A headwind for revenue, a tailwind for innovation: How covid-19 is pushing progress in the money transfer sector

By George Piskov, founder of the international money transfer service MoneyTO 

International money transfers are the essential plumbing of global trade and travel. The industry has long been a champion – and a beneficiary – of globalisation.

The Covid-19 pandemic has broadsided it in two ways. International trade has fallen as business and consumer demand contract, and international travel has collapsed as national borders close and airlines slash the number of flights.

The combined effect has hit parts of the payment services industry hard. Some highly profitable services like Dynamic Currency Conversion – which allows international travellers to use their bank card to make purchases abroad in their home currency – have almost ground to a halt.

My own business, MoneyTO, which allows consumers to transfer money to friends or family abroad, has been one of the lucky ones. Our service is especially popular among the UK’s large migrant worker community, who use it every month to send remittances home.

The frequency and size of the transactions we’re processing has held up well since the pandemic arrived, as for many of our clients, ours is an essential rather a discretionary service.

Yet we are fighting hard to maintain our market share. And we, like innovators in other sectors, have found the best way to keep on the front foot is by continually improving the customer experience.

The Zoomification of business, family life… and love

One piece of technology has surged to prominence above all others during the global lockdown – video calling.

Seen as science fiction until just a few decades ago, on the eve of the pandemic it was still relatively niche; popular among tech-lovers but rare elsewhere.

However as billions of people around the world were ordered to self-isolate, it was catapulted into the mainstream.

Meetings everywhere – from summits of global leaders to family catch-ups – went virtual. Video conferences became a daily ritual for housebound office workers and tech providers such as Zoom and House-party have turned into household names.

People’s newfound love affair with video chat is most dizzying in the world of… love.

The American tech giant Match Group, which runs some of the world’s biggest online dating sites, found in April that 70% of its US users would be happy to go on a virtual date – spending an evening with a prospective partner via video link rather than in person.

At the end of February, before the pandemic hit, just 6% of American singletons were willing to meet a suitor this way. Sure enough, Match Group has now announced plans to introduce a video-chat function on its flagship app Tinder.

Veni, video, vici

I believe video technology will soon come to play an important role in financial services too – particularly in international payments.

The march towards digital banking saw many of the world’s best-known bank brands close thousands of physical branches even before the Covid crisis hit. The consumer group which? Calculates that in the UK between 2015 and 2020 an average of 55 bank branches disappeared every month.

But while many customers are happy to do routine financial transactions online or through an app, conventional digital banking is not a perfect solution – especially for more complex actions like sending money abroad.

In the most literal sense, video chat capability gives online financial services a human face.

But since MoneyTO introduced a video chat option on its app earlier this year, we’ve seen it deliver so much more.Its potential outstrips that of conventional call centres or ‘live chat’ text interfaces.

From the customer point of view, the appeal is obvious. It’s far easier to interact, and understand, when you’re talking to someone you can see.

This is especially important if your clientbase is multinational like ours, and includes many non-native English speakers. Our feedback shows customers really value the ability to see and hear a friendly staff member who is able to answer their questions, walk them through the process and help them complete forms in real-time.

Our research also suggests the video chat function significantly boosts customer trust, slashes the number of abandoned transactions and all but eliminates client errors.

There are other benefits from the business’s point of view. Though the service is on a par with that offered in a physical store, the operational cost is a fraction of that needed for a bricks and mortar office – making value a decisive factor even before the UK’s lockdown forced the closure of most retail premises.

Video calls allow staff to form strong bonds with customers, making it easier to upsell additional services. Face-to-face sales conversations have always had the best conversion rate, and this is as true over video as it is in a branch.

Security can be strong too, and the latest tech enables video chat functions to include enhanced features such as facial recognition, digital signatures and voice biometrics. These can be used to confirm a customer’s identity better and more discreetly than conventional telephone or online platforms.

Nevertheless I see the video chat function as a powerful complement, rather than a competitor, to the other ways our customers interact with us. MoneyTO operates multilingual call centres to support our international customers, and I don’t foresee our teams switching entirely to video calls; some users still prefer the telephone.

We pride ourselves on our service, and we can serve our customers best by offering them a wide range of convenient ways to talk to us.

Pandemic pushing the pace of change

Recent decades have seen a steady increase in competition in the international money transfer space. Banks have gradually lost their stranglehold on the sector, with a raft of non-bank players springing up to offer more attractive exchange rates and higher standards of service.

But despite the hoopla about a few fintech providers, progress has typically been incremental rather than exponential.

Now the pace of change is being accelerated dramatically by the Covid crisis. Around the world, thousands of businesses in every sector have already pivoted their operations to meet the needs of the ‘New Normal’.

The payment services sector is no different. The huge upheaval in global trade and travel is forcing providers to make changes in a matter of weeks that would previously have taken them years.

The players most likely to survive and thrive are those willing to adapt their operations and embrace new technology like in-app video calls.

The future course of the global economy, and the financial services industry on which it relies, remains shrouded in mystery.

But one thing at least is clear to see. Brands that allow their customers to see and talk to their staff, whenever and wherever they need to, will have a decisive advantage.