How will AI, blockchain and social media revolutionize cross-border payments?

We ask the experts

by Fred Schebesta Posted: 9 June 2017

The experts

Introduction

It’s been an exciting past couple of years for the cross-border payments sector, with a number of innovative banks and fintech companies rolling out artificial intelligence and chatbots to service their customer interactions as well as implementing blockchain technology to increase speed, lower costs and enhance the security of international money transfers. Even SWIFT finally started trialing blockchain this year.
At the same time, social media companies such as Facebook and messenger apps like WhatsApp are looking to get their foot in the door. They’re collaborating with fintechs to allow international money transfers to be sent to receivers on their platforms (though not through their platforms as of yet). Facebook quietly secured an e-money license in Europe, so it’s looking like it will expand its peer-to-peer Messenger payments beyond the US. On the flip side, these new technologies have a lot of challenges to overcome — like making chatbots and robo-advisors intelligible and useful for the average person, persuading people to use these new technologies (more than 90% of IMTs are currently made offline), accessing specific developing demographics and addressing much of the banking sector’s lack of will to change. Can we believe the hype about the massive potential for disruption in the payments space? We interviewed 10 leading experts from fintech companies that deal with cross-border payments and independent consultants to get an idea as to the tech innovations they’re most excited about, what they’re working on right now, their predictions for the industry, market segments that will be most affected by these technologies and how to overcome challenges.

Artificial intelligence, chatbots and social media

According to Accenture’s Banking Technology Vision 2017 report:

76 percent — that’s 3 out of 4 of banking experts — interviewed for Accenture’s report believe that in the next three years, the majority of organizations in the banking industry will deploy AI interfaces as their primary point for interacting with customers.
79 percent (4 out of 5) agree that AI will revolutionize the way they gain information from and interact with customers.
71 percent believe that AI is capable of becoming the face of their organization or brand.

According to a 2017 survey conducted by Personetics:

More than three quarters of financial institution respondents view chatbots as a viable commercial solution now or within the next one to two years.
Nearly half of the companies that responded already have active chatbot projects in place.

Additional insights

According to estimates by the technology analyst firm Gartner, by 2020 more than 85% of customer interactions will be managed without human contact.

In 2016, Facebook opened its Messenger app to chatbots, and over 34,000 different bots have now been developed. Click to tweet

Faisal Khan

Cross-border money transfer specialist

website | twitter

Chatbots would take the No. 1 slot. AI has yet to be demonstrated for various purposes. However, the lowest-hanging fruit is chatbots, because of the fact that there is so much time that is wasted by banks and payment companies in explaining the basics over and over again to people through various channels — like telephone, or the Internet or even email or Twitter. And chatbots that are so advanced that you really can’t tell that you are chatting with someone. To give you an example, there’s a CEO for a payments company that I was chatting to the other day, and I was telling him I would like to send his secretary something for New Year’s. And he says to me, “Uh, Amy’s a bot. You know that, right?” So I think chatbots is the lowest-hanging fruit. And I think this will have the biggest impact,much n because a very basic interaction can be done without trying to learn anything new. It’s just human communication taken on a different level.
Huge. There are many, many advantages to this: instant settlement, ability to value transfer, two parties that do not trust each other and all the classical benefits of bitcoin being applied to the money transfer industry. So you don’t have to spend months in doing contracts. You can just say, “Hey, I’ve got a bitcoin. Will you accept bitcoin?” “Yep, I will.” “OK, let’s exchange bitcoin.” And value exchange takes place. Done.

I see a huge role in remittances using bitcoin for the back end.

No. If you look at the overall market cap for bitcoin, it is very small vis-à-vis the market cap for, let’s say, remittances. So even if all that market cap was diverted toward bitcoin, bitcoin simply cannot serve the remittance industry. So I think initially for smaller players and other medium and emerging players, bitcoin will play a great settlement currency, but on the back end only. I do not think bitcoin will ever come to the front end. I do not think bitcoin will ever come to the part where consumers are using it. It will be used for back-end settlement, and it might be overtaken by a better coin or whatever for faster settlements which offer a larger liquidity pool, which offer certain benefits that bitcoin does not right now have. For example, the number of transactions executed per second is pretty low, etc. So once you have a better coin that is pegged to a particular currency and you have one-on-one pegging — X coin is equal to 1 USD, for example — that might just be a better way of doing it. But I feel that bitcoin for now and the blockchain in general will have a huge impact on remittances. No doubt about it.
It’s inevitable they will play a role.
I feel that Facebook hasn’t implement any technology. Earlier on it was different, but today whatever you see running on Facebook is something that they own. It’s not rented, it is not leased — it is something that is native, proprietary, something that they own. So if and when their platform for payments comes out, I think Facebook will own it.

If and when their platform for payments comes out, I think Facebook will own it.

They will not lease it. They might lease it for the interim period, but I think generally they would like to own the platform. Meaning that a possible scenario might be that they would partner up with a money transfer company, like Western Union, and offer the service, and eventually bump Western Union off and do it themselves once they’ve learned the tricks of the trade and so forth. But the answer is it’s inevitable: Yes, it has to come in.

Well before they did the Europe license, you do know that they got the US license, which was even more difficult to get. I don’t know why everyone made such a big deal about them getting the European license. That was just a regular thing. The real news should have been made when they got the American license, which has a lot more value than the European license. The European license is not that difficult to get. I feel that the press got the wrong side of the story. I think the real story was that they got the US licenses, which made a lot of sense. And I think, if anything, if Facebook starts any transaction, they will start transacting within the top economies — which are economies like the G10, the G15 or the Eurozone. These are the kind of countries that they would run with.
Someone asked me this question on Quora almost five years ago, and I predicted what they would look like. I answered it in 2012. I have not edited the answer since then, and halfway through (at the 2.5-year mark) I did a pulse check to see how the predictions are going.

Thinking about the next five years, my top predictions are 1) instant real-time, 2) micropayments, 3) fraction of a cost.

I have a proverbial example that I keep saying: “What would it cost to send $6.80 across the world?” What should it cost to send this amount across? Right now, as you know, there’s a floor on the amount of money you can send. So generally that floor is $100. If you try to send anything less than $100, it is extremely expensive. So if you can send $6.80 for 2%, 4% or even 5% — say, for $0.35? If you can send $6.80 in under 10 seconds to anyone in the world for $0.35, that is cool. And this could have happened 10 years ago. It could have happened five years ago. It can still happen today. It’s just the mindset that’s not allowing us to do it. Technologically, there is nothing that’s stopping us.

The KYC [know your customer] of a person is going to improve drastically. Do you know that there are more than 90 templates for KYC worldwide? We don’t even understand what KYC is supposed to be. Do you know that the KYC that we use is a 100-year-old-plus template? Think about it: What information do I currently provide? Name, surname, DOB, ID, address at best. Going back to 1910, what do you think Western Union was asking for back then? They were asking for the exact same information even back then.
I think it will be tokenized. The one thing you cannot buy on the Internet is time. You cannot buy short-circuit time. So if you have spent eight or 12 years posting everything on Facebook, there are way too many data points to suggest that you are who you are. So I think your identity will be stored on the blockchain in some kind of global registry. You can read more about my thoughts on that here and here.
I love this company Terrapay. Terrapay has made an interoperable payment system for mobile. So, for example, when you send a text message from Vodafone to Deutsche Telekom in Germany, you just send a text message. That’s it. There is a standard that converts that text message to work with all the different providers in the world. And that is accepted by the GSMA [GSM Assocation].

Terrapay are making a protocol for using mobile money, so that money becomes interoperable. You just send money from one wallet to the other, across the world, just by knowing the telephone number. And that is it.

So that’s the same thing Terrapay are doing now for money. They are making a protocol for using mobile money, so that money becomes interoperable. You just send money from one wallet to the other, across the world, just by knowing the telephone number. And that is it. Terrapay already connects 1 billion mobile wallets together. So Terrapay is one that really pops out in my mind.

The way I see AI impacting money transfers is basically allowing a “financial manager,” if you will. Saying not just, “Hey, I don’t think you should really be having that ice cream today, because you are really over budget.” But something that could be a very cool conversation, because it understands how much money I have spent on ice cream. It understands what my entertainment budget is, how many calories I’m supposed to consume every month, and makes my payment decisions based on factors other than just payments, but where the usage is going. So if I’m spending a lot of money on gasoline, it might suggest I buy a London Underground pass today, they’re offering 20% off, that I’ll be better off in the long run. Things like that. So that payments are taken into context in the environment in which they are being used. No one has done that yet.

For too long, consumers have had to bear the “Your call is very important to us, please continue to hold” banality. But 2017 could be the year where this unintelligent automation disappears. Thanks to advances in artificial intelligence, the vast majority of customer queries can now be answered quickly and efficiently via a chatbot, with human help only required for the really tricky questions.

Thanks to advances in artificial intelligence, the vast majority of customer queries can now be answered quickly and efficiently via a chatbot.

The advances in artificial intelligence have caused a small explosion of sorts in the fintech sector. But this small bang could expand with the mainstream introduction of chatbots and smartbots, with human help only required for the really tricky questions. As consumers become more digitally savvy and open their minds to a smarter technological future, so too does their confidence in these intelligent robots. In 2016, UK banks began to adopt AI to speed up processes, with organizations such as RBS [Royal Bank of Scotland] implementing smart robots online to help customer interactions. As consumers’ relationship with money evolves and their trust in spying chatbots is for the most part long gone, we will see them wanting more interaction with technology.

The most exciting tech innovation in the money transfer space is something that we have just launched and is absolutely an industry first on this scale. Our new in-app feature enables customers to instantly transfer money simply by using a mobile phone number. This means that customers no longer need to know or input account details, complicated IBAN numbers or bank routing numbers up front in order to send money.

Customers no longer need to know or input account details, complicated IBAN numbers or bank routing numbers up front in order to send money.

This feature is creating a fundamental change in the global money transfer market and in how people send and share money. This feature is available for both international and domestic transfers. So if you’re out for dinner and need to split the bill, you’ll no longer be haggling over who owes what or emptying your pockets in a bid to find an extra 20p!

1. Technology will change our relationship with money. We’re already starting to see a real shift in power from banks and financial heavyweights back to the consumer. We’ll finally start seeing an end to the toxic mix of hidden charges, rip-off exchange rates, unhelpful customer service and little choice for the consumers. From new people-focused, digital-only banks like Tandem and Atom to mobile payment apps like Zapp, these new services will give people all access, all the time.

Technology is democratizing financial services, and it will force business and financial services firms alike to up their game.

2. Digital natives demand financial services anytime, anywhere. Today, people are digital natives and expect every financial service they use to be digital — able to complete actions from anywhere, on any device and with minimal effort. Consumers demand payments to keep with the speed of service in other areas. In the next five to 10 years, financial services will be a core part of the mobile operating systems — the idea that your financial life isn’t controlled by your phone will seem as archaic as a black-and-white television. The future of the market is that within the next five to 10 years, there will be no “high street” [Main Street] stores left. All financial services will be delivered via mobile. 3. Global instant, low-value mobile-to-mobile payments take off. As smartphone sales reach a saturation point in developed markets, technology adoption growth is now solidly focused on emerging and developing nations. Following on from the success of domestic millennial-focused payment apps such as Venmo in the US, sending money mobile to mobile around the world, instantly and at low cost, will take off in 2017. And with our latest innovation, we’re absolutely leading the charge!

Sending money mobile to mobile around the world, instantly and at low cost, will take off in 2017.

Five years ago every business needed a mobile strategy, and 10 years before that it was a web strategy. Next year every financial services firm — consumer or private — will need bitcoin or blockchain strategy. While it is unlikely to have a massive impact on day-to-day businesses next year or even the year after, everyone needs to start building a plan. As like every major tech revolution, the game can — and will — change overnight.

Next year every financial services firm — consumer or private — will need bitcoin or blockchain strategy.

I don’t think we’ll see a huge benefit just yet in the consumer space. But there will certainly be benefits for businesses, and these benefits will in turn impact the consumer. We’ll see vast improvements in terms of instant settlement, improvements in working capital and reconciliation. In the money transfer business, that will mean faster payments and even cheaper services.

As a society, our relationship with tech is evolving, and in turn consumers are much more tech savvy and want access to everything instantly. Bots and automated solutions appeal to a mobile-first generation who demand chat services, Internet and smartphones and value financial platforms that can offer this immediacy. From a money transfer perspective, AI allows us to be increasingly thorough and provide an exceptionally convenient service for users in a fraction of the time it would take to send money through a more traditional service. As AI continues to evolve and consumers desire an “always on” solution, I would predict that it won’t be long before these features are prolific. And businesses that don’t keep up to speed will set themselves up to fail.

As AI continues to evolve and consumers desire an ‘always on’ solution, I would predict that it won’t be long before these features are prolific. And businesses that don’t keep up to speed will set themselves up to fail.


Marta Krupińska

General manager and co-founder of Azimo

website | twitter

Duena Blomstrom

Independent digital and CX consultant, fintech specialist

website | twitter

In five years, transfers and payments would have consolidated to whatever messaging platform would have won the race in terms of consumers’ engagement. This will not be a singular one, but different geographies will have different winners. These platforms will serve as the front-end consumer gateway and still rely on existing infrastructure, and so we’ll see the first signs of the “banks will become mere rails if they don’t find a way to create emotionally significant, lasting relationships” predictions coming to life.

In five years, transfers and payments would have consolidated to whatever messaging platform would have won the race in terms of consumers’ engagement.

See above. Today we’re witnessing an acerbic fight for becoming one’s primary engagement space, and banks — and B2C providers alike — are not even a factor in this.
Bots represent the interactive part, but there is much to be said about the ability of performing money-related tasks without the consumer’s direct involvement. There is a sleuth of money actions that ought to have been automated and out of the consumer’s eye ages ago. The technology to eliminate frustration in mundane repetitive tasks, be they payments or investments, has been around for almost as long as fintech. And yet financial institutions still have not achieved that across the board.
When I started my crusade to get banking to take stock of consumers’ feelings about their money, become a beloved brand and fulfill the CX imperatives they owed us — i.e., emotional banking — the battle was to culturally change monolithic structures, so I expected it to be slow. What I didn’t count on was how fast slow has constbecomes too slow when the battle is not against other sluggish banks but fast-moving technology giants with a client-relationship-acquisition target. My focus hasn’t switched. It has enhanced to look at the full fintech spectrum and see where strong partnerships between new providers and incumbents can bring some much-needed injection of speed to give the industry a fighting chance.

Blockchain

According to a 2016 survey by IBM:

15 percent of the top global banks intend to roll out full-scale commercial blockchain products in 2017.
65 percent of banks expect to have blockchain projects in production in three years’ time.

According to a 2017 report by Infosys:

About 50% of the banks surveyed are either working with a fintech startup or technology company to augment their blockchain capabilities, while another 30% have opted for the consortium model.
80% of the respondent banks expect the financial services industry to adopt blockchain-based applications commercially by 2020.

According to the 2015 World Economic Forum Technology Tipping Points report, by 2027 about 10% of the global GDP will be stored using blockchain.

Click to tweet

Sudhesh Giriyan

COO of Xpress Money

website | twitter

Over the past few months, blockchain has fast emerged to become a global phenomenon. The technology has become an ecosystem in itself. I believe that brands should not shy away from being part of such an ecosystem. Xpress Money, for instance, has been collaborating with different financial entities over the years and is happy to collaborate and be part of an ecosystem, whether blockchain or any other new ecosystem that may be developed in the future.
Xpress Money has constantly introduced services that suit the needs of our customers. Xopoto, a social international money transfer app by the company, offers customers in the UK the opportunity to send money to their beneficiaries residing in different part of the globe by simply selecting a beneficiary from social channels like Facebook or Twitter or messaging platforms like WhatsApp, WeChat and SMS. The app is fun and flexible. More importantly, it offers customers a chance to transact through their smartphones and at their own convenience. Since security and compliance ranks high on our priority list, we ensure that our customers’ funds are transferred securely from one country to another. Xopoto does not send money using social networks: The money transfer actually happens through Xpress Money’s secure payment channels using a custom link. In short, there is no actual, physical money being transferred through any social network, and there is no financial or personal information being shared on those platforms. Yes, companies such as Facebook and WhatsApp have the potential to become major players in the money transfer sector, because they have a strong existing customer base — which works to their advantage. But what they may lack is the infrastructure and regulatory approvals required — in sourcing as well as in payout countries — to make cross-border fund transfers. That could take years to build.

Facebook and WhatsApp have the potential to become major players in the money transfer sector.

Here, collaborations with the right brands could be a major differentiator — strategically partnering with a company like Xpress Money that offers cross-border money transfer expertise can essentially help in staying ahead.

Technology has not just changed the way we do business today. It has also changed the way we compete. Innovation and technological advancements have created a very competitive business environment. We are in a new era, where financial institutions collaborate with their own competitors. We are constantly looking at strategic partnerships that will benefit the brand and our customers. With this philosophy, we introduced an open technology platform called the Plug and Play model that helps in extending our international transfer capabilities to our partners, allowing them to plug into the Xpress Money platform and partake in the remittance industry.
Fintech has a profound impact on growth in cross-border payments. It is successfully unbundling the services offered and catering to smaller niches in the sector. Here, the right technology is adapted to fundamentally redesign processes. The services offered through fintech help build a cohesive business environment that ultimately benefits modern, discerning customers. But fintech has a bigger role to play in financial inclusion, or in terms of catering to the needs of people who don’t have access to financial services — commonly referred to as the “unbanked.” Digital financial services have significant potential to provide a range of affordable, convenient and secure banking services to the unbanked population in developing countries.

Blockchain and digital payment technologies are what we are most excited about. Security sophistication in digital payments and blockchain are market disruptors that are — forget will — fundamentally changing the global money transfer landscape.
1. The money transfer transaction flow from the remitter to the beneficiary can involve several “middlemen,” which are typically bank accounts. The more bank accounts in the equation, the higher the charges. Technology solutions now exist that can reduce the number of middlemen in the workflow process. 2. The time it takes for funds to move from Point A to Point B needs to improve. The technology exists to do this, but the current processes act as barriers. 3. Currently there are still too many manual operations involved behind money transfers — especially on the accounting and compliance side. These can be streamlined with technology which already exists and which falls under the regulatory guidelines in most sending markets.
The following are our predictions: P2P transactions via digital channels and prepaid cards will dominate cash. Remittances charges will go down significantly, virtually to zero. Operators will make money by offering peripheral services, such as utility bill payments, airtime top-ups, etc. Telecoms operators and microfinance institutions will play a much bigger role in remittances through mobile wallets and mobile money for the unbanked.

Remittances charges will go down significantly, virtually to zero. Operators will make money by offering peripheral services.

RemitONE is currently devising sophisticated end-to-end money transfer solutions to help money service businesses of all sizes and types offer a range of services — money transfers, prepaid cards, travel cards, airtime, mobile money — via multiple channels to customers. This will help bring down remittance charges and drive social inclusion of the unbanked, fueling economic prosperity and creating a sophisticated marketplace in sending markets for customers to choose money transfer options from.
This requires a consolidated effort by all stakeholders of the money transfer industry. Sharing success stories via social media is, in my opinion, the best way to bring about change in mindset and behavior.

Sharing success stories via social media is, in my opinion, the best way to bring about change in mindset and behavior.


Aamer Abedi

Chief marketing officer at RemitONE

website

Marwan Forzley

Founder and CEO of Veem

website | twitter

Tracking — an end-to-end view of transfers that you can’t get out of wire transfers. Transparency — exchange rates are public information. You never know what rate you get on most currency exchanges done through banks. Speed — real time versus two to five days with banks.
It’s a core part of our multirail technology. As a leader in global payments and a pioneer in using blockchain technology, we were quick to see the advantage of sending transfers across these rails.
Access to liquidity — blockchain suffering from lack of mass adoption. Liquidity would help bring more stability and narrow the bid/ask spread. As the market matures and it gets more users, it becomes more stable, inviting more users — and it becomes a viral loop. It’s happening. It’s just a matter of time.
Continued simplification of user experience — Square Cash, Venmo, WeChat. Integration of payments to profiles — Uber, WeChat, Facebook.
Making the experience a night-and-day comparison to bank wire. It takes 30 seconds to submit a transfer versus 30 minutes with bank wires.
Payments continue to grow, but now we’re seeing growth in contract management, KYC [know your customer] and insurance. Plus private blockchains are starting to boom for private corporate settings.
We’re excited to see the continued progress of blockchain. We were one of the earliest adopters of the technology and are proud to see it evolve.

Remittances and development

According to a 2014 World Bank report.

More than a third of the world’s adult population make little or no use of formal financial services.
Between 2011 and 2014, the percentage of adults with a bank account increased from 51% to 62% — a trend driven by a 13-percentage-point rise in account ownership in developing countries and the role of technology.

Leon Isaacs

CEO of DMA (Developing Markets Associates)

website | twitter

It may not be very original, but without a doubt it will be mobile payments. At the moment, over 95% of all payments are made in cash, and even a digital leader like Western Union transacts less than 10% through digital means. Most people receiving remittances have a mobile phone and understand how to use it. What is missing in most countries is a local mobile payments infrastructure as well as an understanding of how mobile payments and wallets work. These will take a while to take effect, but there are now use cases of where it is happening. Other areas like blockchain and digital currencies can help but won’t be game-changers.

What is missing in most countries is a local mobile payments infrastructure as well as an understanding of how mobile payments and wallets work.

The revolution will take place in emerging countries, particularly in Africa and Asia. The impact will particularly help those in rural areas, who currently struggle to access any financial services, and will have great benefit for cross-border intraregional payments.

The revolution will take place in emerging countries, particularly in Africa and Asia.

This will positively impact poorer communities and the emerging middle classes, who can afford to pay for family members to migrate.

I don’t see a major role for bitcoin or digital currencies except as a tool for settlement between money transfer companies and banks. Whether this is successful will depend on whether there is sufficient liquidity to transfer funds from fiat to digital and back again, as well as local finandicial regulations. DLT has the potential to help with the exchange of transaction information and customer identity. This is probably a bigger opportunity.

I don’t see a major role for bitcoin or digital currencies except as a tool for settlement between money transfer companies and banks.

Potentially they could, because they really understand customers, how they communicate with each other and how to get product into their hands. However, they are very wary about financial regulations and have generally prioritized other business streams as an area of focus. Unless that changes, then I would expect the current remittance industry incumbents to develop their own digital services and leverage the trust they currently have to dominate in this space. Having said that, if Ant Financial is able to develop its current initiatives, then we might see a completely different money transfer industry.
1. Cross-border mobile payments in East and West Africa. This is really addressing a problem that traditional remittances have not been able to do. 2. Using digital payments to help settlements between money transfer sending companies and payout companies. This is potentially making payments quicker and cheaper. 3. International bill-payment apps. This is allowing the senders of remittances to pay bills directly on behalf of receivers, which is a real advantage and is eliminating waste.
For us, everything is exciting. Right now it is how to apply technology to help reduce the cost of remittances in Africa, the highest cost region in the world. This means we are continually investigating new technology developments and trying to apply them to solve real challenges. Interestingly, in many cases the technology is already there, but the challenge is: How do you change consumer behaviors? Addressing this is what is really exciting.

In many cases the technology is already there, but the challenge is: How do you change consumer behaviors?

Remittances will continue to grow in their importance, but the current operating environment for cash-based businesses will get harder. There is likely to be more consolidation within existing money transfer companies, and I predict there will be fewer but larger money transfer companies. These businesses will dominate remittances moving forward. There will be space for one new entrant from the digital world — this is likely to be one of the current fintech companies that have entered the remittances space in the last five years.

In some developing countries, we are already seeing that under favorable regulatory conditions, mobile money penetration has the potential to make it significantly easier and cheaper for the unbanked and underbanked to receive remittances. According to the GSMA, in December 2016 there were 277 million registered accounts in Sub-Saharan Africa, more than the total number of bank accounts in the region.
At BitPesa, we see great potential in the use of blockchain technology to increase the speed of and lower the cost of settlement between remittance companies and the partners who are providing them with wholesale FX and last-mile distribution to recipients. In fact, we already work with a number of money transfer companies in this manner.
These big tech companies certainly have the potential to become major players in developing countries. But in order to do so, they will need to partner with market makers who can provide an efficient on-/off-ramp to local liquidity.

Big tech companies will need to partner with market makers who can provide an efficient on-/off-ramp to local liquidity.

In developed markets, the transaction fees associated with payments and money transfer will continue to decline as new fintech companies disrupt incumbents. In developing countries, there’s still a long way to go. But we’re confident that blockchain technology will play a key role in increasing the efficiency of highly inefficient markets.

Charlene Chen

COO of BitPesa

website | twitter

Digital identity, authentication and regulation

David G.W. Birch

Recognized international thought leader in digital identity and digital money

website | twitter

In the longer term, of course, AI will mean the reshaping of the entire industry. But in the shorter term, I’m looking more to identification and authentication technologies, because that’s where we need disruption. The cost of KYC [know your customer], AML [anti-money laundering], CTF [counter-terrorism funding], PEP [politically exposed persons] and the associated derisking is a huge problem that needs fixing.

In the longer term, of course, AI will mean the reshaping of the entire industry.

In Europe it will be the post-PSD2 [Revised Payment Service Directive] shift to third-party API-centric providers.
Right now it’s all about mobile, but I think it will soon be social media and chat integration.
1. It doesn’t really matter for payments — payments aren’t expensive, because the technology is expensive. 2. Blockchain is a regtech, not a fintech — it reduces overall industry costs. 3. The first applications will be around the KYC, not the money.
I can see a substantial part of the volume moving over to these platforms as they develop interfaces into banking platforms.
Security is a huge problem, and it’s getting worse.

The industry’s entering a new phase of innovation with AI and chatbots, for example. The biggest impact right now though will be via regulation. In the UK, we’re lucky to have the most forward-thinking regulator in the world for this sector. Balancing innovation and consumer protection is key to moving the industry on. In Europe, for example, there’s a massive opportunity with Open Banking, but it’s key that such initiatives don’t get diluted by the incumbents.

Balancing innovation and consumer protection is key to moving the industry on.

One of the biggest challenges is that people stick to what they know. There’s a real inertia to overcome. But gradually people are becoming aware that there are alternatives to the banks and brokers of the past. It helps that the alternatives like TransferWise are so different — in speed, cost, ease of use and fairness. For TransferWise, 60% of our growth is from word of mouth. There’s no better encouragement to switch than when you hear from a friend or family member.
Right now there’s still a need for cash and physical locations. But it’s decreasing as people adopt online and mobile solutions. The future is about what people need to make their lives better: How do we make transferring money internationally as pain-free as sending an email? There’s no reason why it shouldn’t be that easy.

The future is about: How do we make transferring money internationally as pain-free as sending an email? There’s no reason why it shouldn’t be that easy.


Jo White

Director of international corporate affairs at TransferWise

website | twitter

Pictures: Shutterstock

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