WorldRemit turns to digital to stand out in LatAm remittances market

The number of all-digital remittance sending platforms have exploded in the last decade with the proliferation of mobile smartphones and fast-transforming technology.

According to the World Bank, remittances flows to Latin America and the Caribbean grew by 9.3% last year to US$87bn, led by Mexico and Central America. Growth was driven mainly by the strong economy and labor market in the US, where the majority of the region's migrants reside.

BNamericas spoke with Daniel Canning, commercial director for London-based WorldRemit's North American operations, about its plans for Latin America and the Caribbean, as well as the challenges facing the company and the industry at large.

BNamericas: Where is WorldRemit in its growth with respect to Latin America?

Canning: We're an eight-year-old company, no longer a start-up, more of a scale-up. We're a digital money transfer company, one of a relatively small cohort of digital competitors, who are essentially trying to evolve and advance and offer better solutions to customers in this big remittance category.

We're just getting our business here started in a significant way in North America. So, as we think about the Latin American space, we are focused, first off at present, we're present in every country in the region with the exception of a few outliers: Paraguay, Venezuela and Cuba. 

We are building out a pretty significant network, a network that allows us to move money and pay out in cash, which would be the traditional method, as well as to bank accounts. We have a very robust 'to-bank' network in many of the countries where we are operating, and then in some of the countries we have mobile network operators so we are able to move money into mobile wallets.

BNamericas: Do you have specific strategies or are you looking at certain advantages in particular countries?

Canning: We're still relatively small in the region, which is really a good news story as far as I'm concerned. I've been in this role for four months, and I'm actually coming from a number of years at Western Union.

If you think about where we're focusing, we're looking at and focusing on some of the bigger corridors.

We've got some focus currently on Colombia and Mexico and Dominican Republic, and really the big Central American corridors - Honduras, El Salvador and Guatemala. But we are not excluding anybody.

BNamericas: Could you tell me about growth expectations, plans?

Canning: We're looking to continue to grow our business really rapidly. We do have a small base in the grand scheme of things. We're growing at triple digits.

BNamericas: Triple digital annual growth? Is that your goal or current?

Canning: That's what we achieved last year in terms of growth and that's what we hope to see in 2019.

BNAmericas: In terms of clients or volume?

Canning: Both. In terms really of any of the key measures: clients, transactions, principals moved and revenue.

BNAmericas: How do you see your Caribbean operations?

Canning: We do have a [Caribbean] presence. Of course, we have the Dominican Republic. 

The two biggest non-Spanish speaking countries ... you have got Jamaica as a very large receiver of remittance country, and Haiti is the second. They're actually about the same size. We have presence in both countries, and we are building out that network. We are also going to be competing pretty robustly in the English-speaking and French-speaking countries of the Caribbean.

BNamericas: How much are you looking to invest in that expansion this year, or in the coming years, and in what?

Canning: In terms of a physical presence, like all remittance companies, we rely on partnerships of licensed operators in all of these countries, their banks, their mobile network operators, their retailers. So, we count on those relationships to form what we call the payout backbone of the business. We own and operate and continually evolve the customer-facing platform - that is the sender, who completely and wholly operates through our platform.

As far as marketing goes, most remittance companies are focusing on marketing largely to the senders. So, in the case of our business to Latin America, we're focused on Latinos here in the United States and Canada, who are sending money home regularly.

Typically, there's less marketing to the receiver. It's usually the sender that's making the decisions, deciding which service to use.

BNamericas: Clients are going to want to get behind a company with a reputation of strong finances. Can you give me your perspective on the financial health of the company? 

Canning: You're right. People are not going to be sending hard earned money if they don't believe they have staying power, if they believe the company is at risk.

We have a lot of growth to go, and obviously, we have got to do a lot of things well in a very, very competitive market, but we're confident that we have the right product and platform. We've got a lot of new blood, new leadership, actually, at the top of the organization that is coming with some impressive experience and know-how of how to scale up small companies and ultimately continue to help them to grow.

That's exciting. I personally joined the company for all of those reasons I just mentioned. It's part of a remittance category that's growing. The digital piece has double-digit growth, while the cash [retail] piece is no growth at this point, and all you have to do is look at Western Union's results or Moneygram's results to see what I'm referring to.

BNamericas: As you just said, this is a really competitive field. What do you do to stand out in that field?

Canning: I would start by saying this is a hard field to be in, because the regulatory frameworks are very complex. The money movement part, on paper it looks easy, but it's actually not. It's a complex business.

Standing out within a field of many competitors is also a challenge. A lot of the competitors have a similar offering to the customer. But that said, there are ways companies like ours are trying to be able to offer a unique value proposition.

For example, we can offer to our customer the ability tell us when and how frequently they want their regular remittance sent back home in a 'set-it-and-forget-it' type of offering, where you say, 'I want US$200 to my Mom every two weeks, here's my debit card.' And enable that type of an auto-send, which today doesn't exist in the industry.

It's not easy to build, there are a lot of considerations about how to do it with a pricing perspective, but it's something that we're looking to potentially be able to add to our offering that would be something that would allow us to differentiate, on that particular feature.

BNamericas: What can you tell us about your correspondent network? What kind of partners do you have? 

Canning: Depending on the country, we have different partners. So, in the case of Mexico, for example, we're working with most of the major banks.

Specifically, in Mexico, we've got Bancomer, which has been a traditional major payer. I think up until some of the other companies had to stop working with them, they were the single biggest payer of remittances.

We're with Bancomer. We've got Elektra, Azteca of course, Bancoppel. We've got a network of independent [payers] in small towns. We work with Wal-Mart in Mexico, and we continue to build out our network, because the more points of sale that you can offer and the more connectivity into bank accounts and mobile wallets, the more likely you are able to serve every sender.