Money transfer group Zepz is laying off 420 employees, the company told CNBC EXCLUSIVELY, as the fintech industry grapples with a difficult macroeconomic environment.
The London-based company began notifying staff of the cuts on Monday, with their managers telling individual staff ahead of a larger announcement. By Tuesday, the entire company was informed of the move.
Zepz, which owns the WorldRemit and Sendwave brands, has a total headcount of about 1,600, which means layoffs represent about 26% of its workforce.
The job cuts will primarily affect Zepz’s customer service and engineering teams, as Zepz looks to move those operations from multiple countries to more centralized centers, the company said.
The company is headquartered in London but has regional offices in the US, Canada, Australia, Hong Kong, Poland, Kenya and more.
Zepz said it is implementing what it calls “workforce optimization” to address duplication of roles that have emerged following the merger of Sendwave and WorldRemit into one parent company.
Collectively, the two money transfer services are used by more than 11 million users in 150 countries. Sendwave was acquired by Zepz in 2020 for an undisclosed sum.
This is the second layoff at Zepz in less than a year.In June 2022, Zepz reportedly implemented layoffs affecting approximately 5% of its workforce sky news.
Zepz CEO Mark Lenhard said the decision marked “a transition from two large, dispersed teams to one dynamic organization under Zepz and an ambitious foundation for our long-term strategic direction as a combined business. An important and necessary step.”
The company’s decision to cut jobs was driven by a need to streamline its structure rather than macroeconomic pressures, he added.
“Over the past year, we’ve taken a hard look at how we can optimize the organization to continue scaling in a mature manner that lays the foundation for the long-term success of the business,” he said.
“The remittance industry remains strong despite poor economic conditions around the world, and we’ve seen this audience take significant steps to ensure their loved ones are supported amid rising global costs.”
Employees will receive support in the form of counselling, mentoring and careers, resume development, job application and interview skills.
Despite the layoffs, Zepz said it was still hiring for 200 positions.
The company enables users to send money abroad from a smartphone or computer, while the person on the other end can deposit the money into their bank account via cash, mobile wallet or mobile airtime top-up.
The service is a challenger to established remittance services such as Western Union, touting low fees and the ability to send money quickly.A close opponent is Sensibleclaiming to offer cheaper international money transfer services than banks.
Fintech companies like Zepz are facing a number of challenges, including consumers becoming more cost-conscious and regulatory scrutiny heightened. These have hit the value of companies in the sector — both in public and private markets. Funding has dried up, and some fintech companies have slashed their valuations.
Even traditional banks have struggled to gain traction in the market, with Goldman Sachs recently pulling back on its fintech ambitions.
Zepz last raised cash at a $5 billion valuation in August 2021, when it announced it had secured $292 million in new funding from investors led by hedge fund Farallon Capital. The startup is backed by leading venture capital firms including Leapfrog, TCV and Accel.
Zepz has long been a darling of the UK fintech scene. It was founded in 2010 by Anglo-Somali entrepreneur Ismail Ahmed, who started the company after moving to the UK after fleeing civil war-torn Somalia.
Ahmed’s idea for Zepz (later WorldRemit) arose out of his own experience moving money in emerging markets; he would send money to his family, who were living in a refugee camp in Ethiopia at the time, but transfers were expensive, And it will take months to complete.
Ahmed stepped down as CEO of Zepz in 2018, but he remains on the board as non-executive chairman. He was replaced at the time by Breon Corcoran, an Irish businessman who previously headed British bookmaker Paddy Power Betfair.
In 2022, Corcoran is replaced by Mark Lenhard, a former executive at bill-payment company Bill.com, his appointment reportedly comes amid dimming prospects for the company’s initial public offering.
Zepz “never announced a timeline for an IPO, nor does it intend to announce an exit plan at this time,” Lenhard said. The company was operating profitable in the first half of 2022, he said, adding that it was “on the verge of improving margins.” on a sustainable track”.