How does the development of technology affect fintech companies?
The story, which FinFan shared on our LinkedIn wall, is about how the development of online video viewing extremely affects the manufacturing of Blu-ray and DVD companies.
That is also evidence of the effect of the development of technology on old businesses. So, how does this situation impact on the remittance industry? Let's find out with FinFan in the following article.
The development of technology in the remittance industry
From going to branches of international money transfer companies to sitting still and transferring money with just a few phone swipes.
From money transfer by post to money transfer to banks through money transfer service companies
In the article How to make foreign remittance from the U.S. to Vietnam? FinFan discussed the way to send and receive remittances from the USA to the “S-shaped” country through the periods of time from the 70s and 80s of the 20th century up to now.
Since the country began to open until now, remittance transfers to Vietnam have always been improved and updated with the latest technology to make money transfers faster and easier.
In the 70s or 80s of the 20th century giving gifts as well as sending remittances to Vietnam often had to go through the post office, until the early 2000s, when the Vietnamese banking system began to operate stably and remittance companies such as Western Union and MoneyGram are starting to enter this market, most remittance transfers to Vietnam will be through these two companies.
Transferring money to Vietnam has been shortened to nearly 1 working week instead of nearly 1 month like when sending by post. Furthermore, they will be more secure when money is transferred via the bank's SWIFT system rather than having to send cash as before.
Transfer money through online money transfer apps or online payment gateways
The early 2000s was also the time of development for .com companies after the .com bubble event or Y2K. From this point on, a number of money transfer technology companies were born to handle cross-border remittance transfers faster and less expensively.
It wasn't until the 2010s when smartphones became increasingly popular with all classes of society (previously only for the rich or middle class or above), cross-border money transfer companies used through new apps or web payment gateways that are growing rapidly and reaching a significant number of users.
This also puts great pressure on the two giants, Western Union and MoneyGram, when they are faced with the choice of either having to improve technology or being left behind and surpassed. Therefore, these two companies have been waiting for the opportunity to catch a newer trend in technology to increase their competitiveness in the market.
How to send and receive remittances from abroad to Vietnam through Western Union and MoneyGram
In some FinFan articles, we have given instructions for how to transfer remittances from abroad to Vietnam.
However, we didn’t share how to receive it in Vietnam. Specifically, it includes the following 3 steps:
Step 1: Go to Western Union transaction points near where you live, and make a full declaration on the bank slip according to the specified information.
Step 2: When filling out the information, sign and give your ID card to the teller to photocopy for storage.
Step 3: Receive money.
Do the same when you make a money transfer abroad.
The formation and development of cryptocurrencies in cross-border currency exchange
Starting in 2009 when some people's confidence in fiat currencies was shaken after the 2007-2008 economic recession followed by the bursting of the real estate bubble due to overvaluation, the market of cryptocurrencies began to form after the birth of Bitcoin, the first blockchain-based cryptocurrency that exists to this day.
Since then, users have begun to spread word of mouth about a decentralized currency with higher security capabilities and can support cross-border money transfers faster and more conveniently than fiat currency at the bank.
However, the development of Bitcoin as well as other currencies in a number of projects based on their foundation (such as Ethereum) has led to these currencies being priced too high. It is difficult to control their exchange rates.
For that reason, stablecoins were born as a method to solve the above problem of the original cryptocurrencies, and these coins are often chosen for cross-border cryptocurrency exchange to this day.
How MoneyGram and Western Union improved their cross-border money transfer technology.
In order to keep up with the development of technology and not be eliminated from the race in the financial market, both of these giants have had to cooperate or receive investment from fintech parties that develop based on technology. blockchain technology and created other cryptocurrencies Stella and Ripple.
The story of Stellar and MoneyGram
In 2019, realizing that the potential of the fiat-to-crypto market at that time was huge, MoneyGram joined hands with Ripple by letting the crypto giant invest a sum of money up to 50 million USD to actualize its above dream.
However, by 2021, this investment was withdrawn due to some legal proceedings with the US Securities and Exchange Commission.
By October 2021, MoneyGram and Stellar started working together and launched a crypto-related pilot program. In November of that year, several reports suggested that Stellar was interested in acquiring MoneyGram. And now that information is starting to sound accurate as SDF becomes a minority investor of MoneyGram.
Read more about the story here
The story of Ripple and Western Union
*This strategic move was unveiled by CEO Hikmet Ersek during an analyst conference call, where he revealed Western Union’s active exploration of integrating Ripple’s blockchain technology and its native digital asset, XRP.
Ripple confirmed a longstanding collaboration with Western Union, stating the company has been “engaged in testing various solutions” with Western Union.
Among these innovations is the much-discussed xRapid, a solution designed to seamlessly incorporate XRP into payment systems.*
Read more about the story here
Through the story between the two giants in the cross-border money transfer industry above, we can see their ambition to enter the crypto market.
However, who will be the sheep and who will be the wolf in the deal between Stellar and MoneyGram, that issue will be answered after the results of further negotiations between the two parties.