Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 May, 2012, 08:29 0 likes

Money has a few traits that are not shared by water / electricity viz. local currency, legally obtained versus ill-begotten, and so forth. These differences are responsible for at least a part of the feasibility, friction and fees involved in cross-border worker remittance. On second thoughts, even electricity exhibits some of these differences e.g. 120V/60Hz in the USA versus 230V/50Hz in the UK. Not sure whether it's even feasible to transmit electricity seamlessly between such places with dissimilar specs.

Tim Tyler - Misys - London 03 May, 2012, 16:25 0 likes

I think electricity as you noted is actually a good example. We don't have to have to carry voltage converters with us when we travel, we just expect our devices to work. We do have to carry plug adaptors, but in truth we would rather that we didn't.

And so I think it is with money as well. If I want to send you some money now, should I have to worry about the precise mechanisms as to how it gets to you, and really should I have to go out and find specific money transfer agents / enrol with new (potentially risky) companies just because you decide that you want / can only receive money via mechanism Y? No - my bank should handle all of that for me.

The AML / Risk / Exposure elements that the bank needs to carry out are the equivalent of the voltage converter - it should just happen transparently to me (unless something fails in which case I experience the equivalent of a blown fuse?).

We should be looking at this from the consumers' perspective, enabling and empowering them, rather than - as the majority of banks seem to - deciding its too hard / complicated.

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 May, 2012, 09:24 0 likes

No, I didn't mean the electrical appliance. I meant electricity, which is the correct analogy for money. As far as I know, electricity produced in USA cannot be transmitted to UK due to difference in specs. Period. At least, banks are transferring money produced in USA (USD) to money that is usable in UK (GBP). 

Even where electricity can be transmitted from Place A to Place B, it obviously can't be handed over to the consumer's hands (God forbid!). The electricity company is justified in delivering it to a plug point and in expecting the consumer to have access to a plug point. Same way, why can't a bank expect the beneficiary to have a bank account?

Consumers might be justified in wanting everything their way but regulations do impose certain limits on what banks can and can't do. I've given a few concrete examples of the role of regulation on customer experience in this and a couple of other Finextra posts / comments. And, then, there's the uncomfortable question of whether the consumer is willing to pay for all this or expects the regulator to clamp down on banking fees.

Tim Tyler - Misys - London 04 May, 2012, 10:28 0 likes

Analogies are dangerous things! If we lived in a world with no power grid and no personal generators, would batteries become the new gold standard, or a universally accepted currency?

The point I'm making though is that banks are missing out on large revenue streams by not adapting to new and emerging payment networks. What %age of global workers remittance payments do the banks have a share of, as an example? They could increase this by adapting to their customers' demands: building windmills and not wind-breaks.

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 May, 2012, 16:44 0 likes

Ah, that's a different question and one that I'd asked, and answered, a couple of years ago in my person blog post Banks Can’t Look Down On Remitters (Finextra policy forbids me from giving a hyperlink to this post but it comes up first on the search results when you Google search by its title).

Let alone remittances from bank accounts to nonbank accounts belonging to the emerging networks of the nature mentioned by you, banks don't seem to be interested even in the conventional bank account to bank account money transfer business. Reason?

According to the Western Union executive I'd quoted in my post, 'many banks still view remitters in developed countries as impoverished, nearly illiterate, and hence not worthy of selling checking accounts, credit cards, mortgages and other banking products. According to one former banker and remittance specialist quoted in this article, “not all banks will want the footflow into their branches on the sending side. They don’t want these guys coming into their branches and cluttering up their nice clean offices”.  Apparently, banks fear that putting remittance service stickers on their windows would dilute their brands.'