The remittance sector is constantly expanding and so is financial technology (fintech). Remittance Market Research Reports show that remittance has constituted the single largest source of foreign exchange in developing countries from 2000 onwards. The global community is searching for technologies that will improve the efficiency and safety of cross border money transfers known as remittances. Transferring money is expensive because there are limited connections between financial institutions and systems. Currently, there is a need to have a neutral network to tie dissimilar and isolated institutions so that money can be moved cheaply and seamlessly from one country to another.
Traditional remittance involves waiting in line for several hours and the burden of fees as well. Remittances cross national boundaries, currencies and financial institutions which lead to inefficient and expensive transactions for everyone. The rise of mobile and digital technology is changing the way we manage and move money.
- Mobile phone usage is rampant and nowadays smart phones and internet technology are helping to reduce the cost and effort of transferring money. People who live in one city or country can now use basic cellular fintech services such as SMS to send money across to their family members. This method is widely accepted by people and is secure, convenient and affordable.
- Digitalization of remittance has also originated in recent years thereby changing the very nature of money. Internet has driven this market and has reduced the transfer cost and time.
The remittance market is a valuable external source of funding for many families around the world. With help of internet, the growth of remittance market is driven by rise in digitalization and automation. Financial technology has been innovating in recent years in order to cater to the global remittance market which according to Remittance Industry Analysis is expected to surge shortly. Investments in fintech have majorly been for money transfer services. India occupies a prominent position in the global remittance market as remittances from Indians living abroad rose by nearly 10% in 2017 and India retained the top spot as the largest recipient of such payments. India was followed by China, Philippines and Mexico as the top countries receiving remittances.
New ventures are capitalizing on the trend propelled by the rise of mobile technology. There are a handful of popular fintech money transfer service providers influencing the fintech remittance industry out of which a considerable number of companies are based in the UK. These include WorldFirst, TransferWise, TransferGo and WorldRemit with the latter two having operations in 44 and 120 countries respectively. London based WorldRemit is highly renowned and competes with the US based Western Union who is the global leader in cross border/cross currency money movement operating in over 200 countries. Despite this WorldRemit is undertaking developments in order to increase its customer base from 2 million currently to 10 million by 2020.
The fintech developments are greatly augmenting the digital remittance market. The US and UK are catering well to the industry and are reaping profits evident by the fact they are world leaders. India though not as technologically advanced can be considered as a significant player having immense potential.
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Ankur Gupta, Head Marketing & Communications