Financial inclusion is among the worthiest of goals when it comes to economics, finance and payments. But making the leap from hope to reality means hurdles must be cleared with deliberation and attention to detail.
In a wide-ranging conversation between PYMNTS’ Karen Webster and MoneyGram EVP Grant Lines, who’s responsible for regions as diverse as Africa, Russia and Asia-Pacific, among others, both noted that gains in financial inclusion have been broad and deep, and more progress must be forthcoming.
Lines said that, for access to financial services in the parts of the world he looks after, style and distribution remain important. In the case of MoneyGram, with increasing global presence, “in many cases, we’ve entered those markets five to 10 years behind our largest competitor,” and the company has managed to gain low-single-digit market shares in several regions, with an eye on method and cultural fit taken case by case. Technology is still important and so is competitive pricing — “and technology is starting to influence the way that people have access to financial inclusion. For many people,” Lines continued, “this is their first touchpoint [to financial inclusion].”
He offered up China as an example, where financial inclusion had been marked in large cities such as Shanghai and Beijing but has more recently also spread to smaller villages.
Webster noted that different countries — ranging from Africa to Russia to Indonesia — “are very different in terms of personalities” when it comes to payments and financial inclusion. Lines agreed, stating that some considerations include the availability of infrastructure in each market. In some cases, bank branches are the main option for access to financial services, and in other cases, banks are there for account holders. But microfinance or other financial conduits are available as well.
“Markets tend to be flexible,” he said, and they also adapt across distribution landscapes.
One of the key levers to financial inclusion has been the mobile device, the pair agreed. This can be the on-ramp to digital payments, but cash is still sticky. India represents but one recent and extreme example of just how hard it can be to displace this traditional payment method.
The mobile path in some of the countries may materialize as MoneyGram is still building out its global network, said Lines, with technology and distribution opportunities (including mobile) driven by the fact, at a country level, mobile payments and other options need to be balanced with an eye on just what consumers are willing to embrace.
“Whether it’s cash or technology,” Lines added, “language is still a very important consideration” between markets as money flows between nations as far-flung, for example, as Saudi Arabia and India. In that isolated instance, remittance activity can be shepherded through a personalized level, as reps working with, for example, QuickPay and MoneyGram, who are fluent or native in a language tied to the sender’s or recipient’s country, can help walk a customer to a physical ATM and conduct activities in those tongues.
In some places, digital wallet usage is expanding, and Lines stated that, in other places, like South Africa, money movement remains a physical process. In that market, regulation has meant that remittances have been the province of bank branches when it comes time to sending money overseas. But amid deregulation, now, remittances can be done in retail environments (in other words, in retail stores) at the counter. Here, the physical transaction still takes place, but the locations and use cases expand without necessarily spurring people to use their phones.
Webster noted that there are more compliance boxes for companies to check, as money crosses borders to a growing number of countries, and all happens against a growing threat from cybercriminals. Lines said that one impact has been more countries requiring money transfer operators to operate directly with consumers rather than solely through agents and local merchants, and he also said that the regulatory issues and costs tied to certain countries must be dealt with on a case-by-case basis, as the remittance industry remains “highly fragmented.”