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Banks are stepping up efforts to increase their share of the global remittance market, either alone or by partnering with other companies, reports CardLine Global sister publication American Banker. The financial cooperative Swift has opened its global network to remittance traffic, a move it hopes will encourage more banks to develop international funds-transfer services. Swift's efforts could help banks "get back in the game to compete more effectively with … nonbank providers," says Michael Knorr, a managing director in Citigroup Inc.'s global transaction services unit. Citi already uses its own network to offer remittance services to more than 100 countries through its QuikRemit Service. Additionally, Wells Fargo & Co. has extended its own remittance service, permitting customers to initiate funds transfers through its online-banking site. Banks have been challenged in the past in trying to develop remittance relationships with correspondents in distant parts of the globe, says Michael Whyte, Swift senior market manager for banks and low-value payments infrastructures. Most such relationships require participants to develop proprietary agreements and involve customized technical integrations between the individual banks' systems, Whyte says. Forcing banks to repeat the process with every new partner is a waste of effort, he adds. "You're not achieving the economies of scale you would expect by reusing" the contracts and standardized systems," Whyte says. The SwiftNet infrastructure, which is widely used around the world, can address the connectivity question, he says. Executives of Swift, formally the Society for Worldwide Interbank Financial Telecommunication, plan to promote the remittance service next week at the group's annual Sibos conference in Hong Kong. Funds-transfer companies Western Union Co. and MoneyGram International Inc. account for about 20% of the world's remittance market, and bank-based networks have 30%, Whyte says. The rest is split among a multitude of smaller competitors. The United States has more than 70 major funds-transfer operators. The United Kingdom has more than 4,000 funds-transfer entities outside the regulatory umbrella of the Financial Services Authority. "The remittance market is hugely fragmented," Whyte says. Twelve banks already are testing SwiftNet Remit, and 19 more are gearing up to use the service, Whyte says.
