_{Matt Oppenheimer} 

Overview

FXcompared CEO Daniel Webber interviewed Matt Oppenheimer, CEO of Remitly.

Remitly was founded in Seattle in 2011 and instantly took a different approach to growth by just focusing on one segment (US to Philippines) and one state. Its annual flows are now tracking north of $6bn/year and it has served over a million customers.

Last week Remitly announced its giant $220m funding round. The discussion covered a range of topics:

• How the new raised equity will be spent?
• How to provide instant payments and the need for working capital?
• How building trust is the cornerstone of Remitly?
• What technology trends have meant for the business?
• What to make of Facebook’s Libra project? 

Interview with Remitly CEO Matt Oppenheimer

On raising $220m and how to spend it

We raised the capital so we could continue to grow the business. If you look, at the numbers there's a market getting closer to 700 billion dollars. In remittances we're sending six [billion] so we're less than 1% of the market. It's rapidly shifting to digital and so it's about continuing to invest in the markets we're in and then continue to expand around the globe as the primary use of capital.

Then the longer-term vision is about exploring other financial services for immigrants. Definitely part of [the reason] why we raised the capital so that we will be able to invest in that area as well.

On building up a credit line to serve instant payments

We offer instant transfers with our Express transfers services. For transfers within minutes we say how many minutes it's going to take exactly. We have a variety of tools that enable us to deliver funds within minutes. Some funds we can post with some of our partners or abroad in different banks, but one of the tools we have at our disposal is to have a line of credit basically to pre-fund those transactions.

If you look at the debt that we're raising, it's not meant for operations in the sense of what we use on the equity side, it's being used more to be able to fund the growth of our actual transaction volume and to be able to deliver that within minutes around the globe.

On blockchain and new technologies solving working capital needs

We pay a lot of attention to all sorts of digital currencies including blockchain. I think that the companies that are looking at trying to reduce the working capital aspects of delivery funds instantly, we haven't seen a fully end-to-end solution that mitigates that problem for us. It is complex and there are a lot of different components to it and sometimes when you get into those details, at least what we've seen is there hasn't been a product that's solved that for us.

There's a lot of interesting potential partners [out there], so we'll continue to talk with them and watch it closely to see if anything emerges that can be a solution for us.

The opportunities for new financial services

An important foundational element is the fact that, we have served over a million customers now, but there are still hundreds of millions of customers and billions of dollars that are out there in terms of continued remittance, business growth. And so that's our primary focus. But if you look at the million customers we served, what we've heard from a lot of customers is that remittances are at the center of their pain points when it comes to financial services especially when you moved from Mexico or the Philippines, to Europe or North America, let's say.

A big part of why our customers do that is so they can support their families back home. And so the absolute baseline needs that our customers have from financial services standpoint is how do we get money home securely, reliably, affordably, et cetera.

But what we've also heard from them is there are a lot of other pain points they have experienced. It could be anything from insuring against specific risks that they have as an immigrant that are specific to them. It could be, living without a credit history as something that they've said is painful. It could be banking specifically both getting bank accounts without all that history and the documentation or specific banking needs that they have. We're really taking a customer-driven approach to saying, what our customers have told us are other financial services pain points for them and then seeing if we can offer additional solutions for them.

On building trust in a financial services business

I think that it's all about trust in our business and I think that’s the reason that most money is sent offline, and that's in the origination part. Where customers can get money is super important and we have a wide range of options, because if you're sending money into Mexico or the Philippines for example, there's the need for cash to be able to transact in the local economy.

But on the origination side, customers by large part have access to our service. They have to have a bank account or prepaid card but getting over that trust hurdle is significant. And that's where I think that our scale, our size and just the industry in general is rapidly shifting to a digital world where our customers more and more trusting their mobile phone, especially their smartphone for financial services. As that shift occurs, I think that we are a really a go to option for customers to be able to send money back home in a reliable, affordable, secure fashion.

The importance of both technology and cultural factors and resilience to move to digital

I think that was true 10, 15 years ago and you saw that in some of our competitors that they were potentially a little bit too early to market. But I think that while it does vary in terms of the digitalization of our customers, depending on the country, it's pretty much across the board now where customers are trusting their smartphones for financial services. And I think that that journey is just the beginning. You probably have better stats on the exact percentages but that percentage [of digital remittances] is still relatively small in terms of percentage that originated digitally, but it's grown tremendously over the last five years. You look forward five years and I think it's going to be the majority of the market.

Let's go back 10 years. The iPhone was invented in 2007. Easy to forget. And it's been 12 years now, but that’s invented, not our customers adopting. If you fast forward now, 10 years later, smartphones have become much more affordable, accessible and used by the majority of the population, including our customers.

But it is singularly trust because 10 years ago was not about trust. Customers didn't have smartphones. Now, I think the reason for its rapidly shifting is we’re at this point in time where customers are talking to their friends who have sent money back.

We are seeing some large mainstream digital remittance players start to scale and grow through word of mouth and they have trust within their community and so I think you look 10 years out and you'll see a few next generation remittance companies that are really serving a large share of the market. Because of that shift wealth would have occurred, it's very much underway.

On Facebook’s Libra

It is fascinating, getting a lot of press, but there's not a large amount of detail on how it'll work in the real world. I think that a lot of the use cases are about sending value to a wallet and paying for goods and services with that wallet. That's Facebook's monetization strategy. If they can get money in that wallet and then pay for goods and services with it including things on Facebook. I think that at the very least they need to figure out how they're getting money into that wallet.