As globalization is gaining momentum, not only are the lines between FinTech sectors are getting blurred, but each of us is becoming a citizen of the world. However, formal and legal borders still exist. Legal complexities sometimes hold companies back from the opportunity to go global. FinTech represents a new generation of enterprises that leverages technological advancement to serve such a multi-dimensional world where people are actively crossing borders.
International citizens represent a very interesting segment of the population that has become attractive for FinTech startups. A variety of companies are looking to serve the underbanked, vulnerable or financially excluded population. A simple need to send money back to your country can become a problem with traditional services. International remittance is a whole industry with a significant problem to solve. Traditional financial services providers often seek high margins for the opportunity for customers to leverage their international network to send money to families in their home countries.
However, the situation has been changing since 2015, especially going into 2016. One of the wonderful examples of FinTech companies that is looking to erase the financial borders is RemitRadar. In fact, just today the company announced that HRH Prince Michael of Kent has agreed to act as a global ambassador for the company.
As HRH Prince Michael commented in the announcement, "For centuries, people have left home and crossed countries, continents and oceans in search of better opportunities for themselves and their families. Today, more than 240 million people live outside their countries of birth. This expanding global community, much in the front news today, will send home USD 450 Billion each year to support families and will pay a high price to do so, or be forced to use unregulated informal channels putting their hard earned cash at risk. I will be delighted if my role helps these people retain more value and enjoy more security when sending money home."
One of the founders of RemitRadar, Emil Griston, expressed his deep gratitude to Prince Michael saying, "Prince Michael's international expertise and insight will enable us to do a better service in pursuit of financial inclusion - a priority goal for those international organizations who work to alleviate poverty, as well as improve the lives of developing nations and communities."
RemitRadar is built with migrants’ best interest in mind. The company's solution provides details of the best currency exchange rates available for international transfers. The technology ensures maximum transparency and easy comparison among the remittance options. Part of the service is a free, real-time online remittance auction for consumers, allowing service providers to bid against unfair remittance prices and secure the customer's business.
"Constant price monitoring through the lens of the auction model allows customers to enjoy savings of up to 35% when sending money abroad compared to conventional money transfer methods", explained Denis Kochubey, the CEO co-founder of RemitRadar.
RemitRadar monitors millions of quotes from more than 35 money transfer providers and has processed more than a million quote requests to date. More than $24 million were transferred through the platform.
“The problem we are trying to solve is one that was here yesterday, is here today, and will be here in the future”, Kochubey shared with Forbes, “RemitRadar looks at the problem holistically, it’s a warning to the market; effectively we are saying that transparency of pricing is a democratic right that should be made available for all people from all walks of life, but most especially for those people who need help the most.”
RemitRadar is not alone in attempts to make the world a better place for migrants. Monese is another interesting example. Monese is a digital banking service that lets users open a UK banking account on their mobile in minutes regardless of their citizenship. The service launched this September following a three-month closed beta. Monese is a UK-based startup that targets immigrants who are having a hard time opening a UK bank account as foreigners.
The mobile banking service established by Estonian Norris Koppel lets users open a current account and get a Visa debit card in just three minutes with a snapshot of the passport and a selfie. Monese said that its international money transfers are up to 10 times cheaper than high street banks and are charged at the mid-market rate plus 0.5%.
A leading Canadian global financial institution, CIBC is also taking a step towards painless international transfers. CIBC eliminated fees for Canadians who send money overseas, making it feasible for them to send money back home to support their families and manage personal affairs. “Canadians can now avoid paying upfront charges, which can be significant, and have the confidence in knowing that the amount of money they send will be received by their loved one,” said Larry Tomei, Senior Vice President, National Sales and Service at CIBC, in the press release. The new no-fee CIBC Global Money Transfer service lets customers with CIBC accounts send money overseas through online banking or at a CIBC banking center. The new service currently lets its clients send money to 34 countries and is expected to expand to 60 countries by the end of 2016.
There are other FinTech heroes aiming to even out financial services for migrants. Well-known TransferWise is one of them. The remittance platform offered by TransferWise is aimed at expats, retirees, overseas workers, and small and micro enterprises. A normal transfer of £1,000 into euros using Western Union can cost over £100 once you add in exchange rates and other fees, whereas through a bank wire transfer, the cost is £50. TransferWise offers the same transfer at an attractive rate of £4.50, a direct savings of at least over £45.
Since we are recognizing FinTech heroes, also worth mentioning is Regalii, an international mobile payments platform that allows immigrants to pay their families’ bills anywhere in the world. The business model of this startup is to allow migrants to send money for food and bills to their families through SMS messages.
Ripple is another disruptor, making it easy to send money anywhere in the world in any currency – instantly and for free. Users simply need to load money to an active Ripple wallet through a participating gateway. One can send it in any desired currency to a Ripple user based in China who could accept payment in a completely different currency through a transaction that happens in less than five seconds and costs only a minimal fee.
WorldRemit is also looking to foster international remittance for those helping families abroad. It is an online service that lets people send money to friends and family in other countries, using a computer, smartphone or tablet. WorldRemit is low-cost alternative to traditional money transfer companies that use high street agents and charge unreasonable fees. Money can be received as a bank deposit, cash pick-up, mobile money, or mobile airtime top-up. WorldRemit’s service is available to senders in 50 countries and is offered to more than 120 destinations across Europe, Asia, Africa, Australia and the Americas.
Certainly, there are many other FinTech startups aiming to transform international remittance and diminish the financial hurdles for those going through difficult moments in life. All those startups serve as examples of the endless benefits of fostering FinTech ecosystems globally. As technology can now erase these man-made borders, financial services within and between countries need no longer have vast differences in fees, especially for those who can ill-afford them.
Global remittances amount to $500 billion every year. The industry has grown dramatically; yet, for a consumer, there are still issues to solve. High transfer costs, limited money distribution methods, limited brand options, limited ways to deal with money, etc. New players in this space are redefining the solutions to these problems, which were created by its mainly duopolistic nature until a few years ago. Bright entrepreneurs saw a great opportunity in this segment and are establishing remittance platforms making use of cloud, mobility, blockchain and other technologies and concepts.