Money Transfer Trends and the Increasing Importance of Self-Service
James Oladujoye, CEO of GWD Media, gives his thoughts on the development of the money transfer industry…
There is a silent army infiltrating the money transfer market; self-service kiosks, ATMs, Internet portals, and mobile wallets all have the potential to make big waves in the money transfer industry. These developments do offer huge potential for money transfer organisations (MTOs) to innovate, but the challenge now is to capitalize on this by further developing their offering (via complementary products) to increase throughput, drive usage and secure customer loyalty.
However this shift in the money transfer market should not just be viewed as a way for MTOs to generate additional revenue and improve profit margins, (although self-service is a great way to achieve this end) but rather MTOs should see these changes as a vital part of ensuring the survival of their businesses long term.
It is inevitable that declining transfer fees and fluctuating foreign exchange rates will put huge pressure on the day-to-day profitability of money transfer businesses. Exclusive agreements will become less common and regulations will become more rigorous. This will force both bricks-and-mortar and online businesses to rethink their provision of money transfer services and to meet their customer’s needs in ways that were not possible before now.
There are three main factors that I believe are contributing to the stagnation and potential decline in this sector:
- Neglecting the needs and desires of current users
- Inability to anticipate and pre-empt changes in consumer behaviour.
- There is not enough incentive for MTOs to innovate and provide additional services (the value proposition is minimal)
On the upside, some companies have profited from high demand in certain transfer corridors (especially where countries have a high migrant worker population, as they are likely to be transferring some of their wages home each week). The companies that have capitalized on this niche have seen their market share grow exponentially and are now enjoying dominance in the money transfer market. Western Union, MoneyGram, UAE Exchange, ICICI Bank and Xoom all grew as a result of these markets. Cross-border transfers processed by Western Union and MoneyGram combined amounted to nearly $90 billion in 2011.
So for companies who haven’t yet tapped into the limited number of gold-mine territories, where is the growth opportunity?
- New service channels are emerging as MTOs and banks realise the importance of meeting customers’ demand for innovation
- Mobile solutions are becoming increasingly popular and will shortly be a must-have
- Person-to-person transfer needs to be provided as standard and should be simple to use
- Self-service kiosk solutions in convenient locations provide quick and easy ways for consumers to complete what is often seen as a mundane chore
The majority of customers are still relying on face-to-face transactions for money transfer and their adoption of these alternative channels has been slow. If providers were able to push consumers towards automation of money transfer transactions, they would be able to achieve much greater customer throughput, which becomes essential at peak times (such as pay day). Self-service kiosks are an important tool for achieving this end.
Overview of where Money Transfer Organizations currently stand:
- Western union (17%)
- UAE Exchange (4.5%)
- MoneyGram (3.7%)
- ICICI Bank (3%)
- Euronet’s Ria (1.5%)
- Wells Fargo
- Philippine National Bank
- LA Nacional
- Remesas Quisqueyana
This article was written by James Oladujoye CEO of GWD Media who are the creators of Genkiosk kiosk software. We’d love to hear your views on this subject as well, please contact us with your thoughts. If you have any questions or comments you can reach James on Twitter or Linked-In.