FinTalk: WorldRemit founder on the future of money transfer

Ismail

Today WorldRemit is one of the UK’s most high profile fintech companies, offering international remittance services from 50 countries to more than 120 destinations around the globe. Users can send money via computer, smartphone or tablet and picked up in the shape of a bank deposit, mobile money or mobile airtime top-up as well as more traditional cash pick-up.

Aiming to offer an alternative to high fee charging incumbents with highstreet agent models, it is part of a new generation of money transfer services that want to make sending money as easy as sending a message online.

Backed by the likes of Facebook and Dropbox investor Accel Partners as well as Netflix, Spotify and LinkedIn investor Technology Crossover Ventures, the firm is one of London’s best-backed financial tech companies with around $150m in venture funding under its belt.

In the latest episode of the FinTalk interview podcast series we talk to Ismail Ahmed, who decided to build WorldRemit after experiencing the high cost and inconvenience of sending and receiving money first hand, initially growing up in Somaliland and later as a student in London sending money home.

We talk about the challenges he faced building the business, where he sees the industry in 10 years and what he’s learned along the way.

The episode is available for listening on Soundcloud right now, with a launch on iTunes coming very soon. We’ve also transcribed the interview below for those of you that prefer that format. Enjoy!

Team FinTalk. 

 

Tell us something about WorldRemit nobody else knows

When I started the company it was first incorporated as ‘Clean Remittances’. The idea was that because of my compliance background we wanted to promote that and say that we’re different from traditional money transfer services which are associated with money laundering and the like.

Just before we got started I got a call from one of our bankers and it became clear she thought we were running a cleaning business so she was checking out what kind of qualifications I had to run a cleaning business. After that we changed the name.

 

Why did you decide to launch the business in the first place?

I have been interested and involved in remittance for a long time. I come from Hargeisa, the capital of Somaliland, where remittance makes up around 40% of the GDP. Before I left the economy used to rely on remittance coming from gulf countries and my family like many others used to receive money from there.

I learned how remittance worked when I was a schoolboy and then when I came to the UK as a student I became a sender so I gained first-hand experience of the kinds of costs and inconvenience associated with traditional money transfer.

After that I became a compliance adviser for the United Nations (UN) after 9/11. That was when I saw how traditional money transfer services were broken in terms of difficulties in identifying fraudulent transactions and money laundering and the difficulties of trying to establish an audit trail around someone going to a corner shop to send money using cash.

My original background as a recipient and sender of remittance and also my experience of the UN helped shape my idea for WorldRemit.

 

It feels like mobile is a big inflection point in remittance, but how much remittance is actually happening online?

For mobile on the receive side we have partnered with big operators like MTN, the biggest in Africa, mPESA in Kenya and Eco Cash in Zimbabwe. But apart from countries where mobile money has taken off, cash pick-up is still popular on the receive side. On the send side the overwhelming majority of migrants have accounts but still more than 90% international remittance on send side takes place in convenience stores.

If you look in Europe, 97% migrants have banks accounts so why would someone with an account need to go and take cash out of an ATM to then travel to a corner shop to send money – so that is where we are changing the way people send money.

 

What do you think the remittance industry will look like in 20 years?

The space is changing now driven by banks that are exiting from traditional money transfer businesses that collect cash. Most of the big banks globally do not want to offer banking facilities to a company relying on a corner shop to collect money and that’s really pushing a lot of those traditional players to exit. Tough regulation is also driving a lot of the traditional money transfer businesses online because it is safer, there is an audit trail.

The third trend helping the industry move online is smartphone adoption. Most migrants now have smartphones so they can use their devices to download an app and send money. Those trends are pushing the industry digital much faster than before.

We expect that in the next 10 years 90% of remittance will move online. Even today we’ve seen some markets like New Zealand, Australia and the Nordics where the share of online has grown significantly in the last few years.

 

What has been the most challenging element of building the business?

Getting the payment methods on the send side right. We went global very early, for example launching in Canada within weeks of launching in the UK. They don’t use debit cards like we do with Visa and MasterCard they use a system called Interact or Interact Online for online payments so it’s about getting an understanding of how to collect payments from customers in each market. I’d say really understanding and then implementing those payment methods in the 50+ send markets where we source remittance was the most challenging factor.

On the receive side it was about how to get tier one partners that help us build trust with migrants. Migrants are very conservative and do not like to change their behaviours. One way for us to build that trust is through partners they recognise. Every Kenyan will understand if you say you’re working with mPESA and any Ghanian will undertand if you say you are working with MTN Ghana.

Without those brands it is hard to win that trust. But to get those brands you have to show volume and traction. So we faced the challenge of having to get customers to prove we were a credible large player to tier one correspondents, but could not get them until customers trusted us.

 

Did you ever think about giving up?

We were certain we had to forge on despite the challenges. Fortunately our focus on compliance and the platform we built meant we were able to get some tier one partners pretty early on and that helped us build the trust we needed to get traction.

 

What are you proudest of during your career?

I am most proud of winning my whistle blower case at the UN, it was the best piece of news I ever received. It was a process I had started four years before starting WorldRemit and I had been told that if you are a whistle blower you are more likely to win the lottery than win your case.  But I persisted and won and got compensation that helped fund the initial part of WorldRemit.

 

If you weren’t doing this, what would you do?

Today there are more than 100m people in emerging economies who were previously unbanked but now have mobile money accounts. I think many want to now participate in the internet economy, but there is no payment method because schemes like Visa don’t work for mobile money accounts due to things like very small transactions.  I would have wanted to help these people buy online.

 

What’s the best advice you’ve been given?

Be ambitious, always think beyond your own local market and work on something you are passionate about. If you are not passionate about what you work on you are likely to give up early.

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