What's making fintechs so popular for remittances? Aside from representing cost savings, being built from the ground up with user experience at the forefront has enabled these entities to be more flexible and inclusive than incumbents.
For instance, it only takes about two dozen clicks to create and activate a new mobile remittance account. This agility and accessibility helps neobanks reach underserved customer segments — delivering services that diaspora workers, for example, value greatly.
Importantly, they aim to outperform banks on customer service, products and margin to bring a wider, more compelling customer-first offering to market. They also start with a streamlined product experience before evolving into further offerings like international money transfer.
Neobanks can go where the customer needs them to go — becoming more of a one-stop shop offering mobile accounts and mobile wallets at the click of a button. Our own research has shown that 72% of customers prefer a one-stop shop, or a super-app approach, for their financial services. It makes sense and helps customers streamline their lives.
You can transfer money instantly, buy your favorite shares, or get advice on spending and savings — all from your armchair for little to no fee — what’s not to like? This disruptive approach represents a win-win for the customer and a much-needed evolution for the world of finance.
Like neobanks, money remittance companies around the world have observed a marked increase in money flows in recent months. Research has shown that the pandemic has precipitated a wholesale shift to digital solutions. Our recent research into remittance habits among our customers supports this, with a whopping 72% saying they now send their remittances to family and friends online.
This is a marked increase from previously noted behavior where the majority chose a more traditional cash transaction. In the Philippines, Ghana, and Brazil the shift to mobile money, online airtime top-up, and online bank transfers has increased significantly since the lockdown began.
People who need to support loved ones with money or other micro-value transfers, such as mobile phone top-ups or bill payment, but who don’t want to put themselves at risk by leaving their homes have been seeking out digital methods.
While some customers may eventually return to cash as their preferred method of payment for goods and services, or a more manual approach to banking and money transfer after the pandemic passes, the crisis may have accelerated a shift to digital that is likely to persist for a large majority of the converted. The demise of cash is real and happening faster than foreseen.
Fintech is providing real, viable and more affordable options for money remitters, to continue to be the lifeblood for communities all around the world.
