- Fintech presents an opportunity for conventional transfer services to enhance customer offerings
- Joint partnerships on the rise
- Industry turning focus to customer experience
- Innovation and embracing change are key to driving growth
The global money transfer industry is in the middle of a major shift, driven by digital disruptors like apps, blockchain and P2P lending platforms. While new technology is sometimes seen as a threat to traditional financial services, that doesn't have to be the case.
On closer inspection, fintech has plenty to offer the money transfer market.
The future is for collaboration
Mobile transfer apps and blockchain are commonly called 'disruptors' in the remittance industry, yet these new technologies actually present a host of opportunities for incumbents. Fintech can help conventional transfer platforms drive true change to deliver better service to customers.
By collaborating with fintech firms, traditional transfer services can boost financial inclusion for the billions of people around the world who don't have bank accounts or use formal financial products and services. These so-called "unbanked" number over two billion worldwide, so finding ways to extend necessary services to this market sector represents a massive potential market share for incumbents who are able to leverage the power of emerging technology.
According to World Bank, global money transfers are set to grow by 3.4% in 2018, with $616bn in funds sent across borders. In order to continue growth industry-wide, firms should be looking for ways to work together to help shape the future.
One way many firms are accomplishing this is by entering into joint partnerships. These deals make it possible for conventional remittance platforms to offer customers a broad range of new services, faster transfers and transactions with lower fees. Partnerships with fintech disruptors also help traditional firms roll out new products and solutions to market more quickly than they could by developing technology on their own.
Roughly 82% of conventional financial institutions expect to enter into or strengthen partnerships with fintech firms over the next several years. The goal of these partnerships is to enhance existing offerings and respond to customer-driven market shifts.
Conclusion
Fintech firms are not going away any time soon and their influence on the remittance industry is only going to grow. Around the world, customers demand for faster, cheaper, more convenient transfers will continue to drive change across the industry.
In order to ride this wave of change, incumbent financial institutions should look to innovate and evolve by finding ways to incorporate emerging technology into their existing products and services. Fintech offers a way for traditional firms to question their own status quo, delivering more efficient and more effective solutions to customers and opening the doors of financial inclusion for millions of new users across the globe.
By working together strategically, fintech and traditional finance can provide mutual benefits they might never be able to achieve alone.
