Money transfer industry embraces digitisation and collaboration in $1 trillion sector
IAMTN Global Summit 2019 highlights record growth in remittances, powered by companies with a total market capitalisation that has reached $1 trillion.
Industry is seeing rapidly increased incumbent-fintech collaboration and a number of major acquisitions to drive growth.
Companies operating in the space are exploring new technologies, including blockchain, AI and stablecoins, to lower the cost of remittances and boost financial inclusion.
[London, 11 October 2019] The International Association of Money Transfer Networks (IAMTN), the only global trade association that represents the cross-border payments industry, hosted its Global Summit at London’s BMA House in October 2019, with more than 150 founders, c-level executives, regulators and government agencies in attendance.
The annual event, which connects innovators, disruptors and stakeholders in the money transfer industry, highlighted that global remittances in 2018, including flows to high income countries, reached $689 billion – up from $633 billion in 2017.
Remittance flows to low- and middle-income countries (LMICs) grew by 9.6% percent last year (up from the 8.8% rise in 2017), to hit a record $529 billion. A senior figure from the World Bank, speaking at the Summit, expects remittances to LMICs to grow by about 4% in 2019, to $550 billion.
These remittance flows are increasingly digital, which lowers costs, increases efficiency, and, ultimately, drives financial inclusion and sustainable development. The speakers at the two-day event identified a number of encouraging trends:
The total market capitalisation for companies operating in the space stands at around $1 trillion. This includes traditional players, such as Western Union and MoneyGram, and a growing number of new fintech entrants, including Transferwise, WorldRemit and InstaReM.
The industry is seeing a ‘rise of the networks’ which increases reach. In 2019 alone, Mastercard acquired global payments company Transfast, Visa has acquired Earthport, and Ripple has invested in MoneyGram. At the same time, money transfer organisations such as Western Union and Ria are opening up their proprietary networks to fintechs to help improve their services. This highlights the scale of industry collaboration, with the companies involved keen to reach every corner of the world.
New technologies are taking seed in the industry, with a number of speakers talking about blockchain as a more efficient means of managing data in the Open Banking environment and carrying out KYC and AML activities. While cryptocurrencies are still seen as volatile, industry participants believe that stablecoins, with their promise of a secure and stable decentralised system, could drive future cross-border flows. Since the beginning of 2017, well over 100 stablecoin projects have been announced.
In terms of mobile money, Africa remains a major hub. Of the $30 million of mobile money in 2018, 50% was in sub-Saharan Africa, while the ‘WeChatification’ of financial services continues in China, unhindered by regulations such as GDPR.
A representative from the Financial Action Task Force (FATF) discussed how the organisation has been working hard since 2014 to slow the pattern of de-risking, though it will take time to reverse.
Veronica Studsgaard, Founder and CEO, IAMTN, said: “It’s an exciting time for the money transfer industry as we look towards a new decade together. Collaboration is at its peak as companies come together to lower costs, improve customer experience and reach out to the world’s unbanked, and underbanked, communities.”
“We’re seeing the likes of Mastercard evolving from a card provider to a technology company with innovative new solutions, whilst Visa has invested well over $1 billion in technology to create new experiences for consumers.”
“Western Union moving to white label its network is huge news for the industry. We’re seeing this sense of openness create new opportunities. For example, STC Pay, a new integrated payment app in Saudi Arabia, is leveraging this network to help drive financial inclusion in the Kingdom and already has over 1 million customers. We look forward to continuing the conversation with the industry at our next event in Cape Town in March 2020.”
The International Association of Money Transfer Networks (IAMTN) is a non-profit membership organisation, and the only global trade association that represents the cross-border payments industry. Our membership base represents the entire spectrum of the modern international payments network, including banks, payment institutions, electronic money transfer organisations and mobile operators.
Founded in 2005, IAMTN provides a platform for industry partners to come together to discuss common challenges and industry initiatives, and to collaborate and create opportunities. We work closely with governments, regulators and all other important stakeholders such as the FATF, FSB, World Bank, IFAD and DIFD to champion the creation of the most effective, safe, and reliable cross-border payments system.
Visit www.iamtn.org for further details.
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