Bankless Times recently spoke with Komal Rathi, COO of Transfast’s commerce business. Ms. Rathi has more than a decade of experience in marketing, operations and product development. She has also worked with Capital One and Accenture. She earned her MBA from Wharton to go with an MS in Computer Science from USC.
We spoke about how Africa is a growing hub for emerging payments and remittances. Transfast’s African bank network is available to more than 90 percent of adult bank holders in 23 nations. Transpay is licensed in 70+ jurisdictions globally, with countries such as Nigeria, Ghana and Kenya, receiving a large percentage of payout volume.
1. Many are saying the mobile phone and innovations surrounding it can help Africa leapfrog generations of development. What are your thoughts?
Africa is an exciting place. It’s a continent with tremendous opportunity and challenges. There’s a lot of movement with migration abroad, and specific countries are relying heavily on remittances.
When you don’t have a lot of legacy infrastructure, you get to innovate. That’s why Africa is a white board and you can create what you want, leapfrogging entire generations of technology.
In 2015, we announced the massive expansion of our proprietary bank network into 23 African nations. Since then, Transfast’s network has enabled people in the U.S. and Canada to send money online or via mobile, directly into recipients’ bank accounts at nearly 600 banks or to 6,000 cash pick-up locations inside banks in Africa. Today, our African banking network covers up to 90 percent of adult bank account holders in the 23 nations we serve.
In addition to providing the greatest reach, Transfast’s self-owned bank network also provides the greatest value and transparency – senders pay the same flat fee and receive locked-in rates to send to all 13 African nations currently online. Bank deposits arrive within a day, and sometimes instantly. Cash is delivered in minutes.
Looking to the future, the African Development Bank has reported Africa has more than 200 million people aged between 15 and 24. That means about 65 percent of the continent is made up of millennials, making Africa the youngest continent in the world. Demographic forecasts show that this figure will double by 2045. Because millennials are the generation that’s most comfortable with using mobile to do transactions, we see millennials making the move from using their mobile device to stay in touch with family and friends to using their mobile device to send money home. It will be a natural move for them, and with our network already in place, we’re excited about the growth potential.
2. Were there cultural considerations you had to factor into the design and development of effective services?
We built our VALUE+ and FASTRACK products with our customers in mind, and the result is our number-one ranking as lowest cost remittance for Nigeria and Ghana (and also for the Philippines and Egypt) during the first quarter of 2016 on the World Remittances Prices Database (The World Remittance Prices Worldwide Database, from the World Bank, is available at http://remittanceprices.worldbank.org).
Our customers sending funds to Africa want value, convenience and service. They demand maximum value for their money, and they seek out companies that are open and transparent with them. As a result, we offer locked-in exchange rates that give our customers a high level of confidence, and we walk them through the process, providing all the information they need and answering their questions before they have them.
Finally, for our customers sending funds to Africa, security is also paramount. We have systems in place to protect our customers and our bank partners as well, from potential fraud.
3. Are there differences in user habits within the continent?
Yes. Mobile money is very heavily used in Nigeria and in Kenya with M-PESA, and is starting to trend in Ethiopia, compared with other nations such as Ghana or Senegal, where mobile money isn’t as prevalent. In Nigeria, we’re also starting to see more people feel comfortable with banks, and that’s resulting in growth in mobile banking and downloading mobile apps from banks like First Bank of Nigeria, one of our partners. So, Nigeria is starting to leapfrog again, this time into mobile banking.
4. What are the factors behind Nigeria and Kenya’s growth in inbound remittances?
Globally, we see growth in migration, which is driving growth in remittances, and Africa is certainly no exception. In 2015, World Bank reports the number of international migrants will have surpassed 250 million, an all-time high.
The second factor behind the growth in remittances is the growth in disposal income for members of the African Diaspora. Not only is this new generation of Africans more educated, they also have more disposable income to send home. We’re very upbeat about the trend in remittance growth and the desire of members of the African Diaspora to invest in the community, both in their new country and back home, which will also be fueling the strength in inbound remittances.
5. What were individual government attitudes toward the potential of mobile commerce? Which ones understood the most?
While our mobile app has been embraced throughout Africa, we want to particularly note Kenya, where the M-Pesa wallet offers people a simple, affordable and quick way to transact by using just their mobile phone. When our customers send funds in M-Pesa to Kenya, their beneficiaries can receive the money in minutes on their mobile wallet.
6. What does the future hold for fintech in Africa?
The sky’s the limit for fintech in Africa, and opportunity is boundless. In particular, we see a bright future in fintech’s ability to further the financial inclusion goals of governments in Africa.
As banking penetration grows in Africa, one example of fintech driving financial inclusion is our direct-to-bank product capability, which we believe is the most efficient and cost-effective way to receive funds. For unbanked recipients, the ability to pick up cash at a bank provides a positive experience in a bank environment and is a first step toward becoming banked. According to the World Bank, direct bank deposits and electronic payments play an important role in building financial inclusion by further engaging account holders in the banking system. Studies show that when people participate in the financial system, they are better able to start saving, expand businesses, invest in education, manage risk and absorb financial shocks. Access to accounts and to savings and payment mechanisms increases savings, empowers women, and boosts productive investment and consumption.
Because of that, we’ll continue to develop our network and product capabilities in Africa, building on the reputation we’ve built as an innovator. That reputation was established when we became the first money transfer company to offer instant bank transfers, back in 2009. Instant bank transfers underscores our ability to innovate and deliver better products and experiences for customers. We’ll continue to expand our footprint across Africa, to serve the broader population.