SIR RICHARD BRANSON: What you need to shake up an entire industry

Transferwise, a start-up I recently invested in, is a great example of a business born out of frustration — and that’s partly why I got involved.

The two co-founders, Kristo Käärmann and Taavet Hinrikus, were each paid in the currency that the other needed: Taavet was paid in euros but he lived in London; Kristo was earning pounds but had to pay his mortgage in euros.

Both men were using banks to transfer funds to the other currency, and losing 5 per cent of every transaction in fees.

The two entrepreneurs came to an agreement: Taavet would put euros into Kristo’s bank account, and Kristo would put pounds into Taavet’s, eliminating the banks’ processing fees.

Soon, Transferwise — a peer-to-peer matching service for people trading one currency for another — was up and running.

So why is this model so special?

MONEY TRANSFER

The international money transfer market provides an essential service to people around the world — according to some industry estimates, $5 trillion to $10 trillion is transferred annually — yet the system hasn’t improved much over the past decade.

It was ripe for disruption, especially since many banks were charging unnecessarily high fees for the same services, and some were not as transparent about these fees as they should have been. People who send money through Transferwise (often workers in developed countries sending money to relatives in developing nations) find that they can transfer money more quickly and at a lower cost.

Another innovator that caught my eye in this sector was Fourex — the UK-based start-up won a Virgin Media Business’ Pitch to Rich New Things Award, which I judged in London this past June.

Fourex takes a different approach to international money exchange: It relies on automated machines that convert foreign coins and paper notes into pounds, dollars or euros.

FOUREX

No staff is required to man the machines, so the machines’ locations can be more convenient than exchange bureaus.

Industries that have remained unchanged for a long time are often the most in need of someone to come along and shake them up.

Why does it sometimes take so long for disruptors to arrive on the scene?

Three conditions are required for a potential disruptor to become a leader:

1. New tech

The first condition is that the company’s technology must offer a simple, seamless and intuitive solution to a problem.

Remember: Customers don’t care about why you’re able to offer a better product — they only care about getting better results.

So the back-end systems need to be strong enough that customers can use the interface on their first try, without instructions.

2. Reach

A business must be able to attract users beyond early adopters.

One of the reasons so many industries are experiencing disruptive change now isn’t because the Internet changed the world, but because better connectivity and a global increase in the use of smartphones has created the critical mass required to make many new business models viable.

3. Timing

Disruptive innovations often arrive just as the public is growing familiar with a new technology and is ready to explore the possibilities.

Transferwise is only able to produce impressive peer-to-peer match rates because users trust the service.

Fears about online scams were prevalent in the Internet’s early days, but they’re now easing — users know that they’re not sending their money into the ether.

The service would be useless if nobody was ready to make the leap.

DISRUPTIVE TECHNOLOGIES

Every industry faces disruption at some time or other.

If your business is in a sector that hasn’t changed much in recent years, you’ll need to keep up with new technologies and innovations, or risk losing market share to newcomers.

There are resources available that can help you get ahead — for example, Virgin Media Business’ digital skills hub for start-ups and small businesses (learndigitalskills.co.uk).

My main message to entrepreneurs who want to break into a tired sector is to keep researching trends in your markets and stay open-minded with regard to collaborations, opportunities and new technologies.

Even Transferwise and Fourex will have to do this in order to avoid being disrupted later!

This column is part of a weekly series by Richard Branson in which he responds to reader’s questions from around the world. Send questions to RichardBranson@nytimes.