Customers Willing to Shift to Mobile Money for International Transfersby Fintechnews Singapore April 12, 2016
Mobile international money transfer services have significant potential to gain traction and market share as 92% of consumers are willing to ditch traditional money transmitter services for a mobile method, according to a new survey.
Entitled ‘Mobile Financial Services Consumer Survey: International Remittance,’ the report highlights key findings from a survey which questioned nearly 3,000 members of migrant communities in the US, UK and Germany.
The research, conducted by Juniper Research and Amdocs in 2015, was aimed at understanding consumers’ perceptions of and preferences for international money transfer, international top-up and international bill payment.
The firms studied 7 particular remittance corridors: US – Mexico, US – Latin America, US – India, US – Vietnam, US – Philippines, US – Nigeria, and Germany – Turkey. These corridors account for US$78.6 billion in remittances annually.
They found that although money transfer operators (MTOs) are the most popular means by which respondents send money (61%), users are highly unsatisfied with 82% claiming that they had one or more issues with their provider, including cost and speed of transfer.
47% of respondents cite speed of money transfer as a major challenge with their current provider, including 48% of those sending via MTOs, 49% of these who send via bank transfer and 46% who use the Internet.
The report suggests that MTOs currently represent one of the most expensive options for money transfer, with nearly half of respondents paying an average of more than US$10 per transaction.
The survey found that respondents are willing to explore alternative options to existing international money transfer methods. Findings suggest a lack of awareness of alternative, lower-priced services on the market.
83% said they were ready to send money remotely and respondents also indicated a strong willingness to pay for a mobile international remittance service priced lower than those currently available. Respondents said they were willing to pay approximately US$5 per transaction for a mobile remittance service.
92% of these currently using MTOs said they would be prepared to send money via mobile. This figure represents an opportunity for mobile network operators to play a pole position to develop and introduce such a mobile remittance service.
“Based on the findings of our survey, we would recommend that the scale of the opportunity […] is such that an MNO (mobile network operator) launching a mobile international remittance service has the potential both to churn significant users from their existing service providers and to generate new business for the market as a whole,” the report says.
“Overall, the survey suggests a significant level of dissatisfaction with existing service providers, presenting an opportunity for a new entrant capable of offering a service that is faster and cheaper than those currently available.”
According to Dr. Windsor Holden, head of forecasting and consultancy at Juniper Research, the survey findings’ demonstrates a “clear opportunity for international mobile money services to disrupt the money transfer landscape and provide much needed competition within this arena.”
“With consumers citing cost as a primary factor for service selection, the emergence of a lower-priced alternative is also likely to act as a catalyst for overall growth in the scale of official remittance,” Dr. Holden said in statements.
Sending money home
Sending money home is a common practice among those surveyed, with 60% doing so.
Typically, respondents either send money between 6 and 12 times per annum or between 2 and 6 times per annum (37% of respondents in each case).
Across all respondents, 49% sent less than US$300 per transaction on average, with a further 34% sending between US$300 and US$749 per transaction.
The international remittance market represents an attractive, fast-emerging revenue stream for mobile financial services providers. The World Bank estimates that the market will reach US$610 billion this year.
Remittances often represent a key capital source for developing countries: 1.9% of Gross Domestic Product in Mexico, 3.4% in India, 4.5% in Nigeria, 6.3% in Vietnam and 10% in the Philippines.
Read the ‘Mobile Financial Services Consumer Survey: International Remittance’ report: http://lp.mobilemoneytime.com/imt-remittance-wp/
Featured image: Money dollars airplane by photovs, via Shutterstock.