Embracing a digital future: views from Larry Angelili, Executive Vice Chairman at MoneyGram
MoneyGram is known to be one of the biggest businesses in the remittance space. Whilst the company’s origins go back to the era of cash transfer services, it now seeks to be at the forefront of digital change and innovation. I had a conversation with Larry Angelili, who explained what these transformations mean for MoneyGram and its customers.
Larry described to me how MoneyGram is exploring the opportunities stemming from blockchain technology and stablecoins through a partnership with Stellar. Together, the companies have developed a service, ‘MoneyGram Access’, that allows customers to convert their cash into USDC stablecoin, and to exchange their USDC for cash, at Moneygram locations globally. The service, which was launched last July, also allows users, for instance, to exchange bitcoin for USDC with a click, and to cash out. In other words, MoneyGram Access solves the biggest limitation of crypto today: the inability of customers to use their digital currencies in most situations of everyday life. The service is easy to use, requires no particular understanding of cryptocurrencies, and provides new possibilities for deepening financial inclusion, as it enables the unbanked to buy and sell cryptocurrencies. Through functionalities such as this, MoneyGram fulfils its vision to serve unbanked customers.
“This solution creates a link between the cash world and the digital world”.
Since the service went live in the summer, adoption has been increasing rapidly on both sides: wallets are being loaded, and digital currencies are being cashed out. MoneyGram is solicited by numerous wallets that demand to be integrated with MoneyGram Access: while it is early to judge the impact of the service, so far it looks like a success.
Larry also sees long-term potential in MoneyGram’s use of blockchain: “stablecoins come as a new way to settle remittances globally”. Currently, even though remittance services providers offer instant payments to customers, money does not move instantaneously in the background. MoneyGram is open to the possibility of using stablecoins in other parts of their operations, to settle transactions immediately and gain efficiency. Overall, Larry believes that it is only a matter of time before the advantages of stablecoins are widely recognised in the industry, to be used as a settlement engine by more financial services providers.
“If there is a new and better way to move money across borders, we want to be at the front of it, because this is what we do every day, on a global scale”.
I asked Larry about the biggest challenge when implementing a blockchain solution in a financial business today. He answered: “the biggest challenge is education”. This year, crypto valuations have fallen, and people have seen that stablecoins aren’t necessarily stable. These experiences have created doubts about the practical application of cryptocurrencies: many people now need to be reassured, and education about the technology and the risks, is the best way to convince people of its potential for payments. Not only customers, but also regulators and staff of payments businesses, need to be educated on blockchain, in order to understand that, when implemented correctly, it can benefit customers without increasing risk. The education process is key for mindsets to become more open to this technology. Regulation also needs to incorporate and authorise blockchain and stablecoin applications, in order for this technology to flourish and reach its full potential in the payments industry.
In the next few years, there will be interesting developments to follow, as we witness the transformation of the traditional remittance providers. MoneyGram is going private, after being acquired by Madison Dearborn Partners, which will eliminate its’ SEC disclosure requirements, and change the way the company communicates with the market. However, MoneyGram expects to continue to be very active in describing its use of new technology to the public on an ongoing basis.
“Moneygram is reinventing itself: in the coming years, we will continue our focus on building a consumer-direct, digital experience. Technologies will enable our services to get cheaper and more accessible. Our customers will have more alternatives on how to use MoneyGram.”
The mutation of traditional remittance services providers is not an isolated process, but is happening as part of a large-scale restructuring of the payments industry. New business models, new customers, and new relationships: exciting changes are on the horizon.