Video: Mobile Payments and Remittances – Understanding the impact and the opportunities

Continuing our recent discussions exploring the evolution of the remittance sector, RemitONE hosted their IPR EMEA event on 2-3 March 2022. The 90-minute panel session centred around the evolution of mobile payments and remittances and how they are going to impact the industry.

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Ababacar Seck, Managing Director of Africa, RemitONE

Panellists:

Sukhi Srivatsan, Head of Sales, AZA Finance
Edward Chidavarume, General Manager of Business Development, CashPesa
Muhammad M. Jagana, CEO, Kuringo
Clinton Leask, Business Development Lead, Pay@

Time Stamps

00:00 Introductions

06:32 Why does financial inclusion matter?

11:15 Who delivers financial services in the market at the moment?

14:35 What obstacles and legal infrastructure regulations are agents, MTOs and banks facing to catch up with mobile operators in Africa?

24:32 What roles do technology and mobile payments play in financial inclusion? What are the main challenges?

35:02 How will interoperability between Telcos benefit the end users?

42:22 What role do central banks and governments play in financial inclusion?

47:12 How can we improve the user experience and make it seamless for the unbanked population in Africa?

53:54 What progress should we expect to see in the years to come? What advancements need to happen?

Why does financial inclusion matter?

Sukhi: Financial inclusion matters today because it is our greater responsibility to ensure everyone has equal opportunity, whether you are a business or an individual, to access affordable and timely financial services and products. Especially if you look at the world of mobile payments and remittances. We need to empower communities, give them access to basic needs, like food and shelter, but also increase the economic output of the country and level the playing field between developed in frontier markets.

Muhammad: Financial inclusion is one of the fastest ways to change lives, by empowering the unbanked or the underbanked; especially women and young entrepreneurs who find it very challenging sometimes to have access to financial bank accounts. I think digitalisation of the financial system makes it much easier for people, especially in Africa. As we all know today, mobile phone penetration is huge in Africa, and the majority of people know how to use things like WhatsApp, so it makes it easier for them to use their phone and to be included in the financial system.

Who delivers financial services in the market at the moment?

Muhammad: Today, companies like Kuringo and other fintechs are expanding their reach to the unbanked and providing financial inclusion services, simply by offering them an app – they do not need to have a complicated banking system or anything else for them to be able to access the payment systems. But generally, it’s the fintech companies and mobile money operators that are disrupting this market.

Sukhi: I think one important point to highlight here is a provider like RemitONE is looking to bring everything together and do a one-to-many integration. So, through the RemitONE platform, an MTO could connect and push all the remittances with one integration, but in many markets. So, there are fintechs that are really growing in each of these separate markets, but the hardship and the obstacles in each market are so unique. So, I think providers like RemitONE really look at that aspect.

What obstacles and legal infrastructure regulations are agents, MTOs and banks facing to catch up with mobile operators in Africa?

Clinton: I think the biggest challenge is that it’s always difficult for underserved incumbents. So, whether it is mobile apps and mobile operators in Central Africa, or whether it is tier one banks, like we have in South Africa, changing things without regulation or unforeseen market changes is very difficult to do. The way compliance is shaping up these days, those burdens are growing. It is getting more onerous to comply with various things around AML, CFT, FATF, particularly for onboarding and monitoring end customers, especially as new entrants and smaller players catch up – you must comply with these from the get-go.

Muhammad: These are the challenges that can create obstacles because only the big guys are there already. They have a bigger balance sheet and a bigger team. But the good thing is, especially in Africa, there is a lot of ‘plug and play’ technology coming in. If you look at it in terms of, how do I partner with somebody who specializes in providing a platform, who specializes in providing tech, who specializes in something else, and you focus on the user experience, it will help you grow your footprint.

Edward: We’ve also seen the regulator shift into a more risk-based approach when it comes to KYC on customers, which now gives the fintech players the opportunity to come up with solutions that enable them to onboard customers easily with a risk-based approach. You can have API integrations for verifying documents that you get from the customers digitally which makes onboarding easier and cheaper.

What roles do technology and mobile payments play in financial inclusion? What are the main challenges?

Edward: We are now shifting from the brick-and-mortar. The brick-and-mortar banks were the ones dominating the financial services market. But now we’re looking at the mobile app and the way that it’s increasing in Africa – by 2025 it has been expected that at least 80% of the population in Africa will have mobile phones. So, now with the technology and the mobile penetration building within Sub-Saharan Africa, it becomes easier with technology for us to offer financial solutions to these markets where you can offer mobile money solutions.

Clinton: Mobile payments are the future. There is no other way to do this and to solve what needs to be done in Africa in terms of financial inclusion. The devices aren’t a problem anymore, unlike a few years ago. It is really about ensuring that the cost of data is being tackled effectively by regulators across all countries to promote the usage of mobile payments.

Sukhi: One example is if a fintech is starting out and wants to build a mobile app. Initially, there needs to be a focus on building one thing and doing it well and gaining user attraction. And then once that is underway, and you have that retention of users, it is important to start to diversify the products and services you offer. So, not just being able to receive money, and me being able to send it to you in a P2P manner, but also, can I do other things with this wallet? Can I go and can I buy a coffee? Can I go to the merchant? And can I pay for my scarf? So, lots of different things, lots of different use cases. But, the initial steps are to start small, build focus, and then eventually build up and add more products and services. So, you can diversify and create an entire user experience within your product and within your service.

How will interoperability between Telcos benefit the end users?

Muhammad: Today, if you do not have interoperability, a certain segment of society or a certain community will be left out. The cost of doing business or the cost of providing the last mile of the financial inclusion journey to them is expensive. So, to reduce the cost of transactions, interoperability is a must. Lowering costs of transactions, increasing volumes and expanding footprints can lead to people being able to pay for basic things in life that they need. It allows farmers to sell their produce, and they don’t have to travel miles to a bank to cash their cooperative checks. I think the interoperability we’ve seen in the UK, with the open banking system, has really allowed fintechs to explode, much more than any other European or US system. So, it is essential in Africa for governments to look at interoperability as a key to open access to finance, allowing the underbanked to have access to financial inclusion, and allowing the unbanked to come on board.

Edward: It is such a key thing for end consumers. We’ve seen it in South Africa, for the mobile operators it has created a boom in terms of customers because people are now able to upgrade and do things much easier. So, there is a strong benefit for interoperability, not only for the consumers but for the Telcos as well. They will see a rise in transactions for sure.

Sukhi: So, there is a lot of hesitation when it comes to this from many of the Telcos or the bigger players. They’re asking: is my business going to be taken away? Am I going to lose revenue over this? But thinking a bit longer term, you will get more user traction and it will create a better user experience. More importantly, it increases the frequency of a user using your product.

What role do central banks and governments play in financial inclusion?

Clinton: Financial inclusion is quite a broad term and means many things to many people and industries. But, central banks and governments are key in driving financial inclusion. It comes from clear and transparent regulation that needs to be put in place with participation from their side and the industry. So, whatever they are putting into place, they need to ensure firstly, that it is going to be cost-effective for everyone. Secondly, they have to drive competition and innovation. So, we must ensure that there is a level playing field, in terms of how people can tackle it and how industries can get involved. We touched on interoperability quite a bit. We know it goes hand-in-hand with reducing costs and accelerating competition, but also making the offering bigger for everyone.

Muhammad: In addition to this, the role central banks can play is to push for government payments to be digitalised. In the Gambia, they started talking about pensions and a scheme to be paid digitally. I think this will also help push financial inclusion and would allow people to be onboarded much easier.

How can we improve the user experience and make it seamless for the unbanked population in Africa?

Edward: When it comes to user experience, the first interaction that you have with the customer is onboarding. I believe when it comes to the information that the customer must share with a service provider, it is confidential information, and there must be some level of trust. So, the customer must feel comfortable sharing that information and there must be some form of transparency on the product that makes the client comfortable. Also, the experience must be as easy to use for the customer as possible.

Sukhi: You need to make onboarding seamless. Users should be able to start using the platform quickly, whether they are individuals or businesses. For that, you need to balance both security and compliance along with a positive user experience, which a lot of fintechs have done really well. Compliance also plays an important role. So, we cannot forget about what it means to stay compliant with the regulators, what it means to stay compliant with all the financial authority bodies, and how you incorporate that as you grow from one stage to the next as a company.

Ababacar: We know that our population maintains very specific services and all the players who experience growth have very simple to use platforms and, as a result, are successful. People use their mobile phones to connect to others and to sell and pay. Now we also see QR codes that some operators are offering and all of this is very easy to use.

What progress should we expect to see in the years to come? What advancements need to happen?

Sukhi: This is a very exciting question because we can talk about some very creative ways of what the future is going to look like. Obviously, there is a lot of scope and there is plenty of opportunity. But it is going to require a lot of collaboration as we just covered. How can governments help? How can central banks help? How can the regulator help? And how can the fintechs and everybody else work together in this ecosystem? I also think traditional digital currencies and cryptocurrencies are something we all need to be aware of – the adoption is already starting to happen. We see it in many of the markets, but we still have a long way to go. And I am personally very excited about the opportunity here.

Edward: I think the one to watch out for is what the central banks are going to do with the CBDC. The whole ambition is that they are the custodians of these individual wallets and there will be an impact downstream for everyone in terms of MTOs, mobile operators and banks because it is shortcutting everyone out of the flow. So, that will be an interesting one to see.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Video: Better Together – The money transfer ecosystem

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Selim Mohamdi, Business Development Manager, RemitONE

Panellists:

Wayne Gould, Head of Direct Sales and Financial Services, Trust Payments
Priscilla D. Friedman, COO, CrossTech
Muhammad M. Jagana, CEO, Kuringo

Time Stamps

00:00 Introductions

03:55 How significant is the remittance industry and who are the traditional and new players in the ecosystem?

07:55 How does partnering with payment gateways assist money transfer operations?

12:31 Can you provide some examples of other successful partnerships, and why they work?

16:57 What are the developing trends within our ecosystem and what is RaaS?

19:55 What do you see as the future of payment gateways? And what can we expect to see in this space?

27:40 How can MTOs leverage partnerships to expand their networks without necessarily having a presence in that country?

29:55 What are the critical questions to ask when evaluating a payment vendor or a technology partner?

How significant is the remittance industry and who are the traditional and new players in the ecosystem?

Priscilla: The remittance industry has transformed rapidly in the last five years, and is becoming very digital. With this new transformation and globalisation, specifically during the pandemic, many money remittance service providers must focus on digital remittances to enhance their business and provide faster transactions to clients, and agents must also provide services digitally to their clients.

But the industry has become much more than just remittances. With new services such as B2C fuelled by the gig economy and B2B fuelled by e-commerce, those markets are 10 to 20 times larger than remittances. Money transfer providers are using their technology and experience to grow into segments. The traditional players in the markets are MoneyGram and Western Union, and some of the new players are Wise, Azimo and Currency Direct. As I navigate this industry, I learn every day, that new FinTechs are coming into the market with new solutions involving money transfer, digital banks, and many more.

So many different types of partnerships exist in the remittance ecosystem. How does partnering with payment gateways assist money transfer operations?

Wayne: I think the first key thing here is that the payment gateway provider needs to be able to cover all of the payment touch points. For these merchants who did not have payment methods like a simple POS machine to collect payments, they really struggled. Now on the other side of this, we collaborate very well with our merchants, enabling them to collect payments not just face to face, but also helping them digitalise their entire platform.

In addition to all of this, the right payment partner would also allow you to process funds in different currencies, as well as settle them in a multi-currency account. This is a very crucial SLM, simply because with remittances, the competition is quite rife now and margins can be quite low. So, to partner with a payment gateway, who could provide not just the technology, but also a solution that is very cost-effective, is a match made in heaven.

Can you provide some examples of other successful partnerships, and why they work?

Muhammad: Partnership is how we built our entire company. We believe that today, with technology, you do not need to build, you just need to plug and play. What we have done over the last 12 months, as a start-up, was to focus on how to expand our footprint. How do we plug in technology easily? How do we go to market where we are not? It is either you raise a multibillion-dollar fund, or you go and partner with people. Today we have seen instances where technology has made it more accessible for customers and to deliver a vast distribution network. As a result, it is uncomplicated and straightforward because we don’t have to worry about building the technology; we partner with it.

What are the developing trends within our ecosystem and what is RaaS?

Priscilla: So, innovation is improving, as we have been discussing. Digitalisation, the rise in mobile-based platform channels and cross-border transactions, and the decrease in remittance transfer time and cost drives the growth of the market.

RaaS (Remittance as a Service) is a go-to solution for many MSBs, Fintechs and small businesses and is a solution that we recommend to clients in our consulting division. So, we have the solutions that are focused on technology providers, we have some that are focused on licensing and reporting, and we also have some that are providing banking as well. Right now, we are seeing a new trend where we see a one-stop solution. But one point that is important to say is that some clients may already have some part of the solution developed. So, it is good to partner with companies that can marginalise what your need is, instead of just giving everything.

What do you see as the future of payment gateways? And what can we expect to see in this space?

Wayne: Payment gateways will always form and will always be an integral part of card payments because that is what is bridging the gap between our MSBs and their customers who want to pay. In terms of keeping up with trends, crypto is something that is picking up a lot of pace in a lot of areas and blockchain-based pay-outs, are something that is being pioneered by Ripple now. These are things that we’ll be seeing for payment methods of the future when it comes to things like payouts. In the days to come, as businesses start to evolve, requirements start to evolve. It is very critical that payment gateway or technology providers within the payment space can adapt and rise to the demands of our customers and our merchants.

How can MTOs leverage partnerships to expand their networks without necessarily having a presence in that country?

Muhammad: What we have seen, especially with our experience over the last year, is that technology has brought down the cost of integration and there is a lot of interoperability. Now, people have realised that you do not have to be a big standalone and everybody seems to be building their own small, quiet part of the jigsaw puzzle. When there is somebody who has already built a network and aggregator, this is your way in. So, you can just plug into their platform. Our clients from Europe, for example, can easily send money from a wallet or mobile phone account to your bank account, and we can also easily be in about three or four countries just by switching on a plug somewhere.

What are the critical questions to ask when evaluating a payment vendor or a technology partner?

Wayne: I think the first one is do they understand your business? I think that’s very important because everyone wants to help everybody but help needs to come in the right way. To work with a payment provider that understands the ins and outs of the business is very, very crucial. And things like, what certification or who regulates them as an acquirer, or as a technology provider is also very important.

When it comes to things like the technology, and asking them the types of platforms they work with, for the pay-ins and pay-outs, as well as what kind of security features that come with the gateway. Does it offer fraud screening? If it does, what does it run? What does it check for? And so on. These are some questions that could be interesting for an MSB to ask their provider. Another feature, which is quite important, is how soon can they settle their funds? Obviously, with remittances, we understand that funds coming in is as important as funds going out. So quicker settlements are imperative when it comes to this industry.

Priscilla: One of the things that I always ask Fintechs or MSBs who are looking for solutions is how many transactions are you looking to transact to your start-up? Are you a midsize business? That is very important because different payment providers have different tools, and they are also looking for a specific target. In addition, from a payment provider view, one of the questions that I also ask is module customisation, do you have modules for different clients? How flexible are the payment provider solutions in providing modules that are specific to that client’s needs?

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Video: Cryptocurrency as a Payment Method – The new growth potential for money service businesses

In our latest IPR Webinar, our expert partners from BP Ventures LLC joined RemitONE to explore the use of Cryptocurrency as a payment method in the money transfer industry, and how using the USDC can benefit money service businesses as they shift to a more digital way of transacting.

Webinar moderator:

Aamer Abedi, CMO, RemitONE

Panellists:

Jeffrey Phaneuf, Director, BP Ventures LLC
Anthony Barker, Director, BP Ventures LLC
Arif Saleem, CTO, RemitONE

Time Stamps

00:00 Introductions

14:24 What is the next big thing in the ecosystem for remittances?

17:29 How have you seen payment methods change over the years?

19:37 What is USDC? How does it compare to other USD-denominated stable coins?

23:29 Why use the USDC stable coin as a payment mechanism? 

28:27 What is the fear that MTOs may have using USDC? How do we address this?

31:31 How can we address the bank account issue?

34:45 What are the benefits of using USDC as a payment mechanism for the individual users?

37:54 What’s different from paying with a stable coin instead of traditional methods?

40:19 What is the cost to the MTOs?

43:10 How do we take advantage of the Moneygram USDC opportunity?

44:03 Risk profile of USDC vs. cash or card?

44:56 How can USDC as a payment mechanism decrease Chargeback rates & Fraud?

45:47 Margins are compressing for MSB’s, how does using USDC help increase revenues?

47:14 Are users going to use stable coins & can we settle it?

53:05 Next steps, how can we implement USDC as a payment mechanism leveraging RemitONE?

59:48 What procedures and policies need to be in place to enable USDC?

Please let us define the terms blockchain cryptocurrency stable coin and token.

Anthony: So, Blockchain is a word that you’ve probably heard in the news everywhere. It comes from Bitcoin which has a technological system where that verifies blocks of transactions (the blocks come every 10 minutes) and computers all over the world. Right now, in Bitcoin, there are over 5000 computers, called validators, that validate the transactions.

An example of a cryptocurrency is Bitcoin. Cryptocurrencies typically use blockchains. So, the ones you might have heard of might be Ripple, Stellar, Bitcoin and Ethereum. The difference between a stable coin and a token is that a stable coin is typically tied to the value of a currency. So, the one we’re talking about today is called USDC.

USDC is a stable coin issued by Circle Corporation, which is a US-regulated financial institution. It’s audited by third-party auditors. So, these are stable coins, they’re tied one to one. And in theory, you should be able to cash out $1 of USC for one US dollar.

Why Stellar? What, in your opinion, distinguishes Stellar from other blockchains?

Anthony: Stellar and Ripple would have been built up, really to focus on the international cross-border payments. At that point, Ripple was closed source; it was owned by one corporation and was really focused on promoting its XRP token, which was issued mostly to employees, founders and investors in Ripple. Then I compared it to stellar, all of the software was open-source from the beginning, and that seemed to me to be a better platform to build on where you can add additional value.

The volatility in the cryptocurrency markets, as evidenced by the fluctuating Bitcoin value graphs, can make a money service business, which obviously wants prices to be as stable as possible, extremely nervous. How does cryptocurrency as a payment method solution, that BP Ventures and RemitONE are proposing here, address this concern of volatility?

Anthony: Bitcoin and Ethereum are mostly used on these offshore contract-for-difference trading platforms, which are highly leveraged. So people are individual traders are trading at it at a 10 to one ratio or a 100 to one ratio, so you can have 100 bitcoins controlled with your one Bitcoin. So when the market collapses it has a tendency of going up very quickly and down very quickly now. But stable coins, because they’re tied to the US dollar or Euros, they are much better for remittance companies.

If you look at the bailouts that occurred in 2008, when major companies like Barclays and other major institutions went bankrupt, they had to have government intervention to save the whole ecosystem. If you look at cryptocurrency, to give them some benefit of the doubt, it’s still running. There are still transactions clearing, there’s still settlement, and the USSC dollar is still worth $1. So it is growing, and its funds are based on US Treasuries. So they’re not sitting their money in some risky offshore thing. All of their funds are in short-termed US Treasuries. So USDC is safe. With other Cryptos, there are different levels of risk.

What is the next big thing in the ecosystem for remittances?

Jeffrey: I think given the recent announcement of Moneygram’s cooperation with Stellar to offer USDC the cash in cash out, we believe that digital crypto blockchain powered payments is potentially the next big thing in the ecosystem. We’ve been involved in Stellar blockchain for a number of years. I think the fact that MoneyGram has confirmed their entry into this space, certainly confirms that using USDC as a payment mechanism on Stellar blockchain has some merits.

Arif: One of the big problems in remittances is the friction at different levels when you’re talking about international transfers. And any new technology, that can reduce that friction and reduce the cost associated with that friction, is definitely going to become more important as time goes along, especially if regulatory and other concerns can be addressed and delayed. So in that sense, it does appear as though one-to-one-backed stable coins offer a very friction-free international transfer.

USDC – what is it and how does it compare to other US-denominated stable coins like USDT and even CBDCs that aren’t mentioned?

Anthony: There are two main issuers in the United States as regulated institutions, one’s called Paxful, and the other one is called Circle. Its price equals one dollar. It hasn’t really fluctuated from that, in the past four years. It’s managed by something called the Circle Consortium, which is a group of companies that oversee the financial standards for stable coins and ensure there’s transparency around the one-to-one backing. That means for one USDC created there’s $1 held in reserves typically in a bank, or in US Treasuries. Now, USDC is available on multiple blockchains. And this is where it gets a little bit confusing for remittance companies. So there’s multiple blockchains around that are all competing, they’re vying to get adoption by users.

Why should the MSBs the money service businesses use the USDC stable coin as a payment mechanism?

Jeffrey: We believe that there are several compelling reasons why USDC as a payment mechanism is interesting for MSBs. One is that it’s fast, meaning that funds are received within 3 to 5 seconds, versus a payment that you would receive, let’s say, by a card processor that sends us the funds up to 15 seconds after the transaction was performed on the long side. So that’s one reason why we’re advocating USDC as a payment mechanism.

The second reason is that we think it’s better regarding decreasing both fraud and chargebacks. USDC payments are irreversible. And so again, my experience and depending on the MSB, we had significant chargebacks, we had fraud related to customers that would come back and were requesting a chargeback, which ultimately, and in some cases meant that we were out of the money at the end of the day. So this is where the USDC payment as a payment mechanism avoids this.

What are some of the fears the MTOs have the MSBs have about using USDC? And how do we address these fears?

Jeffrey: I think there are probably two particular items that obviously that come to mind. One is regulatory concerns when using cryptocurrency or stable coins. And that basically would be contingent on what jurisdiction the MSB is in and do they require any specific or additional licensing. The second item I would say is in the banking sphere. And MSBs normally are always susceptible to banking relations just in normal times. So certainly, bank relations are precious and MSBs may fear an impact if they offer USDC as a payment mechanism.

From an MSB perspective, as long as they meet the regulatory criteria, all they have to do is sign up with an entity like Circle to gain access to USDC and have this BP Ventures payment gateway enabled for their end-users?

Jeffrey: That’s right. To be able to assist those that have issues getting a USD Circle account, BP Ventures can assist at that stage. But for larger MSBs, yes, we would certainly recommend that they would just open the USD Circle accounts. And the fact that we’re going to have this integration directly into RemitONE means that there’s no setup fee, they’re off and running. And it should be really a compelling new payment mechanism to be able to offer MSBs customers.

What’s different from paying with a stable coin versus these traditional methods today?

Arif: So essentially, the payment process remains the same for the end-user. So, the same flow would happen, when using the BP Ventures gateway for collecting the USDC, it’s just that instead of providing your card details, you would instead be providing the wallet numbers from which the funds would be paid and the wallet to whom the funds are going to go. So, in that sense, the payment process is very similar, there’s not really a great deal of difference in terms of flexibility. One of the things about USDC tokens is that you don’t have to be in the US to use them. You don’t have to have a USD account to use USDC tokens – you could be in any country as long as it’s legal.

And what does using USDC mean, in terms of increasing revenues for our MSBs?

Jeffrey: With USDC, you get the funds immediately, you reduce your charge chargeback and fraud rates, meaning that you’re not at a loss in those areas. So, your revenues basically should go up due to the fact that the fee proposed is either for free or after 10,000. USDC is lower than cards means that your revenues again should go up, because hopefully the transaction is going to be more profitable.

And finally, are users going to use stable coins?

Anthony: So with BP, we have a certain approach that basically we think that an MSB should roll it out step by step. We’re pushing the acceptance of the USDC as the first step for MSBs. The second one is to actually as an MSB sell the USTC. So, customers can come online and actually buy the USDC and you can mark it up. Now the third step that MSBs may do in the future is actually settled with correspondence using USDC. We think that that’s going to happen in the future. We tried it previously, with tempo in the Philippines, we had it working to the Philippines, Nigeria, and Brazil. That worked. It’s just not quite there at the critical mass yet. So that’s why we’re really recommending it as a risk-based approach.

Jeffrey: We think there are a lot of compelling reasons to try it. And we’re going to try to make it from a technical side, as easy as possible as seamless as possible to incentivize people to use it, and to make the financial reason to use it as well, a compelling reason. So, we’re optimistic that it is a very viable way to make a payment.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Video: Compliance and AML for Money Transfers – Everything you need to know

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Oussama Kseibati, Associate Sales Director, RemitONE

Panellists:

Richard Spink, Sales Director, GBG
Gabrielle O. Micheals, Senior Compliance Officer, Nairagram
Imad Chishti, Director of Payments & Compliance, Evantagesoft
Ibrahim Muhammad, Payments Consultant, Finxplor Consulting Services

What are the main challenges facing MTOs regarding compliance and regulation?

Gabrielle: Well, it has to be adaptability. We all understand that countries have different guides, let’s say in the UK you have FCA and in the US BSA. Sometimes when you have certain partnerships with other MTOs in this jurisdiction, it doesn’t keep up because there is that difference. The risk when it comes to businesses is knowing what you want to do. For instance, how can we work to create an effective program and how can we implement this program in a way where it protects us, our service, customers and clients. What I always would put in first is, why do you want to have a risk assessment on your operations. You need to know the first thing that you want to achieve, and that is to detect and prevent your system or your company from money launderers in any way as they always find ways of looking after our abilities, and then using that, to aid our own needs.

What is digital ID? Why is digital ID necessary? How does it impact KYC and AML?

Richard: It’s different now from what it will be. In practical terms, digital identity at the moment is an idea which has been delivered in a few countries, but it’s not global. We’re certainly not at that point where it’s making any difference whatsoever to AML and KYC processes. At the moment in terms of the landscape for digital ID, the processes are delivered in slightly different ways in different countries. Digital ID at the moment essentially means confirming proof of ID proof and address.

At GBG we ran a survey on this a year ago, in which we found for most people that means something like presenting a driving license or a passport. In 10 years we can expect the process to be the same but using a mobile phone number, and email address and a biometric and the biometric that was typically used in that process at the moment is a Face.

Particularly looking around AML Compliance, what are we seeing in Pakistan and the Middle East region?

Imad: We are seeing two major aspects that are creating an impact. One is that ever since this pandemic started, there is a drastic change in customer behaviour. From Pakistan’s perspective, the regulatory estimates that the formal and informal remittance channels are somewhere between $40 to $60 billion. This huge gap between the two channels is what MTOs, regulators and banks have been trying desperately for the past many years to somehow move informal remittances towards formal channels by offering incentives.

The second thing that we are seeing happening is that with the rise of fintech, banks are being challenged significantly. In our understanding MTOs ability to improvise and innovate is much faster than any conventional traditional bank possibly due to the kind of environment that banks are in. The key difference is that banks are compliance and risk driven. So, they will not act upon anything unless they have full assurance from their compliance and risk that everything is by book. As opposed to MTOs and fintechs’ who are very customer-driven.

What is being done to help the clients face literacy in terms of the technological side?

Imad: We feel that changing our customer behaviour goes hand in hand with the motivation, why would customers want to use something new or something different than what they have been using in the past. We have been using different incentives, some incentives are being offered in partnership with the government so there are a lot of lucrative subsidies that the government is providing not just to MTOs but also the customer.

Are E-wallets big in Asia or is that something that’s catching on?

Imad: Two things have revolutionized the financial industry. One is the rise of E-wallets. And the second is biometric verification. So now the whole population adult option is biometric verified, and there are roughly 45 million registered mobile accounts in Pakistan right now from a population of 120 million with an adult population of 70 to 80 million. You can see that compared with 15 or 16 million bank customers mobile wallet density is much wider.

How can regulators balance evoking trust for consumers whilst avoiding stiffening innovation in the industry?

Gabrielle: Well, regulators are awakening key innovations in the industry, and also carrying improvements. We can see some cases where a new regulation comes out it gives new ideas and birth to new technological innovation that comes forward. People are beginning to try different things.

Would you say stakeholders like the Central Bank in the remittance industry have also invested heavily into tech as MTOs and Fintechs have?

Gabrielle: I won’t say they have all adopted the whole culture of being completely Technological. If banks have I don’t think we’ll have many issues and it’s just a case of plugging your API. I think everybody it’s still in the process.

Oussama: I think that’s one thing I look forward to in the future, while things become more centralized and people become open to APIs, it would be just easier to connect everyone. And again, pass information through. So rather than you need to report to the authority every month, your system will simply push that information through overnight. It removes that human error or a part of it. Again, they only have access to that part of the system that they need the information on to see velocity checks and things like that. It’s a positive thing to at least hear that, particularly in your region they understand that technology is the way to go.

What are the individual different tools within IDV?

Richard: Identity verification Traditionally meant physically, or physically looking at a proof of ID in a proof of address document. Lots of businesses will still do that whole face-to-face verification. COVID has changed that landscape. If you think about IDV it’s the process of checking, providing proof of address, and digitising that has delivered two core pieces of technology. Confirming someone lives at their address has traditionally been the quickest way to run this process.

However, it only works if the source of data confirming that someone lives at their address is good, if the data isn’t any good there’s not much point in trying to use that data. All the new technology is around proving identity by using an identity document but also proven to look at as part of that process

Imad: We are developing some data-driven decision tools for making real-time AML decisions, and we are making some tools for real-time customer profiling aggregation of data. We are interestingly working on face verification, and voice biometrics, this is especially important for countries like Pakistan where the infrastructure is not good, the more you go outside urban areas infrastructure is dependent on telecom services.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Video: The Rise of Digital Remittances – How to capitalise?

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Oussama Kseibati, Associate Sales Director, RemitONE

Panellists:

Richard Arundel, Chief Evangelist & Co-Founder of Currencycloud
Assad Alawneh, Owner at Alawneh Exchange
Luke Flomo, CRO of Vyne Payments
Walter D’Cruz, CEO of Moneo Solutions

We have seen a drastic change in the payments industry in the last five to six years, especially in E-payments or wallet payments. In your view, what have been the main developments in the industry. Do you think these developments are to stay? And is the growth of digital payments sustainable post-COVID.

Richard: There’s a lot to unpack in that question. And you’re right, there’s been a load of change over the last five or six years in the payments industry. Firstly, we’ve seen huge advances in core technology. And, in particular, customer trust in this technology. We’ve seen, especially in the MTO and the remittance space, a rapid rise in digital-first MTOs, which has driven more established MTOs to respond by rapidly introducing some conditional initiation funding capabilities. Nearly a third of incumbent remittance companies have now become digital. And the pandemic has obviously accelerated the kind of these digital trends.

I think, on the technology side, more and more of these products and services delivered by technology and accessible by API’s so the menu that remittance companies can choose from has just gotten bigger and easier to read. In terms of mobile banking, as well, mobile apps and mobile banking downloads are going up 50% year on year, and people are preferring this digital method.

Another area where I’ve seen a huge change in development is customer expectation. There was already a rise pre-pandemic as a digital company, but you add on the impact of COVID and this heightened digital expectation and we’ve seen a huge shift to digital products. And it’s driven these traditionally non-digital companies to think much more digitally. So, there’s this new age of competition.

What new technological advances are now being utilized in the digital remittance industry, particularly in your area or space?

Assad: I’d like to talk about the main elements of the technology, which is considered API. I think that the development of the API’s makes significant changes to the industry and to how we connect with partners – we connect with other services and provide the services in a different way. API’s are now a key driver for FinTech and for the payments industry. Without the API’s we wouldn’t be able to provide digital payments or even mobile applications, or payments through the mobile application, sending and receiving the remittances through the API or through the mobile application.

I think as well, this will increase the volume of the transaction because I think FinTech companies, now, their main development they have is the API because they can connect to any other service providers in the industry. Through the API’s, we can even improve the customer journey with the service. So, we have been able to provide payments through them with the application because we are able to connect to payments because if you want to provide a mobile application, for example, to send my resume by application, you need a way to pay for the transaction through your bank account or via the debit card. So again, this is connected through the API’s, and this technology as well.

Where does open banking fit into all of this? How does it work? What are the benefits for money transfer businesses?

Luke: The UK open banking framework that’s been created has helped in many respects, and gained access to payments infrastructure. But I think one of the key problems is the fact that the banks today aren’t incentivized to open up their back end in terms of all that information and data, because they’ve spent years and years capturing it. And now essentially, PSD two, as stipulated, they need to now open up all that data for free. And I think one of the big points that we need to work with these organizations from a FinTech perspective across the board is how do we help them to monetize that data to a certain extent, and how do we then consume it in a really accessible way, that means that we can reduce friction for a consumer.

I think one interesting fact is that about 80% of the UK population have now got a smartphone and about 78% of adults are now digitally banked, and 14 million of them have got a digital-only bank account. So, there’s a real demand for this as a utilization of payment infrastructure. Many of you may be aware that open banking hit the 5 million consumer mark. So, consumers are utilizing this type of technology on a day-to-day basis. It’s now up to us in our costs across the globe to start allowing consumers to utilize this payment method in all the different use cases and scenarios.

How can employers leverage technology to expand their networks without necessarily having a presence in that country?

Richard: I think, firstly, if you’re looking at expanding your network, one way to do that is expanding the number of kinds of pay-out corridors or countries you can send money to, which ultimately expands your user base within the country that you’re working in. The second way you can do that is maybe looking at collections as well as payments, for example, we talked earlier about the current rise of e-payments or e-wallets. And thirdly, partnering with companies who can use technology to leverage their licenses and the compliance and their regulation, which enables you to expand on a global basis without necessarily having a presence in the country.

How can crypto and blockchain assist NGOs in facilitating cross border payments?

Walter: Firstly, I sat and watched the first panel today, the first session on digitalization and, you know, a lot of that crossed over to what we’ve been talking about today, which leads me to believe that actually it’s not about crypto and blockchain assisting MTOs, it’s about how they’re going to migrate into the digital world. And blockchain is just one technology platform that will support that move.

However, in today’s world, the cost of compliance is getting higher and higher. And that’s where I see crypto coming into it, in terms of reducing that cost of compliance. In actual fact, the cost of sending money or moving value is going to get cheaper and cheaper, yet the cost of compliance is going up. So that’s where blockchain can assist, it’s not so much in the transfer of value, because it’s a currency right? The value is whatever the market perceives to be. What can you include in that blockchain that will enable better compliance, better transparency, and therefore fewer people or humans touching it, therefore driving your costs up?

Oussama: I think one of the issues with Bitcoin was people are not using it as all it was built for – as a currency. Now it’s obviously more of an investment. And that’s where we see the volatility of it and of course, what’s happened. If crypto is pegged to a fiat currency, then absolutely. But then we get into the question of regulation; is there enough regulation? Is there going to be more regulation? Is it going to help people bypass some sanctions?

What are the critical questions when evaluating a payments vendor gateway provider that we should be asking?

Luke: It really depends on what you’re trying to achieve. In essence, I think most organizations are looking to acquire new consumers, retain existing consumers and make life as simple and as easy as possible for both the consumer and themselves in terms of working practices and UX and UI. So, I think the key thing you should be thinking about or contemplating when looking at a payment gateway and acquiring a vendor or an alternative payment method is where am I operating? Where are my consumers based? And can that organization support me in those specific territories, either with local payment knowledge, insights, data, as well as connectivity? If you’re operating outside of the UK, there are other alternative payment methods to the likes of credit cards, debit cards, and e-wallets, and there are specifically wallets and payment methods in certain territories.

So we know that regulation is one of the biggest challenges in the industry, what new tech is out there to overcome these challenges? Specifically focusing on fraud as being one of the biggest challenges.

Assad: I think for the regulator how do you identify the customer, and if you go back to the rational way where the customer will come to you and present his ID and you can see him in front of you face-to-face, and then you can know this customer is the one dealing with you. And when it comes to digital payments and online payments you have to identify the customer digitally. In order to identify your customer online and have the data available, you can verify the ID verification, you can do it online.

Now, we can do video conferencing, and you can do even voice authentication in order to identify your customer. There are also companies providing the service – again, without the API’s, you will not be able to do this online verification and online customer KYC. Regarding fraud detection, I know they’ve been using big data optimized to analyze the fraud as well. I think artificial intelligence as well as is being used to identify fraud just from legitimate transactions for legitimate customers as well. As I said the video conference can take a live selfie in order to make sure that this person is the same person. So, there’s also technology now helping us to identify customers and again, to be compliant with the regulators and to avoid fraud as well.

Oussama: In terms of regulation and transaction marginal what’s interesting is it depends on which region you’re in. But what also looks quite interesting are the steps that each region has been taking or will have not been taking. As an example, in Jordan, they don’t request any particular reports, they just request if there have been any suspicious activities. Whereas on the other hand, I know that the FCA in the UK do request a specific report and it has to be at those specific intervals. Furthermore, in Dubai, they’re coming up with lots of new regulations, but they again asked for specific reports in specific formats.

Additionally, with AusTrack, the regulatory body for Australia that we’ve built into our system, now produces the AusTrack report and posts it straight to their website. I think it’s quite good because they’ve made those APIs available, so they’re trying to make compliance a little bit more attainable. And again, getting that information directly from the MTO themselves by being able to post that. I just think it’s a much neater way and it opened up the market for people because if they’re abiding by these regulations, that’s fine. So that was what was supposed to happen with PSD two, everyone’s supposed to abide by PSD two, and the banking was supposed to open up for everyone, which unfortunately didn’t happen.

What does the future look like? Will cryptocurrencies replace major hard currencies in international payments?

Walter: I don’t know what the future looks like. No, it changes every moment. But certainly, in certain corridors, crypto or digital currencies will replace hard currencies for international payments or remittances. Whether it be central bank-issued digital currencies, or the likes of Bitcoin, or some specific tethered or stable coin, a token program, most definitely.

But, I think it’s inevitable. It’s going digital and you can’t stop that. I think the big challenge is it isn’t going to replace hard cash in the High Street, no chance. Certainly not in the developing countries where cash is still a big, big way of paying and exchanging goods and services. That’s not going to replace cash, but certainly in developed nations like Europe and the UK.

Richard: I think the underlying technology is really interesting. I also think it depends on time horizons. In the last few years, maybe crypto has been a solution looking for a problem. I think it’s about time now that certain cryptocurrencies or blockchain technology go more mainstream. And you’re going to see more applications for it. And I think there are definitely solutions out there that can use a blockchain-driven solution, whatever crypto or stable coin that might be.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Video: The International Money Transfer Market – Challenges, trends and opportunities

Continuing our recent discussions exploring the evolution of the remittance sector, RemitONE hosted their IPR EMEA event on 2-3 March 2022. The 90-minute panel session centred around the enormous rate of change over the last few years in the money transfer market, resulting in new technology, higher customer expectations and endless opportunities for MTOs.

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Aamer Abedi, RemitONE

Panellists:

Elizabeth Rossiello, CEO & Founder of AZA Finance
Hasan Fardan Al Fardan, CEO at Al Fardan Exchange
Leon Isaacs, CEO & Founder of DMA Global
Alex Orechoff, Financial Services Vertical Growth at Worldpay from FIS

The World Bank reported remittance flows grew by 7% in 21, and declined by only 1.7% in 2020. This is despite the severe global recession caused by COVID-19. What factors do you think have contributed to this growth?

Leon: The first point in the question is about the resilience of remittances. The people who are sending remittances need to send money and to support them both with consumption and investment needs. And that need doesn’t just disappear. In fact, it probably increased during COVID times, as families back home, found it even harder. So it really meant that people who were sending money were even more committed to finding ways to do it.

One of the key things is the changing ways in which money was able to move. So the shift to digital has clearly had quite an impact. And now every company that makes any pronouncement on remittances, is always talking about their digital strategy, how that’s making a change in what they’re doing. And I think this focus has really helped to actually bring more some more people to the market.

Hasan: I very much echo and agree with a lot of the sentiments obviously, you know, the market that we predominantly serve is the second-largest market in the world. And obviously, the organisations that had a higher degree of digital preparedness, I know people talk about transformation, it’s a big buzzword. But ultimately, it needs to translate to some degree of digital preparedness – companies that were definitely much better prepared, and benefited from drastically converting traditional cash business into a digital business.

The biggest risk with a sector is the lack of regulatory oversight, and you don’t have the benefit of robust KYC, AML, and general compliance framework, so something that we’re definitely addressing at the industry level.

Alex: What Leon was mentioning as well, is that a lot of what has happened, thanks to COVID is that people have been introduced to new digital options, and that has forced companies to really innovate quickly and offer a lot of different avenues that people were not necessarily curious about before. It hasn’t been the best onboarding experience for people, because we’ve been just trying to get everything online for our partners as quickly as possible. And it’s not necessarily the most efficient.

Elizabeth: We process for over 28 of the largest remittance companies out of and across the African continent. And already six years ago, one of our fastest-growing operators launched a corridor into Nigeria, digital-only, and it was the fastest-growing product they’d ever launched. Before that, they were a cash-only agent collection remittance company, mainly out of North America.

So for me, I don’t know why we even use the word digital, because it’s what is remittance without digital at this point? And what are financial services without digital? So, you know, we don’t even think, to work with companies that don’t have a digital offering. It’s like saying, “what is digital banking?”, everything is digital these days. And we need to go beyond that. It’s not just how to get things digitised, it’s how to streamline operations and optimise in a world that’s so fast-moving.

From a technology solutions perspective, there is literally a 100% shift to digital. But is it still fair to say that there is still a lot of emphasis on cash? How do we reconcile the two comments here?

Elizabeth: Well, first of all, even cash networks use digital verification networks. I mean, nobody picks up cash with a paper slip anymore. Nobody goes really into the bank with a printed out terminal, you’re getting a mobile code on your phone, and then you’re going to the cash agent network. And the cash agent network is dominated by mobile treasury and float operations that are digitised. And if they’re not, they’re not going to work.

So I think the companies that aren’t thinking about that, from a user perspective, from a mobile perspective, are missing out. And again, it’s not just the app, it’s also the cash management, the operations, the treasury management.

What is it like in the UAE? Do you have some data to share about this channel cannibalisation from cash to digital? Is it supporting what others are saying?

Hasan: Now there’s a very large uptake and a very large migration from traditional cash to digital and the rate of growth is very aggressive. However, cash is still very much dominant, from numbers that I have seen still around 70-80% of the market is still operating on a cash basis and it’s not necessarily because of the lack of availability of digital solutions or digital touchpoints. As an organisation and I think as an industry as well we hear a lot of emphasis on digitally-driven financial inclusion, but digital inclusion doesn’t mean that you exclude the cash customers as well.

So the future is definitely digital and the migration is definitely much higher and it will continue to accelerate in the coming years, but I still see it being relevant in the medium term.

Aamer: So you have regulatory pressures, of course, for example in the UK and Europe there is a lot of pressure to go digital. So if you’re a cash-based business the regulator just makes the landscape really hard for you to operate. The companies that collect cash from the agent shops etc are dominated by a single player which doesn’t make it conducive for other participants to participate in a fair manner.

Based on the research data that you have access to, is there a market out there where the consumers are refusing to go digital and want to carry on using cash? I know there are a few regions that showed a lot of reluctance.

Leon: I think that it depends on which region of the world as to how fast it gets there and I also think it depends on your time horizon. Some parts of the world have been going 10 years or more using various digital services and the benefits to the users are normally so self-evident you do wonder why people don’t change, but there are a lot of cultural and historical factors.

Also, we have to remember a lot of people in the world have come from countries where they haven’t necessarily had significant amounts of money themselves and also, they haven’t trusted governments or local banks – they think governments may have influence over banks or banks have collapsed and so. There’s still a generation out there that has deep mistrust in anything that’s not physically in their hands or in somebody else’s.

When cash is still king for domestic payments, it is very difficult to then accelerate international payments to make a real dent. So what we need to do is continue to encourage domestic adoption and then the international will flow much more easily.

Alex: What it pulls down to are habits and trust. Anything you have to change a habit is a point of friction, it’s not something that you want to do or you feel comfortable doing, even if all the logic says that you should be doing this new habit. It’s just human nature. So if you’re using cash most of the time chances are you’re going to prefer to do cash in this transaction, and you have to have a really good catalyst to push you off that previous habit in preference.

Aamer: So basically, the panel of experts here feels that the statement ‘cash is king’ is an overstatement. The rate of transitioning that’s happening right now from cash to digital is happening at a pace we hadn’t imagined, it’s so rapid. One of the big three players, I think close to 30/35% of their total remittance volume is digital. Contrast this to 3 years ago when I was in one of the conferences, digital was over 5%. So over a period of three years, one of the big three players’ digital remittances have increased from 5 to 30% which is significant.

From a payments industry perspective, what do you think is coming next?

Alex: One thing is how do we make a frictionless experience for customers and how do we enable that? How do we enable people to grow quickly into the corridors that they want to be in? And how do you ensure that you can have a real-time treasury in the future? Because that’s obviously one of the biggest challenges that a lot of remittance companies have today.

We’ll definitely see greater use of cryptocurrency and CBDCs, but thankfully that’s a ‘future us’ problem – I would say that’s more of a 5/10-year pursuit, depending on where the various central banks are going, in which case we are going to have to think about what are the other things we offer to expand our breadth of products and to add more value to our various customers on the side of paying in but also on the side of paying out.

Can you just define ‘Super App’ and then we can discuss what we mean by this all-encompassing mobile app?

Aamer: There’s a new buzzword we’re hearing ‘Super Apps’. I was in Saudi Arabia a few months ago and I was using one of these taxi services like Uber, Kareem, Bolt. One of them was offering something interesting – they were offering on the app the ability for someone to order a nurse and they would send a nurse within 24 hours to do a Covid test or a PCR test etc. and this is all happening from that one ‘Super App’ if you will, and that’s the buzzword here in our industry.

A lot of these new companies from neighbouring verticals/peripheral industries have an established customer base and they are always thinking of generating revenue from new sources and remittance becomes the obvious choice. It’s a case of APIs. The API these days, from technology vendors especially, are so sophisticated that it’s just a case of plug-and-play. So if you have an existing app you can simply plug into RemitONE’s API and take advantage of the services they have through the API so there’s not much work to do.

Alex: That’s where you’ll see that as a key thing and it also happens to be because you trust the brand that is all-encompassing on that ‘Super App’ – we trust Kareem because it gets us from point A to B and therefore anyone they’re selecting is probably going to be trusted as a result. So that’s the big benefit of the ‘Super App’ that you mentioned there.

Elizabeth: We’ve had digital ‘Super App’s for over 8 years over the African continent and AZA launched the first ‘Super App’ which went from just mobile money wallets to offering health services, government payments and even some banking services. It even had a white label for banks to use as well and what we saw was a real success for services that were adjacent to its core business, but services that were too far off like the medical services ended up being replaced by companies focusing on that.

So for companies that are coming from the traditional brick and mortar space, they’re facing even more of a challenge for them to launch something so agile. What we also recommend for customers that want a white label is to work with companies that know what they’re doing like RemitONE. They have a great product it’s a white label product but maybe think about devoting a team to just doing that.

What obstacles or challenges do you see along the horizon what do MTOs or exchange houses in the money transfer space need to prepare for now?

Leon: One of the obstacles is if you’re not doing a fully digital solution now then either you’re too late or you need to do something immediately – you’re probably too late, but if you’re not doing anything that’s probably the biggest thing.

I think we also have big problems still with de-risking. I know we’ve probably been talking about this at conferences since at least 2012 if not before and I think it just rears its head in a different form.

It’s one thing of course to say that we want to go digital but actually doing the transition is a challenge in itself. As a very successful organisation in the Middle East, what are your thoughts on this? What are the typical challenges an MTO would face as it transitions?

Hasan: You have to start from the perspective of the UX and I echo some of the comments from my colleagues here, provided you can deliver a seamless customer journey generally that really is the basis of transitioning your customer base. I would say players have different degrees of success, of how well they can execute that. You are seeing an environment of offline margin, you are seeing an environment of increasing compliance costs so really only the highly compliant and highly competitive and highly agile businesses will continue to succeed.

Who do you see winning the ‘Super App’ versus Marketplace battle when it comes to accessing financial services?

Alex: It’s going to depend on what other aspects of the market we’re talking about, so there are going to be situations where the ‘Super App’ is going to be preferred – either because that is the place where there’s the brand and the trust. Or that that’s where they’re getting other services that they prefer to use because it’s all of them in one place. It’s easier to just accept that I’m going to have a higher price or that I trust I’m going to have a better price for my remittance through the ‘Super App’.

Elizabeth: I think the marketplace where you’re going online is not something that the younger segments are using so we’re not seeing that inherent in the youth population, so I think customer segments are pretty split depending on age and just digital nativeness.

Leon: I think it ultimately comes down to who owns the customer and if you’ve got the right product. I would tend to lead towards a ‘Super App’ having more to offer than a Marketplace by definition, unless you actually own the customer accessing that Marketplace then you’re going to be challenged.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

Predictions for the Money Transfer Industry in 2022

Recent years have certainly reshaped the world of money transfers. The pandemic presented new challenges and the industry responded with innovative solutions. In 2020, we saw a great demand for mobile and online payments, driven by Covid-imposed restrictions worldwide – an astonishing 62% of banking customers considered switching from physical to digital platforms in 2020 alone [1]. It’s clear that this pace of change is showing no sign of stopping, so let’s explore the new trends and our predictions for 2022.

Cash v Digital: The Consequence of an Age-Old Question

An answer commonly sought in the money transfer space is whether the competition between cash and digital money transfer finally has a winner. Although it’s clear that cash isn’t going anywhere yet [2], digital remittances are continuing to rise, even outside the peak of the pandemic.

Customers and Money transfer Operators (MTOs) alike value convenience, security and cost-effectiveness; all of which can be easily offered by mobile and online payment systems. For example, eKYC, digital AML, payment gateway and other 3^rd party API solutions solve regulatory issues and give instant access to remitter, beneficiary and payment information. In addition, they also allow for changes to exchange rates while offering transparency to supply chain members and automating manual tasks.

As more MTOs enter the mobile money transfer space [3] – and the number of people with access to mobile devices increases [4] – digital money transfers will continue to evolve and thrive. This evolution has already made the role of technology solutions providers in this space mandatory. As a consequence, we predict we’ll be seeing these providers become a permanent part of the supply chain landscape.

Rise of Money Transfer Machines

Over the past 2 years, the money transfer industry has witnessed an array of technology features – that normally would have taken years to develop – reach the market within just a matter of months. Features such as Artificial Intelligence (AI), Big Data, Blockchain, Digital Wallets, Machine Learning (ML) and Open Banking are all entering the money transfer space. As a result, the role of technology solutions providers is becoming a mainstay in the landscape, and we can expect 2022 to be the year where these features are implemented.

The Uptake of Blockchain Technology

Most recently, there has been an increased use of blockchain-based technology for cross-border payments. The decentralised nature of blockchain not only speeds up transactions and reduces costs, but also has inherent security features which are tough to breach [5]. In addition, blockchain technology has an innate value that can eliminate the need for pre-funding in money transfers. Consequently, it can eliminate the biggest stumbling blocks for fintech start-ups in the money transfer space.

Open Banking

Another feature we’re currently seeing increasingly utilised in Europe is Open Banking. With the ability to connect banks, technical providers, aggregators and other 3^rd parties, Open Banking has allowed for a more seamless, transparent, secure and cost-effective experience for individuals.

Open Banking-powered money transfers appear to be improving the entire customer experience, reducing transaction costs and processing speeds in comparison to more traditional methods of payment. With the growing demand for improvement we’re currently seeing, it comes as no surprise that this is one trend we’re expecting to thrive.

Mobile Wallets

We’re also expecting that the definition of a mobile wallet will change in 2022. Whether it’s a send or receive market, the wallet functionality will add a host of services, including utility bill payments, airtime top-ups, micro-loans and wallet settlements. The digital wallet is en route to becoming a universal mobile bank account, through which all daily transactions of varying types will occur, regardless of where the individual is based.

What can we expect now?

Companies from neighbouring verticals such as hospitality, travel and telecoms are considering diversifying their product and service portfolios. Telcos, for example, are exploring ways to offer their own proprietary wallet with a variety of features, including money transfers, to customers. Taxi businesses are a further example of companies that are opening up remittance channels, so their drivers who are paid into wallets can send money directly from the wallet to their loved ones.

As a result, we can expect new alliances between previously disconnected verticals to take root. We can expect a rise in more Fintechs using a plug-and-play model to deliver a new breed of services involving money transfers. And finally, we can expect more aggregators to facilitate open-loop payments with instant delivery times.

To conclude, the main thing we’re predicting this year is diversification. From Open Banking and digital payment solutions to the coming together of firms from different verticals, we’re predicting more opportunities for Telcos, retail shops, MTOs, aggregators to deliver value to the customer through the digital wallet. The customer – the individual with a digital wallet – has never been in a better position to avail a variety of fully transparent services at cost-effective rates.

References

[1] https://newsroom.mastercard.com/eu/documents/mastercard-evolution-of-banking-2020-infographic/

[2] [3] https://www.remitone.com/ipr-report-2021/

[4] https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/

[5] https://www.ibm.com/uk-en/topics/blockchain-security

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Online Event: Innovation in Payments and Remittances 2022 – Europe, Middle East and Africa

Video: Trust vs Innovation – Finding the regulatory balance for a stronger Money Transfer sector

Continuing our recent discussions exploring some of the challenges and opportunities being faced by the remittance sector in these uncertain times, RemitONE hosted a webinar on the 24th of June 2021 regarding trust vs innovation in the money transfer sector and finding a strong regulatory balance. The panel was made up of experts from both RemitONE and our friends and partners in other global companies. In case you missed the webinar, here is a summary of the key insights.

Webinar moderator:

Aamer Abedi, CMO, RemitONE

Panellists:

Ibrahim Muhammad, Payments Consultant, RemitONE
Kathy Tomasofsky, Executive Director, MSBA
Farook Al-Jibouri, Founder and Executive Director, Cyber Code Technologies

The financial services sector has always been one of the most heavily regulated industries but what are the key compliance regulations and challenges that we commonly see across all jurisdictions?

Kathy Tomasofsky: I would say that one of the most important things we see across all jurisdictions is rules concerning your customer (KYC). They may vary in different areas in terms of the level of detail, but all of the regulations ask for the companies to know their customers to prevent money laundering. The second area is risk management. As you enter into the business, understanding your customer profile, understanding the risks, and setting up the appropriate controls in order to effectively do business.

Ibrahim Muhammad: In terms of the ongoing situation; the pandemic had led to a lot of changes and this has pushed regulatory bodies into leaning more towards digital. However, in some markets, people might not have been able to adapt due to lack of infrastructure, so there have certainly been challenges. Broadly speaking, in terms of common regulations we can put it into two baskets: One is the AML (Anti-Money Laundering) and the other is the compacting of terrorist financing. In both these instances and in all jurisdictions, it always comes down to KYC, transaction monitoring and sanction screening.

Farook Al-Jibouri: Particularly when it comes to the Middle East, we do share the same difficulties globally but there are other unfortunate issues and circumstances unique to the region. What I see after the pandemic is a greater diversity when it comes to the Middle East and the level of maturity in the adoption of transformative financial services like Fintech. Some countries have been eager to jump on board but others are still living a hundred years in the past. Still, it’s a cash market where regulators have minimal impact when it comes to controlling the environment. This is what’s driving different regulators in the region to adopt more of a regional approach. The Middle East is ultimately a hot spot when it comes to AML and anti-terrorism. In fact, we are very much leading the way in those areas. The challenge, however, is in how you control different regions and balance them equivalently when there is such disparity in terms of digital adoption.

Is it fair to say that regulators are all for innovation in the Middle East? And is it also fair to say they are taking a lot of inspiration from UK and European regulators?

Farook Al-Jibouri: That’s a complicated question that I couldn’t really give one straight answer to. As I already said, the level of diversity in the Middle East is enormous. There is, however, global pressure from other regulators to bring all of the countries up to the same level and in some cases, those local regulators are simply not doing their jobs. Political complications are slowing the adoption of digital in some situations too. Again, it depends on the specific region. In Saudi Arabia, for example, it was announced recently that the first completely digital bank has been officially licensed by regulators.

Aamer Abedi: I know that when it comes to supporting Fintech start-ups, there is a lot of government support for these businesses in the UAE and Saudi Arabia. Is it fair to say that regulators from the UAE and Saudi Arabia are helping to lead the way in terms of pushing innovation? Perhaps. I believe they are also taking a lot of inspiration from European and UK regulators.

Kathy Tomasofsky: While the Middle East may have different regions that are working at different levels, here in the United States we have forty-nine different entities within a federal regulation and it’s very difficult to navigate. It’s a complex structure and it varies from state to state. For example, the state of Wyoming is very friendly to blockchain and virtual currency but you’re not going to see that in every state.

How far are we from the ubiquitous federal money service license like you have in Europe in the US or the Middle East?

Kathy Tomasofsky: As far as the US is concerned, I’ll answer that question in two parts: The first part is that over the last two years, there have been some movements towards harmonising on a single license. There are currently twenty-nine states that have bonded together. So, if you’re a start-up company and you come into the states, you can have what’s called your level one documents; your financial statements and business plan. These will then be reviewed by a particular assigned state and the twenty-nine other states will say “Okay, we’ll accept these” and it’s as simple as that. Also, we’ve been working with other regulators on harmonising the money transmission law. We expect to have a draft of that sometime this summer, so perhaps beginning in 2023, 2024, we may see a more uniform law.

Farook Al-Jibouri: In the Middle East it can go in different directions. In some countries, opening a bank is extremely easy and in others, you simply can’t do it because the number of banks versus the market has already been defined by regulations. If there is any kind of new license or sub-license, it would be given to the established banks. In other countries though, we are starting to see the licensing of newer digital banks.

How are we doing in terms of open banking in the UK, US and the Middle East?

Ibrahim Muhammad: It’s interesting to see how the US market operates across states. Now, with the UK of course, we’re following the PSD2 standard, and from there we now have open banking. We are enjoying the benefits of PSD2 and though we don’t have passporting rights in the EU we can still redo the applications since they follow the same regulations. So that makes it easier for companies in the UK who would like to expand into EU markets.

Kathy Tomasofsky: In the US, I would honestly say we’re not there yet. There are indirect discussions coming through but we’re not in those open banking discussions like the UK has at this point.

Do you feel that the money transfer industry always plays second fiddle to the payments industry?

Kathy Tomasofsky: I think the introduction of digital and Fintech has made the government more supportive of the whole idea of global payments, whether it’s consumer to consumer or business to business. The fact that remittances fall under that umbrella gives us that support. In general, though, I think it’s more that the banking industry is less inclined to be supportive. It’s very challenging for a company to get a bank account here. There are some things that passed this past January with regard to the strengthening of AML programs and some items there that may help as far as de-risking is concerned, but that remains our pain point here. During the pandemic, these remittance businesses really were a lifeline for many US constituents, and I think that that helped to strengthen the profile of the companies as well.

Post-Brexit, has the government’s stance changes towards the MSB sector? Are they viewing us differently now?

Ibrahim Muhammad: Not exactly, in fact, the FCA has been quite open to supporting innovation in this space and that’s why they were opening up to a lot of Fintechs and new players establishing themselves in the UK. So for the UK specifically I’d say the government has actually been quite supportive.

The concerns that regulators cite can often be addressed by technology. What areas of technology are there in the industry that ensure we meet compliance?

Ibrahim Muhammad: They look into different areas when it comes to transparency; they look into the complaint handling process, incident reporting and the overall system checks and controls you have in place. Of course, AML is one component, so when they do company assessments, they cover all those areas. This assures them of how transparent that entity is towards its customers.

Farook Al-Jibouri: In the past six to nine months there has been a wide deployment of technological systems all across the Middle East but one of the problems is the lack of data. Certain countries probably have a full database but others do not and when you don’t have that database you have to rebuild it. As far as compliance tool deployment is concerned, in some countries, AML is being deployed and pushed by certain regulators but with a specific mandate rather than certain standards. Adopting these systems is definitely going to help in reducing the bureaucracy in the process. Because using certain technologies such as AI and blockchain we can see compliance happening on the fly through automation, rather than being checked manually or via a certain bureaucratic process.

In terms of technology, the US is the most powerful nation on Earth. But when it comes to our payments industry, the US arguably can’t compare with Europe. Why is this the case?

Kathy Tomasofsky: In the US, each state has its own perspective on what’s the best way to serve the consumer. Also, in defense of the regulators, there are so many new kinds of companies and technologies they have to keep learning how to regulate properly. If you look at Bitcoin, for example, some states are regulating virtual currency and have specific laws on their books while others are covering it under general money transmission and some haven’t even taken a pass at it yet. Ultimately, we have lots of interesting products that are being developed and the regulators need to understand what they are, how they work, where is the money going, who holds it, and how to protect the consumers. Then there’s the fact that, at a big-tech level, both sides of the administration are sceptical of companies like Facebook and Google and what they will bring to the US.

Aamer Abedi: It’s not just scepticism at a government level, it’s the big banks too. I know Jamie Dimon, the CEO of JP Morgan Chase is very anti-Bitcoin. You can see these large investment banks being very anti-crypto, but I heard that some of these investment banks have already started preparing proposals for their own cryptocurrencies.

Facebook applied for a money transfer license in Spain a few years ago so you can now use WhatsApp to send money. You have companies like Apple and Google that have money transfer licenses and they’re operating under some sort of regulation. So, should our industry be worried?

Ibrahim Muhammad: The tech giants are definitely jumping into the remittance space and from what I see in the UK and the EU they will have a fight on their hands with the established players. Now, it depends on the approach the big techs take. They might acquire one of the large players and then enter into a partnership or it could be that they establish their own remittance identity since they have a huge customer base to draw from.

Kathy Tomasofsky: In the US I do think that, to some degree, we will see some of the smaller MTOs either disappear or merge with others due to the cost of compliance and licensing. But we’ve also seen in our market research that the selection by a consumer for a particular MTO is often done out of loyalty and is not just price based. I think we’ll see that with age, the younger consumer who’s grown up with technology will be that consumer who is more inclined to go to an Apple or Google Pay transmitter because they will feel a certain loyalty. Even here in the US, in traditional banking, we’re seeing that generation not having traditional bank accounts.

Farook Al-Jibouri: When it comes to the payments industry, what’s happening with the gigantic tech firms is very noticeable and not only in the US. If you look towards China, for example, WeChat predominantly controls the exchange of money over an instant message application and I do think that Facebook took the approach they did because of the success of WeChat. In the Middle East, we don’t have tech firms, but we do have telecom operators who know the technology, and those operators are actually very forward-thinking in terms of bringing those digital wallets and instant money transfers to their customers, particularly in parts of the region where they can get around regulations.

What do you think are the top compliance priorities in the post-pandemic age for any MSB?

Kathy Tomasofsky: In the post-pandemic age, we have seen such an increase here in the US in the remote work area. So security is a big compliance priority for us. We’ve seen specific states here in the US; New York and California, for example; where companies are required as part of their AML program to define what their security requirements are. We’ve seen an abundance of new phishing scams and email fraud here too, so that whole concept is important.

Ibrahim Muhammad: The top priority would be to keep things running steadily despite all the disruption. Because the pandemic has really given rise to something unprecedented. We all know has it has accelerated digital adoption. So, from a compliance perspective, I would say we need to keep pace and adapt to the latest technologies while ensuring that we cater to the needs of the people.

How do we build trust in the industry now, given where we are?

Farook Al-Jibouri: One of the things the ecosystem needs to be ready to build consistently in a post-pandemic world is communication. We all realise now that physical communication is not really there anymore. For example, here in the UAE, we’ve been working with financial companies located a few blocks from here that we’ve never met face-to-face. So, modern communication will be key in re-establishing that flow of data between the technology provider from one side and the receiver from the other side. Also, post-pandemic, you have to be agile with whatever challenges the financial system throws at your feet.

Ibrahim Muhammad: Trust and innovation shouldn’t be competing; they have to go hand-in-hand. Regulatory bodies need to understand what innovation actually brings to the table and how they can ensure that this innovation does not cause any sort of issues with the consumers or stakeholders. It has to be a balanced approach and they have to work in a very collaborative manner. Regulatory bodies need to be more aware of what’s happening in the innovation space, and they should really understand the needs and then set up the regulations accordingly.

Kathy Tomasofsky: I think you have to build trust and communication but I would also add education into the mix, and that goes back to my earlier point – the regulators have so much coming at them that they need someone to help facilitate it all. At MSBA, we represent the services of eighty different companies; from companies that sell prepaid cards to small MTOs. Being able to present such a diverse group to regulators helps to accelerate that communication and education, and helps to build trust.

Our thanks to Kathy, Ibrahim, and Farook for their words and their time.

RemitONE’s award-winning compliance platform is used and trusted by leading banks and money transfer operators (MTOs) all over the world. Our Compliance Rules Engine™ is one of the world’s first business rules-driven compliance platforms. You can simply input the rules set by your regulatory authority and the engine uses its sophisticated algorithm to enforce them.

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Video: Perspectives on Digital ID – What the future may look like (eKYC and AML)

Continuing our recent discussions exploring some of the challenges and opportunities being faced by the remittance sector in these uncertain times, RemitONE hosted a webinar on the 24th of June 2021 regarding the ever-shifting perspectives on digital ID in the remittance sector, particularly in light of the COVID-19 pandemic. The panel was made up of experts from both RemitONE and our friends and partners in other global companies. In case you missed the webinar, here is a summary of the key insights.

Webinar moderator:

Saiful Alom, Head of R&D at RemitONE

Panellists:

Richard Spink, Sales Director of Channel and Partnerships, GBG
Osama Al Rahma, Head of Business Development, Emirates Bank
Reynell Badoe, Payments Manager, Stanbic Bank

Why is digital ID important?

Osama Al Rahma: Digital ID is of course incredibly important through its use of KYC (know your customer) and the ability to identify the customer. In fact, it’s largely through the use of digital ID that we have been able to protect the financial regime from crime on a wide scale. The shift towards digital already started pre-pandemic and has only increased in recent months. No longer are banks encouraging the use of traditional brick and mortar branches. Instead, they are relying heavily on their digital offerings, which by default means that the ability to identify the genuine user of such services is more effective. We’re also seeing a shift to digital with eKYC (electronic know your customer) on a much larger scale when it comes to remittances. This will allow us access to machine learning with Artificial Intelligence, which is incredibly powerful when integrated with real-time streaming. Using this technology, we’ll be able to conduct more diligent processes within transaction screening and monitor the behaviour of certain users in greater depth. For the sake of financial security on the compliance side, this is incredibly important.

Richard Spink: At the end of the day, digital ID reduces compliance costs so it’s always going to be important from a purely financial perspective. However, there is no widely regarded standard for digital ID so far, at least as far as MTOs are concerned. What MTOs have generally been using as the core tenants of their ID is proof of identity and proof of address, which are attributes that can be used by financial services around the world. Of course, a standard would be ideal, but as there are so many different regulations in different countries, this is unlikely to happen anytime soon. As an aside, it’s worth noting that while Revolut has a lot of customers, they’re not profiting very well and the reason they’re not making enough money is supposedly due to the cost of compliance. Digital ID will help businesses globally and save money on the process of knowing who their customers are and the cost of compliance as a result. And I think the technology to do this already exists.

Saiful Alom: It would be ideal if there was a way to digitally identify a person, ensuring that they have met all KYC and AML needs. However, due to the world we live in, there are a lot of complications to work around.

What is the adoption of digital ID like in your respective markets and has COVID accelerated your options?

Reynell Badoe: From a Ghanaian perspective, if you look at the stats, the number of people with access to the internet is proportional to the number of people with access to so-called big data. Having access to the internet means giving up your information and as a result, you also have access to financial services and remittances. It’s a worthwhile trade-off for most. However, there are 1.2 billion people in Africa, and only a handful have access to the internet. While COVID certainly things and meant there had to be a quick adoption of digital money transfer channels from traditional methods, we still have a lot of catching up to do digitally. With regards to how? The pandemic has meant more people have had to use data platforms and open mobile wallets, creating a digital shift of necessity, so the groundwork has already been laid.

Have there been any challenges in terms of Trust Private Security?

Osama Al Rahma: Trust, privacy and security are the three main pillars when it comes to finance and that will never change. The challenge is that by the time that technology evolves, different unforeseen issues tend to arise. For example, using AI for facial recognition might be incredibly convenient when it comes to opening your phone with a glance but the negative consequence is that it is another means for fraud to occur. When we speak up about this, we need validity.

Saiful Alom: In terms of Trust Privacy Security, this is a concern for all of us as consumers – particularly seeing as online services have been adopted at such a large consumer scale since lockdown began. Trust has increased in these online services and so consumers use them more regularly. However, there are many issues to consider and chief among them is privacy. Because your data is a lot more venerable now and consumers transferring money online may question how secure their transactions really are, and if it can be hacked or breached.

Is digital ID a potential solution or a problem to identity fraud?

Richard Spink: If you’re lending money, then I think that there is certainly high risk. It’s a different process to opening up a bank account or sending money on behalf of someone else. The key thing is to ensure you are actually sending that money to the correct person and thankfully, there are more reliable tools that are able to detect these issues now. It comes down to the organisation’s fraud screening processes. The question is how much information are you able to acquire and what does that fraud screening process look like? The standard answer is that there is no silver bullet – there isn’t one organisation that has everything available to run the process at zero risk. However, in the same way, there is always risk in a face-to-face transaction too. As we all know. “Good friction” is necessary for both scenarios. What has changed in the digital process is that it is now acceptable to present an identity, run that process with a mobile phone and check for duplicates. In the future, things will get even more secure with the use of biometric technology and face recognition, thumbprint recognition and the ability to check a chip on a passport. This last process is something we’ve started working with recently. In all, there is a lot more information that is available when trying to detect fraud these days, however, the same rule still applies: you need to decide what information you want to capture and make a decision on it.

The government has been known to over-regulate and stifle innovation. Do you think that we have the right balance when it comes to trust vs innovation?

Reynell Badoe: I think that the government has a lot of responsibility to provide the basic and necessary requirements and nothing more. On the issue of trust, we’ve seen leakages in the past – breaches of customer information from companies. So, on a consumer level, there is the issue of trust to contend with, as people are sceptical as to whether or not their information is safe. An example of this is free apps – technically they’re not “free” in the sense that you give up some aspects of your digital ID data in exchange for access to that app. I’d say the question is: can the information be used against me in the future? In terms of innovation, there’s a need for better services – we need a safer place to operate without having to worry about any of these concerns and challenges. There needs to be a fine balance between regulation and opening up certain aspects of digital ID.

Where does the government sit within this space in terms of digital ID?

Osama Al Rahma: When it comes to the government, it comes down to the level of leadership of that nation and their perspective on digital transformation. They then need to lay down the military frameworks, the standards and the security aspects in order to develop a secure environment. It’s been said that once you introduce digital financial services then it’s not a case of if you will encounter fraudsters but when. There is a lot of truth to this adage, as I have seen myself when we launched a remittance app and immediately fraud occurring on a massive scale. The reality is that if you are not well-enough equipped in different aspects, you will likely encounter problems. One of those aspects is having clear risk mitigation policies, and the second is to use advanced technology to identify such risks. A third aspect, meanwhile, is knowledge and awareness. Most issues I’ve seen actually involve the consumer allowing the phishing to happen due to his lack of knowledge on how scams can occur. It’s all about protecting your consumers.

What advice would you give to MTOs and banks who are thinking of adopting digital ID within their processes?

Richard Spink: My advice would be to keep things simple and understand the regulation before you talk to a business like us. Everyone will give you different advice on regulation. In my world, I need to understand the regulation of the market the jurisdiction is operating in. For example, if your business is registered in Germany, the German financial regulation is very specific on how want that ID verification process to run. In fact, they want it done via video. But this isn’t the case for the whole of the EU. So, although the EU is one trading block, in theory, in practice there are different processes required depending on where your business is regulated. I’d also recommend considering what you need to do to confirm that someone is who they say they are. In my experience, finding proof of address is the hardest process and yet it’s required by most regulators. My experience in the last ten years shows that the proof of address data is large in quantity however there is still nowhere near enough to satisfy the global coverage.

What are the critical questions you will ask an ID verification provider?

Osama Al Rahma: Before asking the questions, develop your own strategy and consider what you will want in the near future, including your offerings, products and other engagements with the consumers as this will dictate the type of provider you want to consider. On one hand, look at the flexibility of upscaling the technology, as you want someone to partner with as opposed to a short-term solution that will leave you stuck with a legacy system that will hinder your ability to enhance your offerings in the future. On the other, look at the ability of the service provider – have they got a system that is dynamic enough to cope with the constantly shifting regulatory requirements?

What do you think this space will look like in two to five years?

Reynell Badoe: At this point, it’s all speculation, especially with the speed at which technology is advancing. For example, things that one would have expected to happen in a decade could happen as soon as next year. At this point, there’s already a lot of personal information online both knowingly or unknowingly. Now, people are less concerned about giving away their data and are more concerned about where it’s going. For example, if there’s a new online financial institution that people are gravitating towards then I, as a customer, would want to find out a bit more before parting with my information. This has led to the use of federated IDs where I can sign in to a website using my existing Google account because I would naturally be more comfortable leaving my limited information with Google as opposed to this relatively unknown third party. I personally expect to see a lot more use of federated IDs in the future.

How do you see the rate of digital adoption in sending and receiving markets, in terms of duration, post-pandemic and pre-pandemic?

Osama Al Rahma: During the pandemic, I think the main shift was that consumers released how digital engagement was beneficial to them. Why do you think China was able to so effectively control COVID-19? It’s because of their AI and biometrics. They were able to use this to track and trace the people who had been in touch with an infected person and find out which areas they were prominent in. The only positive, economic growth in 2020, in comparison to other developed countries, was China and one of the primary reasons was this biometric ability. This is already being applied elsewhere today – going through an airport completely contactless, for example. With regards to the future, the adoption of these new methods should be reviewed seriously by all financial companies. It might be a slow burn but always look at how they will impact your business model and how you will be able to use them to your advantage in the future.

What next?

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