The Mumbai-based online cross-border remittances provider, founded in 2000, chose Kenya as its first base from where it plans to expand and tap Africa’s diaspora remittances market that grossed $40 billion last year.
The deal with NationHela, powered by Diamond Trust Bank, will see Kenyans in Europe and the United Arab Emirates transfer money directly from their accounts to a mobile phone wallet or Kenyan bank account.
Kenya’s diaspora inflows have been growing at an annual average of 30 per cent in the past three years to the billion dollar mark last year — Sh99.4 billion ($1.17 billion) — data from Central Bank of Kenya (CBK) shows.
TimesofMoney is majority-owned by Network International, a Dubai-based payment solutions provider with ventures in the Middle East and Africa.
The service, estimated to cost about two per cent of the amount being sent, drastically cuts down the cost of remittances to African destinations which currently averages between eight and 17 per cent.
The Business Daily spoke to TimesofMoney CEO Avijit Nanda on the new service and its possible impact on the money transfer market.
What opportunities do you see in the Kenyan and African diaspora remittances market?
Diaspora inflows to Kenya and the continent have been growing exponentially and we see this as an exciting time to bring in our disruptive technology and business models.
All the fundamentals here are right for us to come in with an online-based money transfer solution that has an attractive price point and is efficient. As it is right now, sending money to Africa remains costly, at an average of between eight and 17 per cent of the amount being remitted.
This is because of the inefficiencies of the traditional money transfer channels which involve cash handling, distribution agents which increase the cost of the service.
There is also the hidden cost of inefficiencies when travelling in search of agents and the risks involved in cash handling.
We have come to disrupt the market by leveraging on technology to facilitate the direct transfer of money from foreign bank accounts to local recipients through NationHela.
Because there is no need for agents, distribution costs and other fees and commissions in the chain; we are able to pass these benefits to consumers by offering a competitive rate.
Why did you choose Kenya to launch your online cross-border remittance service?
This is the entry market for us in Africa. With its growing diaspora, Africa has a huge remittance potential, which makes it a key focus market for us. The profile of both Kenyan migrants and recipients of remittances is very dynamic and inching towards more uptake of technology.
Kenya’s internet penetration, estimated at about 40 per cent mostly through mobile, makes it ideal for our money transfer system which is online and can also be directly sent to a mobile phone wallet. Kenyans are already used to mobile-based services and are more receptive to technology.
Those in the diaspora will find it convenient to send money directly from their bank accounts back home at any time of the day, saving them the hassle of queuing at a money transfer agent.
What are the key features of TimesofMoney remittance platform?
It is a white-labelled remittance platform — meaning that we provide the backend infrastructure and banks only run and offer the remittance. Our proprietary platform, dubbed Remittance in a Box provides banks with a plug-and-play solution to power their online remittance service.
It is easily plugged into a lender’s existing core banking platform without need to change its software.
This platform offers various modules like user interface and design, risk management, technology, operations and customer service. We have tied up with NationHela, which is powered by Diamond Trust Bank.
The money can be sent to any of the banks in Kenya. The banks control the foreign exchange rate and fees. The banks do not spend in creating infrastructure. We integrate to the bank API which runs out of the bank for security.
The sender also has the option of sending it to the NationHela prepaid debit Visa card, hence can be used to pay utility bills, shop online and withdraw cash from ATMs. This provides an opportunity for banks to generate revenues and enhance their diaspora banking offerings.
The service is available in Europe and UAE; which are Kenya’s key diaspora remittance sources. We are working to bring on board North America and other Asian countries.
The banks have the flexibility of setting cost margins, but it is between one and two per cent of the amount being sent — making it an attractively priced remittance service. The service is multi-currency, multi-corridor — it can be used for inflows as well as sending money overseas. Going online makes our remittance solution cheaper.
In a nutshell, we leverage on our global expertise and technology to provide a hassle-free cross-border remittance experience.
Talk about the speed and convenience of the money transfer solution! The money is sent to your beneficiary within one day of receiving it in our account. Our research shows that in 95 per cent of money remittance cases, the funds are not needed urgently.
Senders are most likely to use a cheaper and efficient service even if it takes slightly longer.
Further, the comfort of sending from a bank account to another bank account is a great opportunity; bypassing expensive wire transfers. The informal remittance market continues to flourish because of its attractive pay point and not necessarily speed.
We want to provide a service that will win over a bigger share of the remittance market by providing great user experience since sending money back home is a social phenomenon.
What are the emerging trends in international diaspora remittances?
Our research over time shows that cost is the biggest factor in choosing a remittance service provider. Due to lack of a variety of offerings, users are forced to use the few channels available to send money especially to Africa.
Most people in the diaspora use banks to make SWIFT wire transfers which are quite expensive. Online cross-border remittances are emerging as a niche market, which is easy to access and follows global norms for customer data and transaction security. At the same time, it allows transparency for the customer to track their transactions online.
The system is able to track customers’ behaviour such as time of transactions, amount and location; giving banks insight into the needs of their customers. The system also allows one to pay utility bills, schedule mortgage payments, loan repayments and can set prompts for social gifting at certain intervals.
Consumers are now more informed and are looking for a dynamic product that is beyond the traditional cash-based money transfer.
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