Michael Kent, whose company Azimo recently won an IAMTN money transfer award at the GMTS, shares his thoughts and insights into the future of the remittance industry
Before you can know where you are going, you need to first know where you have been.
When I started my first money transfer company back in 2005, we were living in a world where the latest Nokia smartphone was as hip as the iPhone 6S, internet was painfully slow and most of us still bought CDs.
Today, we live in a world of hyperconnectivity, where the way we live, work and interact with each other, especially remotely and across borders, has fundamentally changed thanks to digital, mobile and social technology. By 2020 there will be 6 billion smartphone users worldwide – close to the number of people on the planet. That’s nearly everyone, online, all the time.
These changes are resulting in a huge shift in the way that people interact with their money: lending, borrowing, sharing, donating, paying and getting paid. This is especially true when it comes to how money is moved around the world. In the remittance sector the new ‘Fintech’ players are driving lower prices, greater accessibility, more convenience and putting customers back in control. In turn that’s breaking down the financial barriers between countries, shifting value from large institutions to customers and breathing new life into developing and emerging economies.
But while we’ve come a long way, we’re only at the tipping point and I predict that the next ten years we’ll see the payments and in particular the remittance industry change beyond all recognition. They say it’s tough to make predictions, especially about the future, but by 2025 here’s how I see it all playing out:
- R.I.P. Offline: Money transfer stores will all but disappear from the high street, with 90% of remittance senders in Europe and USA using a smartphone to send money abroad.
- Mobile Wallets will become ubiquitous: Nearly 2 billion more people will have smartphone centric mobile wallets in Africa and Asia putting them financially on grid. However cash will not disappear. Users will still be need to be able to freely cash-in and cash-out and I predict over 50% of remittance will still be sent to cash
- Social-first money transfers: Sending money will be fully integrated with messaging and chat (FB messenger, WhatsApp, Viber, WeChat, Hangouts etc). Sometimes those services will be native, sometimes they will be offered using third parties
- Instant everything: The always-on consumers emerging today will not accept anything less than ‘instant’ in 2025: three to five day delivery timescales just won’t cut it anymore. Speed matters especially when it comes to money. It’s already forced companies to reinvent their business models, those that fail to adapt won’t survive the next ten year.
- Blockchain technology will rapidly change the remittance backend: Blockchain and distributed general ledgers will go mainstream but only for corporate and institutional users as a means to speed up international delivery of funds in place of services like SWIFT. However mainstream consumer adoption of crypto currencies like bitcoin won’t happen – the regulators wont let it.
- Consolidation: The rising tide of regulation and high step costs of technology will mean that the money transfer market will continue consolidate. We’ll see mega-mergers of the traditional players (like the rumored Western Union/Moneygram tie up) as well as more high profile acquisitions of digital businesses (like the recent Xoom / PayPal deal)