The financial services industry has seen remarkable changes since the turn of the century. In common with most industries it has been transformed by the internet and digital technologies, which in this context means finance technology, also known as fintech. As a result, banks and other traditional financial players are being challenged by new service providers who can harness the latest technologies and offer alternative business models and better propositions.
Remittances or cross-border money transfers are one branch of financial services where fintech has a far-reaching effect - quite literally. Remittances connect people and shrink the world. They have evolved in parallel with new technology, growing significantly year-on-year. Many new operators have entered the marketplace and developed global businesses on the strength of digital enablement and particularly mobile commerce. Today, if you want to transfer money anywhere in the world, you no longer have to rely on financial institutions with their expensive rates and often slow delivery times.
The new financial players, the money transfer businesses with global footprints, have grown rapidly because they offer compelling advantages for the millions of expats who need to transfer funds regularly to their home countries. Their service is based on speed, convenience, versatility and cost efficiency. And what makes all of this possible is the way technology and industry-wide partnerships have redefined how money can be sent and received.
Cross-border money transfer businesses offer a wide range of options such as cash payouts, account credits, mobile wallets and even door-delivery services. Fintech has helped increase and refine the transfer options. The ability to reach more people in more places, particularly those who were previously financially excluded, has been reinforced through partnerships that are creating powerful financial networks. The result is a new fintech-based infrastructure that can transfer money more quickly, efficiently and economically than ever before.
Shaped by cross-border finance businesses, this infrastructure spans nearly every country and region, and includes thousands of agent locations. It integrates banks, neobank, non-banking institutions, telcos, fintechs and other market players, forming a remittance community that optimises cross-border transfers and collaborates on new products and services.
One of the most important things is mobile money. Remittances today connect people in regions that are often unbanked or underbanked, and the growth of mobile money and particularly digital wallets has been vital in making money transfers more accessible and convenient. This is proving a fertile area for collaboration between money transfer organisations and other businesses.
Thanks to the explosive growth of internet-enabled smart devices, digital remittances are now mainstream. An cross-border money transfer can be made from a mobile phone or other connected device wherever you are in the world and at any time. This flexibility allows money transfer organisations to build networks across Africa, Asia, Europe and the Americas and mobile wallets are a growing part of the service offering.
Mobile technology that adapts to customer needs is the foundation for a more digitally-connected payments landscape as it promotes financial inclusion. Moreover, no matter whether customers are in rural areas or urban centres or whether remittances are sent via digital wallets, account transfers or even straight to someone’s front door, cost efficiency will match speed and convenience. Everyone wants remittances that are economical as well as practical. Today’s money transfer organisations are conscientiously committed to bringing down costs as well as increasing connectivity.
Looking to the future, we are sure to see more partnerships to exploit the benefits of emerging technologies. Not least is blockchain, which could transform financial services. While blockchain applications are still at an initial stage, there are many promising initiatives worldwide, and it is clear that the technology presents a strong use case for faster, cheaper, more secure remittances.
5G, the fifth generation of mobile networks, is another development that is likely to have a big impact on all types of payment. However, although 5G is due to start rolling out this year, it will be a long time before its benefits are felt worldwide, and particularly in emerging markets and countries where remittances are most needed. It will take several years to develop the right infrastructures for 5G, but today’s collaborative model for money transfers will certainly help to accelerate the deployment of the new mobile networks.
Cross-border payment organisations have changed the model for remittances. Through collaboration with fintechs and other third parties, they will continue to innovate and evolve, bringing fast, flexible, cost-effective remittances to more people worldwide.