In the dynamic world of digital payments, a new financial frontier is taking shape: remittances. Open banking is making a significant impact on how money is sent across borders. Let’s explore why open banking could be a preferable option for the remittance industry, making it faster, cheaper, and more efficient.
Challenges faced by FX and Remittance
The financial landscape for FX brokers and remittance companies is fraught with challenges that impede efficiency and customer satisfaction. From cumbersome transaction processes to the high costs of traditional payment methods, these sectors are in dire need of a transformative solution.
FX brokers: the need for a better experience
FX brokers face significant hurdles in transaction funding. The reliance on manual bank transfers not only complicates the payment process but also introduces delays and errors, affecting trade execution and operational efficiency. This outdated approach necessitates a shift towards more streamlined, error-free solutions.
Remittance companies: the need to escape card fees
Remittance companies, meanwhile, contend with the financial burden of card payment fees. These costs, coupled with security risks and the inconvenience of manual data entry, highlight the need for a more cost-effective and user-friendly payment alternative. According to WorldBank, the average cost of sending remittances is 6.20% of the amount sent. There is a greater cost to send remittances through banks than through digital channels or money transfer services, making an alternative option attractive.
The call for Open Banking
The challenges across both sectors underscore the necessity for innovation. Open banking stands out as a promising solution, offering an enhanced user experience, and significantly reducing operational costs.
Understanding open banking and its benefits
In a world of ever-increasing interoperability, open banking has emerged as a catalyst for change, particularly in the realm of remittance. Open banking is a concept that breaks down traditional banking silos by allowing third-party financial service providers to access a customer’s bank account data or initiate payments out from their account, all through secure APIs (Application Programming Interfaces). This data-sharing ecosystem has sparked innovation, and the benefits are many. Open banking offers increased transparency, competition, and choice to consumers, ultimately fostering a more customer-centric financial landscape. In 2022 there were 68.2m open banking payments, up from 25.2m in 2021, representing growth of significantly more than 100% year-on-year.
Remittance under the spotlight
There were some transformative shifts due to the pandemic, and remittance payment flows faced challenges. Financial difficulties among migrants and those working abroad resulted in reduced remittance, compounded by high international transfer fees and restricted physical branch access. However, a solution emerged in the form of open banking-powered remittance. Open Banking is the new way for consumers to pay. Customers pay by bank transfer, sending funds directly from their bank account to the merchant. It is fast and secure, all with no cards and no data entry.
Harnessing the power of open banking for remittance
Open banking’s integration with remittance processes has unleashed a wave of change, benefiting both financial institutions and end-users. Financial institutions now have the tools to leverage customer data effectively, streamlining processes, reducing costs, and enhancing the overall remittance experience. According to industry insights, last year saw a tenfold increase in payments made using open banking, emphasising the shift’s significance.
Elevating the customer experience
Open banking-powered remittance transforms the customer experience into a seamless digital journey. This enhancement grants faster access to funds, real-time updates on transfers, and personalised advice based on unique circumstances. As customers demand more tailored experiences, open banking’s capabilities align seamlessly with these expectations, enhancing loyalty and satisfaction.
Driving efficiency and reducing costs
One of the most remarkable benefits of open banking is the potential for cost reduction. Traditional remittance processes are often laden with additional fees and manual workloads susceptible to errors. By embracing open banking technology, financial institutions can automate processes, cutting costs significantly. Experts estimate that as much as 50% of remittance costs can be slashed through open banking-powered solutions.
Speeding up transactions
Time is of the essence and open banking can expedite the remittance process. Unlike traditional methods that can take days to complete, financial institutions integrating open banking can provide quicker transaction finality, thanks to intuitive interfaces and automated processes.
Leveraging data for holistic insights
In the age of data, open banking unlocks access to permissioned financial data, enabling financial institutions to gain a deeper understanding of customers’ economic behaviours and needs . This insight translates into a more personalised customer experience, fostering loyalty and revenue growth.
Ready to harness the power of open banking-powered FX & remittance?
In an era where the financial landscape is evolving at an unprecedented pace, open banking is a beacon of transformation, reshaping the way we conduct financial transactions. Open banking powered remittance presents an extraordinary opportunity for financial institutions to thrive in this dynamic environment.
As you innovate in payments, we invite you to explore the full potential of open banking-powered remittance. Our team of experts is ready to guide you through this transformative process, helping you enhance customer experiences, streamline operations, and stay ahead of the curve.
Don’t miss out on the chance to supercharge your remittance offerings and future-proof your financial services. Connect with us today to discover how open banking can revolutionise your approach to remittance and payments.
Let’s shape the future of finance together.
