WorldRemit is one of the UK’s most high profile and best-funded financial tech companies. The remittance service lets users can send money via computer, smartphone or tablet and picked up in the shape of a bank deposit, mobile money or mobile airtime top-up as well as more traditional cash pick-up.
Aiming to offer an alternative to high fee charging incumbents with highstreet agent models, it is part of a new generation of money transfer services that want to make sending money as easy as sending a message online.
Backed by the likes of Facebook and Dropbox investor Accel Partners and Netflix, Spotify and LinkedIn investor Technology Crossover Ventures, the firm is one of London’s best-backed fintech companies with around $150m in venture funding under its belt.
In the latest episode of the FinTalk podcast we talk to the firm’s founder and CEO Ismail Ahmed, who built WorldRemit after experiencing the high cost and inconvenience of sending and receiving money first hand, initially growing up in Somaliland and later as a student in London sending money home.
The episode is available for listening on Soundcloud right now, with a launch on iTunes coming very soon. We’ve also transcribed the interview below for those of you that prefer that format. Enjoy!
Why did you decide to launch the business?
I have been interested and involved in remittance for a long time. I come from Hargeisa, the capital of Somaliland, where remittance makes up around 40% of the GDP. Before I left the economy used to rely on remittance coming from gulf countries and my family like many others used to receive money from there.
I learned how remittance worked when I was a schoolboy and then when I came to the UK as a student I became a sender so I gained first-hand experience of the kinds of costs and inconvenience associated with traditional money transfer.
After that I became a compliance adviser for the United Nations (UN) after 9/11. That was when I saw how traditional money transfer services were broken in terms of difficulties in identifying fraudulent transactions and money laundering and the difficulties of trying to establish an audit trail around someone going to a corner shop to send money using cash.
My original background as a recipient and sender of remittance and also my experience of the UN helped shape my idea for WorldRemit.
Mobile is discussed as a big inflection point in remittance, but how much is actually happening online?
For mobile on the receive side we have partnered with big operators like MTN, the biggest in Africa, mPESA in Kenya and Eco Cash in Zimbabwe. But apart from countries where mobile money has taken off, cash pick-up is still popular on the receive side. On the send side the overwhelming majority of migrants have accounts but still more than 90% international remittance on send side takes place in convenience stores.
If you look in Europe, 97% migrants have banks accounts so why would someone with an account need to go and take cash out of an ATM to then travel to a corner shop to send money – so that is where we are changing the way people send money.
What do you think the remittance industry will look like in 20 years?
The space is changing now driven by banks that are exiting from traditional money transfer businesses that collect cash. Most of the big banks globally do not want to offer banking facilities to a company relying on a corner shop to collect money and that’s really pushing a lot of those traditional players to exit. Tough regulation is also driving a lot of the traditional money transfer businesses online because it is safer, there is an audit trail.
The third trend helping the industry move online is smartphone adoption. Most migrants now have smartphones so they can use their devices to download an app and send money. Those trends are pushing the industry digital much faster than before.
We expect that in the next 10 years 90% of remittance will move online. Even today we’ve seen some markets like New Zealand, Australia and the Nordics where the share of online has grown significantly in the last few years.
What has been the most challenging element of building the business?
Getting the payment methods on the send side right. We went global very early, for example launching in Canada within weeks of launching in the UK. They don’t use debit cards like we do with Visa and MasterCard they use a system called Interact or Interact Online for online payments so it’s about getting an understanding of how to collect payments from customers in each market. I’d say really understanding and then implementing those payment methods in the 50+ send markets where we source remittance was the most challenging factor.
On the receive side it was about how to get tier one partners that help us build trust with migrants. Migrants are very conservative and do not like to change their behaviours. One way for us to build that trust is through partners they recognise. Every Kenyan will understand if you say you’re working with mPESA and any Ghanian will undertand if you say you are working with MTN Ghana.
Without those brands it is hard to win that trust. But to get those brands you have to show volume and traction. So we faced the challenge of having to get customers to prove we were a credible large player to tier one correspondents, but could not get them until customers trusted us.
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