Cross-border, peer-to-peer money transfers — better known as remittances — are an integral part of societies around the world, resulting in a massive global market that totaled over $575 billion in 2016 alone.
The industry is in the midst of an evolution, as globalization creates greater distance between families and digital tools promise to make transferring funds both easier and more efficient. In fact, global remittances are expected to reach $615 billion by 2018, according to the World Bank.
These combined factors are putting a spotlight on digital remittance capabilities, essentially turning this channel into a driver of growth in the industry. That's because as more citizens get access to technology, while also moving around the world, they are looking for cheap, reliable, and convenient ways of performing essential tasks — including transferring funds. Digital remittances continue to grow — in 2016, Western Union got 8% of its consumer-to-consumer transfer revenue via its digital channel, up from 5% in 2014.
Digital-first challengers have entered the remittance industry in force, and they have been quite successful due to their ability to offer lower fees and increased convenience — for example, Remitly processed $2 billion in transfers in 2016, which is essentially double its annualized volume in the previous year, WorldRemit now processes over 600 thousand transactions a month, and Transferwise now transfers over £800 million ($1 billion) a month.
Meanwhile, legacy firms have not stood idly by. Instead, market leaders Western Union and MoneyGram have been active [...]