The money transfer industry is ripe and ready for consolidation.
[bctt tweet=”The money transfer industry is ripe and ready for consolidation.”]
That’s the sentiment conveyed by the head of one of the biggest players in the $600 billion field of what is known as remittances, MoneyGram, and specifically Alex Holmes, who is the incoming chief executive of the firm after having served as chief financial officer.
Financial Times noted on Tuesday (Dec. 29) that the fragmented playing field is likely to become a bit more cohesive as mergers take place. There’s regulatory impetus in the wings, too, as FT said that the watchdogs are trying to move in pace with digital technology and a surge in demand for transfers as the economy becomes increasingly global with workers becoming increasingly global, too.
As quoted by the paper, Holmes stated: “Regulators want more information … but the more pressure you put on us, the more we are driving people away. Every regulator in the world wants us to ship money safely and carefully to more people, but everyone also wants lower costs.”
In tandem with the movement to digital, the brick-and-mortar operators are facing increased pressure, even as MoneyGram and behemoth Western Union fend off PayPal and other contactless/cashless firms.
Speaking specifically to the Mexico market, where $24 billion is sent from the United States — and where there are nearly 100 money transfer firms on record — Holmes stated: “I would like them to go away … I would love to buy them all,” and according to FT, he added that consolidation is a wave that is “likely to happen” as smaller rivals “do not have a lot of substance. They build a cool app; they do the simple things right. But try to move cash around to 200 different countries from 200 different countries. It is not easy.”