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The shift to digital in the Money Transfer sector

Many sectors, such as the high street retailers and the travel industry, have been decimated by the huge shift to digital from the traditional ‘face to face’ business model.

Is this revolution now starting to change the Money Transfer sector?

Five or six years ago, the vast majority of regulated money transfers (remittances), were done face to face, whereby you queued in line, completed a form, paid your cash and sent your money, sometimes taking up to 30 minutes in busy footfall locations such as Post Offices. 

Fast forward to 2018 and we now have over 10 ‘Fintech’ online money transfer operators, with no branch networks – just a website and mobile app – who have made sending money 24/7 simple, convenient and cheaper than the traditional players.

Providers such as Western Union, MoneyGram and Ria are playing catch-up and in many cases have the brands and funds to do this. However they have still lost some market share to this channel over the past few years.

It is estimated that over 20% of all regulated outbound remittances are now sent via the web or a mobile app, with this number set to increase to over 30% by 2020, and potentially over 50% by 2025. Why not, given that money transfer is a commodity service and all users are looking for the convenience and best price that these apps can offer?

So what will happen to the traditional face to face model? Well it will certainly not disappear, as many people still prefer this option for reasons such as trust, being un-banked or just good old human contact, however it will continue to shrink year-on-year at the expense of the digital channel.

It will certainly be interesting to see what happens in this sector and if this digital revolution will also impact the retail Currency Exchange sector in a similar way. 

Mark Crowson

Managing Director, MT-FX Consulting Ltd

Mark Crowson has over 40 years’ experience in the Foreign Exchange and Money Transfer sectors, working for Thomas Cook, Travelex, ICE, Eurochange and MoneyGram in senior business development/ strategy roles both internationally and domestically.

He is now semi-retired, is a Non-Executive Director at Unitylink and also provides consultation services via his Company MT-FX Consulting Ltd.