We went right back to work after 4th of July as B-Hive hosted another great FIN AND TONIC.
Our panelists discussed the international payments’ space and what the future will hold. Tania Khouri from Rise New York kicked things off and welcomed all of the attendees to Rise’s co-working space with open arms. She was followed up by IE’s Francisco Chabran and B-Hive’s very own Charlotte Greant who gave a brief overview of the great work that has been done at their respective companies.
The panel was introduced by Monica Murthy, the program director at Empire Startups and our moderator for the evening.
This time, our panel consisted of:
- William Liu - Senior Regional Manager at SWIFT
- Andrew Boyaijan - Head of Banking at TransferWise
- David Lighton - Founder of SendFriend
Murthy started the discussion by bringing up the path international payments’ scene has taken during the last couple of decades. Murthy shared her personal experiences as her parents were immigrants and have had to deal with transferring money across borders. Recently, the process has gotten easier and the panelists agreed that the emergence of new technologies, skepticism for banks and new innovations are the major factors that have changed the international payments’ space drastically.
As consumers become more tech-savvy, more questions have been raised. “Skepticism for banks has grown and people are looking for alternative options. There is a big demand for new innovations that can make the international payments’ scene more affordable.” Lighton stated. Currently, the international transfer fees are 7-11%, but the World Bank is looking to lower it to 5%. Our panelists believe that 3% is possible and 5% should never be exceeded. If the goal of 3% would be reached, we could reach $26 billion in savings for the working population, according to Lighton.
The demand for new innovations is at its all-time high and there is still a lot of room for innovation our panelists stressed. Banks are relatively comfortable with their current situation so the push needs to come from startups. Through a strong push, the transaction costs could be reduced to that 3% goal. The startups need to come up with, not only solutions that will make international payments easier, but also solutions that will make international payments more accessible to everyone. Liu brought up the great work SWIFT has done to ease the process of international transactions across the world.
“In China, we have standardized payments to make it easier to transfer RMB across borders. We can now better understand how RMB is being used by tracking what payments go in and out.” Through new innovations, the future of international payments scene will become more cost-effective and help put everyone on an equal status.
Unfortunately, the movement of money is still mostly controlled by banks in a lot of international markets which creates a big gap between the wealthy and the poor. Opening up bank accounts is costly which is often a no-go for many people across the world. “41% of adults in developing countries do not have bank accounts,” Murthy stated. According to Liu, these shocking numbers could be changed by the right infrastructure, payment environment and entrepreneurship. But how can we bring new innovations to rural areas? In this case, gaining their interest and trust becomes a crucial part of the process. “At TransferWise, we believe in transparency and the importance of talking about our fees and services openly from the get-go. We also want to educate our consumers on what the cost should and could potentially be”, Boyaijan explained. Lighton also added that startups are not the only solution. “There are plenty of opportunities in the banking industry. FinTechs can connect with banks which usually creates more trust around the innovation.” The panelists also discussed the role of artificial intelligence in the international payments scene and how with enough data, AI could be a valuable tool in the future.
Although new innovations could ultimately be the solution to lower, more accessible transaction costs, they still need to convince the regulators to believe in their ideas. “Innovation will always exceed the regulators by at least five years,” Lighton reminded. Due to this fact, startups need to keep communicating with the regulators and educating them on why the innovation is needed and how will it work in reality. Understanding each other through open dialogue is key when new ideas are presented to regulators, according to Boyaijan. Asking them, what their concerns are about the new, more digital approaches will help both parties to find a common ground that benefits everyone.
Overall, our panelists were optimistic about the future of the international payments’ scene and hopeful that we would reach their set goals within the next couple of years. To conclude the discussion, our panelists received a few questions from the attendees and we went on to end the night with some networking and Gin & Tonics.
We were very happy with the night’s outcome and we want to thank our co-hosts at IE, Rise for a great location, our amazing panelists for bringing in their expertise, and of course everyone who attended! We hope to see all of you at our upcoming FIN AND TONICs!