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What the rest of the financial world can learn from its remittance counterparts

Almost all inventions in every industry have been designed to make our lives more comfortable or convenient in one way or another. But one sector which hasn’t always been known for its continuous innovation is the financial industry.

In the past, the core financial institutions have controlled the rate of innovation, deciding how consumers accessed, used and transferred their money. However, driven by a desire to make it easier, people began to find and demand more innovative ways to both handle and send their money.

Yet with technology advancements accelerating, and international migration growing rapidly – the UN Migration Report highlights that the number of migrants hit 258 million in 2017, up from 173 million in 2000 – the requirements in the distance and locations of where the money is going has changed. For those looking to use these services to send money back to loved ones at home, the remittance industry is at the forefront of meeting this need and the way it’s adapted to these changes is something the rest of the financial industry could learn from.

1. A worldwide customer base benefitting from collaboration

The remittance industry is delivering more convenience than ever before; through a network of agent merchants, banks, fintech and mobile operators, money transfer companies can now deliver funds closer to the end user. Yet, whether it’s cash-to-cash, account credits, online-to-mobile, cash to mobile or anything else in between, the scale of the operation, due to the spread of the people using it, is immense. The advancements in technology have brought increased efficiency to this process and ensured the industry is helping to meet demand, as users now expect to send and receive money in a fraction of the time they used to.

This has all been transformed through changes at the infrastructure level. There’s simply no use sending anything, if the task of collecting it on the other side is going to be fraught with difficulty. As a result, the industry has adapted by developing solutions and strategically collaborating with institutions within and outside the financial spectrum. This includes services such as cash-to-cash to mobile wallets, which enable recipients to receive money without having to travel. One way they’ve done this is through collaboration – partnering up with other remittance companies or those outside the industry, such as mobile providers, who have the customer base and infrastructure some others don’t.

2. Regulation and legislation

Regulation is another area where countries don’t always see eye to eye, with rules differing wildly across countries and even from state to state in the US. This can be everything from licensing to do business through to security requirements around data storage. Regulations such as PSD2 and GDPR have recently been introduced in the EU to help improve efficiency and spark innovation, while at the same time making payments safer and more secure. In order to keep moving forward, the industry needs to work with its regulators to ensure any directives or legislation help – and don’t hinder – the end user.

3. Consumer trust

For its customers, sending money home is often a lifesaving process, with recipients’ dependent on the money that is sent to them. As such, convincing people to give their hard-earned money over to a money transfer operator is a big thing. Aspects like transaction tracking, confirmation notices, free cancellations and refunds, are all steps that have been introduced to convince customers their money is secure. Being transparent too is a big factor, particularly around costs, and money transfer companies must be upfront about any charges if they are to earn customer trust. Customers now expect money transfers to be safe and quick, so the industry has to match that. For the industry itself, building that trust has been the easy part, it’s maintaining that which is the challenge and one that can go wrong the minute a customer sees a hidden charge, or a hack occurs. Businesses need to always be focused on maintaining that trust, because once it’s gone, it’s tough to get back.

The remittance industry has had to overcome many challenges to grow, but it’s adapted to meet those issues head on. It’s used technology to develop services like mobile wallets to enable those in remote places to receive money and partnered with other providers to ensure new markets can be reached. Regulation has also been introduced to spark innovation but protect customers at the same time, and the industry has placed trust at the heart of its approach, by implementing protocols so customers are convinced their money is safe. As the movement of people around the world continues to increase, the rest of the financial industry could do well to take a quick look at the work the remittance industry has done to address its customers’ needs.


Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 September, 2018, 14:03Be the first to give this comment the thumbs up 0 likes

Given all the technology the remittance industry has purportedly used, can you share any examples of cross border remittance services that enable an entity in USA to send money in *fiat currency* to the *bank account* of another entity in India in realtime? "Entity" is Consumer or Business / Company, so there are four cases in total viz. C2C, C2B, B2C and B2B. PS: Not interested in Bitcoin, hence "fiat currency" is an operative term; likewise, not interested in closed wallets like PayPal, so "bank account" is another operative term.

Sudhesh Giriyan

Sudhesh Giriyan


Xpress Money

Member since

25 Oct 2017



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