As the payments ecosystem continues to evolve and grow with the help of new technologies and innovation, the way money moves around the world has also transformed.
Peter Ohser, chief revenue officer of Americas and Europe at MoneyGram International, pointed out that, while there are many things driving the company’s business, the impact of digital is having lasting effects on the evolution of the global remittance landscape.
The increased use of digital products and services is something that’s present across every aspect of many consumers’ daily lives, which, in turn, has helped to accelerate the adoption of digital channels when it comes to money transfers.
But Ohser explained that everything about remittances and MoneyGram’s business is very local, so it’s important to understand the behaviors and unique characteristics of corridors rather than generalizing trends across markets — even when it comes to digital.
“In the U.S., we’re focused on the digital sending because that tends to be where you see higher penetration of banked remittance senders. There’s this belief that remittance senders are underbanked, and that’s not actually true,” he noted.
In fact, Ohser confirmed that the majority of remittance senders, more than 70 percent, are banked, which means they have access to the mechanisms that enable them to send funds digitally.
In markets where people are comfortable with digital services, such as mobile banking transactions, it’s more natural to make the shift to using these services to send or receive money.
“It’s less scary,” Ohser said. “That leap of faith that it’s going to work is becoming easier because [consumers are] seeing digital work in other aspects of their lives. But there’s still education that has to take place around these services.”
While the power of digital is certainly on the rise, scenarios like what is playing out in India’s decision to remove certain banknotes from the market show that cash still has an important role to play across the globe.
Though Ohser noted that the exercise has stressed the fabric of the society around the use of cash, he said that time will tell how the people and industries in India adopt and evolve to the new mandate.
“But certainly cash, on every level, is still a dominant payment mechanism, and although it may not be growing, it’s not shrinking at a normal rate. Even in the markets where people say they are going cashless, it’s really not 100 percent true,” he added.
Fueling Global Growth
How people send and receive money varies widely based on location, which not only makes transferring money a very local business but also makes growth without scale almost impossible.
For MoneyGram, strong Q3 earnings growth was a function of many factors, including a strong focus on digital, overall market growth in the money-sending business and maintaining the loyalty of existing customers.
“There’s no impulse money transfer,” Ohser explained. “People don’t walk by a MoneyGram sign and say, ‘Oh, I think I’ll send money today.’” He added that because there is much more planning and forethought around remittances, scale really matters.
“As we bring these digital channels on and pursue digital opportunities, we have to figure out how to scale that,” he said. “It gets more complex as you bring in languages, regulatory compliance, authentication within certain markets, etc.”
While the company is continuing to make investments in technology, ensuring that it can maintain a scalable platform that works across the globe remains top of mind.
The Power Of Partnerships
Just as the money transfer business has evolved over the years, so has MoneyGram’s role in the industry.
With a cross-channel and multi-currency global infrastructure in place, as well as the ability to reach roughly 2 billion bank accounts, it’s no surprise that industry players are looking at MoneyGram differently.
Ohser said many of the companies that now see MoneyGram as a platform to enable their ambitions to move money around the world today may not have even considered a partnership years ago.
“We traditionally have worked with large banks, large retailers and other financial institutions in markets that wanted to offer remittances as one of their value adds in the physical space,” he explained. “Today, we’re seeing a lot of interaction with other digital platforms that want to provide remittance solutions to their customers but do it in a digital manner.”
To help cultivate these partnerships, the company recently launched MoneyGram Kameleon, a turnkey product that offers a customized website for U.S. retailers, financial service providers and telcos looking to offer a money transfer and payment experience.
Ohser explained that the digital platform enables players to integrate global money remittances without all of the risk, compliance complexities and burden.
“Everybody is fearful of the digital side of the business and losing that customer intimacy, but we think that we can continue to give brands and other strong partners around the globe that customer intimacy through partnership,” he said.
“The opposite is just to try to drive everybody into our consolidated app and disintermediate the network, and that’s not really how we think the world should work,” he added.