COVID-19 is reshaping the global economy. It’s a tough time, especially for economic migrants who are having to leave other jurisdictions, such as the GCC countries, as infrastructure projects are paused or cancelled.
The long-term impact that the pandemic will have on migration patterns remains to be seen, but earlier this year the World Bank estimated that in 2020 remittances would fall by up to 20% in low and middle-income (LMIC) countries.
Many economic migrants, already a marginalised group, have lost their jobs and with it their ability to send any money back to their families and home communities. Amidst the disruption created by COVID-19, many remittance providers have also had to close locations because they’re not classed as essential services, prompting a further swing towards digital services.
Rewire, a fintech founded in 2015, is re-establishing the way that international workers manage their finances. The company is going beyond remittances, building the first comprehensive digital banking platform for migrants to help them build a more secure future.
We spoke with Co-Founder and CEO Guy Kashtan to discuss the challenges of rapid growth in the digital age and how they are boosting financial inclusion for the world’s economic migrants.
What have been the biggest challenges in scaling Rewire?
Trust and regulation. Building trust with customers without ever meeting face-to-face is tough. They see a range of sophisticated scams in the media and it makes them nervous. We manage the trust and anxiety of customers who are sending their money home to provide for their families, and they need to do this without a shred of doubt. It takes time to grow that trust and we’ve achieved it by providing a reliable service time after time.
When you launch in new countries, you have to then rebuild that trust again in a new market. It doesn’t always translate across borders, especially with a consumer product. On top of this, you have to get to grips with the regulations and legislations that are in place, building relationships with the relevant stakeholders.
So trust and regulation can slow down scaling, but once you get past that, you can grow rapidly with your customers at the centre. During the pandemic, we’ve hired an additional 30 employees just to handle the additional customer requests and to help with onboarding and providing our customers around the world with the highest levels of service.
How has the rise in mobile solutions affected the remittance industry? What does this mean for the traditional players?
We started operations in 2015 and so digital transformation was with us from day one. We had to think carefully about whether to focus on smartphones or an SMS solution, and went with smartphones due to the very high penetration rate in emerging markets. Sub-Saharan Africa, for example, is now the poster child of mobile money.
Customers in Europe are more used to remitting in cash, face-to-face at stores, so lockdown has prompted even the most reluctant consumers to turn to digital solutions. You’re now seeing the likes of MoneyGram and Western Union adapting to this by investing heavily in their digital services. The traditional players have to evolve to stay relevant.
With remittances expected to drop significantly, how will Rewire continue to increase financial inclusion for migrants and their families?
Even though remittance volumes have dipped, our total addressable market has more than doubled as people seek digital solutions to navigate lockdown. Digital companies like ours are actually seeing more activity than before.
We’re of course aware that many migrant workers now have reduced incomes and we’re keen to support them. We’ve updated our pricing structure, improving rates by renegotiating deals with our partners. And we’ve also removed minimum payments – we’re seeing more frequent, lower-value transactions as people send what they can afford.
Rewire continues to evolve. Five years ago, we were a remittance company, but today we’re a financial services provider. We offer IBAN payment accounts and other free banking services to users, and we’ll shortly be rolling out savings accounts that help to incentivise and educate migrant communities.
What are your plans for future growth? Will you be expanding your services to more countries?
Unlike Western Union, Remitly and others, we’re not targeting 150+ countries. We work with around 15 receiving countries, predominantly in East Asia and Sub-Saharan Africa. Our strategy is focused on deepening the products and services we provide, such as introducing savings accounts, as opposed to increasing geographical breadth.
The main countries we service each receive more than $25 billion a year in remittances, including India, Philippines and Nigeria. We want to help our users to build their finances and enjoy access to a fuller range of financial services.
What do you think the future of the remittance industry will look like?
The fact that there is a ‘remittance industry’ is part of the problem. This shouldn’t be classed as a separate service – it should fall under the wider banking umbrella. This is what we’re looking to change – extending financial services to migrants so they have access that’s on par with everyone else.
If you look at the first phase of neobanks, like N26 and Monzo, they’ve provided a better banking service for millennials and the tech-savvy, but now they’re working hard to deepen their offering. The second wave, like us, are vertical neobanks who target an audience and offer an enhanced depth of services. We ultimately aim to provide a full suite of banking solutions for migrants, covering both sides of the payment corridor. Not a segmented service, rather an end-to-end service that meets all their needs.
For more information, visit Rewire’s website.