PUBLISHED: 24 SEPTEMBER 2019
AUTHOR: NOEL PEATFIELD
The macro trend of financial regulation opening in Europe is also being seen in Asia with fintech startups, banks and money transfer companies competing to meet the growing demand for global remittances.
U.K. remittance unicorn Transferwise last year became the first non-bank to join the Bank of England’s payment system giving them direct access as regulatory authorities push to increase competition. More recently they have gained permission from Singapore’s government to access SingPass a national database that has helped to reduce the time it takes to on-board customers.
Banks have continued to be the most expensive channel for remittances. According to the World Bank they have charged on average an 11 percent fee in the first quarter of 2019 with post offices being the second most expensive adding premium rates when in exclusive partnerships with money transfer companies. The countries with the highest remittance recipients were India with $79 billion, followed by China with $67 billion. East Asia and Pacific remittances increased to almost 7 percent to $143 billion in 2018.
New technology such as blockchain has helped bring down costs and the time it takes to transfer money across borders. One of the most common uses for bitcoin in China has been reported to be remittances using companies like Hong Kong’s Bitspark. As global regulators prepare for the arrival of Facebook’s Libra, China’s central bank will soon be introducing their own national cryptocurrency.
Mark Carney, The Bank of England governor, has challenged the dollar’s position as the world’s reserve currency saying that it could be replaced by a global digital currency. Although Facebook’s Libra would be a unified currency each country has different regulatory regimes and banking standards. For companies looking to provide the increasing demand for international remittance services local partnerships are needed to help navigate a multitude of regulatory environments as new technology and platforms are developed.
Having recently opened a new office in Singapore the open banking and compliance platform Railsbank plans to expand their service in the region as a utility on which other companies can add fintech features to their existing products. As businesses plan to expand their fintech offeing, including improved remittance services to customers who want to send money into SE Asia co-founder and CEO Nigel Verdon said “For remittance firms outside of South East Asia sending flows of money to Indonesia, Philippines, Thailand, Vietnam, Myanmar etc. many of the local currencies have currency restrictions.
One of the key challenges is finding a local partner bank or money services business who will settle in USD/GBP/EUR and deliver the currency locally, with sufficient distribution to reach people, many who may not have a bank account.”
The rise in the availability of cheap smartphones continues to increase the adoption of financial services with payments offering a gateway to mobile banking which is becoming more accessible across the globe. Initiatives taken by governments are opening up the region to European fintech innovators taking a technology first approach to remittances in Asia. Regulatory and technological bridges can be forged through partnerships and understanding for a more connected global fintech ecosystem.
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