Collaboration, not Conquest: Fintech’s Impact on the Global Remittances Market

This exclusive interview with Sudhesh Giriyan, COO of Xpress Money, discusses the future of the global remittances market, and the ways in which fintech is poised to impact this growing market.


Fintech is a dynamic sector, perhaps best known for its ability to radically reshape and transcend traditional industry boundaries between finance and technology. Therefore, the analogies between today’s fintech market and and remittances market are obvious. While the fintech market breaks down intellectual and industry borders between technology and finance, the latter facilitates the flow of capital across national borders.

Xpress Money is one of the players in the remittances market, with 180,000 agent locations across 160 countries. The company is continually growing along two axes: increasing its network of partners across all our existing markets, and venturing into new territories across Latin America, Africa, the Middle East, and Europe.

The Investing News Network sat down with the company’s COO, Sudhesh Giriyan, to learn more about the remittances market and the ways in which fintech is impacting its outlook. Specifically, we wanted to know where the biggest trends are emerging, and where savvy investors should put their money. Read on to hear Giriyan’s views on this rapidly transforming global market and the ways in which fintech will strengthen, rather than reshape, the existing landscape. 

A force for economic equality: remittances in context

International money transfer brands are a key part of the financial services ecosystem as a whole. According to Giriyan, “there are roughly 250 million people – or 3.4 percent of the world’s entire population– that live and work away from their country of origin. Many of them already are contributing to the economies of their home countries in the form of remittances.” Furthermore, “there are roughly $600 billion moving from expats abroad to their home countries every year, across the world. In size, remittance flows far outrank aid flows. And more importantly, they are a stable source of uplift. Unlike foreign direct investment (FDIs), remittances don’t escape to more attractive markets the minute there is an economic setback.” In his view, remittances are the greatest force for income equality, and their power is only growing.

Indeed, global money transfers are an essential part of the global economy and are key to the United Nations Sustainable Development Goals. In Giriyan’s words, “they promote income equality between nations, create disposable incomes, and spur investments in education and healthcare.” Accordingly, international money transfer brands don’t operate in a vacuum. Instead, companies like Xpress Money “believe that there is tremendous scope for collaboration within the financial value chain to deliver more value to the consumer, bring financial inclusion to wider audiences, and create seamless money transfer transactions.”

Future outlook for the remittances market

Historically, remittances have posted strong year on year results, worldwide. However, 2015 and 2016 have been relatively challenging for the global economy, and that fact has been reflected in the pace of growth. Nonetheless, Giriyan takes a very hopeful perspective: “while the World Bank estimates that remittance growth to emerging markets slowed in 2016, the World Bank still estimates that remittances to low and middle-income countries (LMICs) will hit USD 442 billion – an increase of 0.8 percent. We expect global remittances to continue growing overall in 2017, and accelerate further in 2018 and beyond.”

The growth will be accelerated by the sector’s increasingly sophisticated abilities to address customer demands. Xpress Money advocates for better industry-wide standards, lower transfer fees, and an emphasis on customer service. The company is “very cognizant of the important role remittances and money transfers play in linking global economies and enabling the wheels of commerce” by pushing for market liberalization, customer choice, and equitable overheads. The company also works towards “financial inclusion wherever possible, because engaging with large untapped audiences enables those customers and also catalyses business growth.” 

So how exactly is the market evolving? Giriyan identifies three key developments:

  1. Less expensive money transfers

For instance, “the average cost of transferring money is reducing. Lower remittance costs bring more customers to official and sanctioned channels, and also drive remittance growth. Developing low-cost money transfer corridors is part of the United Nations Sustainable Development Goals.”

  1. Speedier money transfers

Time, in addition to money, is a commodity which customers value highly. Increasingly, “customers want their financial transactions to be as real-time as the rest of their online experience.” Giriyan notices that speed and customer service are being prioritized by the industry: “collaboration between partners in the financial value chain are involving new audiences, delivering better and more seamless transactions, and enabling more services to be delivered online or at a single point of contact.”

  1. Fintech as a force to watch

Finally, fintech is a key trend to watch out for. At the convergence of finance, remittances, and new technology, fintech has the potential to transform how people avail themselves of financial services. However, Giriyan takes a relatively conservative view when it comes to timelines: “just because fintech is very much in the news doesn’t mean it has yet gathered the critical mass necessary to benefit large audiences … the innovations coming from the fintech arena will eventually gain the needed momentum to transform the customer experience — in the next five to ten years.”

Collaboration rather than disruption: integrating fintech into the existing market

It’s easy to think of fintech as a disruptive industry, but Giriyan believes that it can also be exercised in harmony with the existing remittances market. He says that “some of the innovative ideas coming out of the field have the potential to revolutionise how people earn, spend, save and transfer money. But it’s worth remembering that 94 percent of the remittance industry is still bricks and mortar.”

“Rather than disrupting conventional business in the coming year, we see fintech firms choosing the path of collaboration with them. The economics are simple. Traditional IMTOs have spent years building their networks and investing in physical outlets and branches across their global markets. They have worked diligently to get accredited and licensed by regulators, and have qualified for the right to process financial transactions.”

For fintech startups, these conventional strengths will be invaluable. For instance, “it might be difficult for a new brand with digital offerings to build scale and reach, and clear regulatory challenges. These hurdles can be skirted by asking an established IMTO to handle the backend processes and payouts as needed.”

Therefore, the big theme of fintech in 2017 appears to be partnerships. “Pure-play digital channels are still a while away from mass adoption in the money transfer space. In the meanwhile, we see meaningful partnerships with money transfer organisations leading fintech towards hybrid models – where money transfer requests might originate in an app but will still be handled by a conventional money transfer business.”

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article. 

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