Category Archives: Zimbabwe

WorldRemit share the secret to their success and rapid scale-up over 2014

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WorldRemit has enjoyed a rapid trajectory with a number of launches recently. Ismail Ahmed started up this company with the vision of providing a low-fee digital service, moving the agent model of money transfer to an online one in the $580 billion remittances market.

Curious to understand how WorldRemit grew so rapidly into digital channels, I caught up with Jeffrey Alan Pietras, Vice President, International Product Development at WorldRemit. As the year draws to a close Jeffrey reflects on the progress made this year and their ambitious plans for 2015.

 

imageJeffrey, please could you give us a brief background about yourself and an introduction to WorldRemit?

WorldRemit was founded in 2010 by Ismail Ahmed with an idea of changing the money transfer industry, having experienced a degree of expense and inconvenience first hand. WorldRemit began as an online service that enabled people to send money to friends and family in other countries.  Customers can today use WorldRemit anywhere, anytime on their computer, smartphone or tablet. For those receiving money, WorldRemit offers a range of options including bank deposit, cash collection, Mobile Money, and mobile airtime top-up.

This year WorldRemit has seen significant expansion, with new products, channels and partnerships in important corridors around the world.

I joined WorldRemit this year, and bring to my role a combination of experience from working with global players and growing start-up companies. I have worked within the converging financial services, payments, mobile & digital commerce industries at global players including J.P. Morgan, Western Union, Nokia and Yahoo!. This is complemented by my transactional experience with growing start-up companies.

WorldRemit has been expanding rapidly recently. Could you please give us a background, and a summary of your current footprint?

imageYes, WorldRemit’s international reach has grown significantly in the past year. Our service is now available to senders in 50 countries, up from 35 earlier in the year. Last month WorldRemit launched in the United States, which is expected to become one of the company’s largest markets, once fully online in 2015.

The number of countries to which people can send money with WorldRemit’s platform has also increased significantly over 2014, growing from 100 to 117. Among the new additions were 15 countries in the emerging Central & Latin America region.

Those are significant achievements indeed. What has driven your recent growth?

A critical enabler has been the $40M investment by Accel Partners (an early backer of Facebook, Dropbox and Spotify) in March this year. We have since been steadily growing our staff as well as our market presence. We now have over 110 employees and plan to open a new US office in Denver, Colorado shortly.

From a product perspective, we recently launched a successful version of our mobile App for iOS as well as Android. We continue to be one of the most flexible remittance platforms in terms of service interoperability, providing more choice for the way in which senders and receivers can conduct their transactions.

We have a growing number of mobile partnerships to enable instant mobile wallet transfers which have seen great traction in 2014. We currently enable mobile wallet transfers to EcoNet Wireless subscribers, as also to Safaricom, Globe, Smart, MTN, and Vodafone to name just a few.

Jeffrey, what has been the secret to your success?

imageIn my opinion there are two things that set us apart in our industry:

1) the interoperability of our digital money transfer platform and

2) our customer satisfaction rates

As I mentioned before, the WorldRemit platform is one of the most flexible in terms of the interoperability which we offer – this allows us to stay relevant to senders as well as receivers in facilitating the means by which they would like to conduct their transaction.

For instance, aside from cash pickup and bank account transfers, the WorldRemit platform easily integrates with mobile operators to tap into quickly evolving payment ecosystems whereby we can enable mobile wallet transfers. Our platform provides us the flexibility to offer new send and receive options in alignment with partners to truly service the evolving needs of the international remittance market globally, as “one size fits all” does not work in this changing industry.

And on a related note, our flexible money transfer platform & business model equates into a high level of customer satisfaction. Without an agent intermediary (like in the traditional money transfer business), WorldRemit can be truly customer-centric and tailor a money transfer service that delivers speed, convenience, and low-cost to the sender and receiver.

In an era of declining brand attributes for the traditional money transfer business, WorldRemit continues to garner great positive feedback on our service and a high level of customer retention.

What are some of the main challenges for the remittances industry?

The evolution of the international remittance market is fragmented and multi-dimensional – a real challenge in creating a consistent norm for a global scale business which is disrupting the traditional MTOs. In some markets the remittance ecosystem is dominated by financial institutions. In other markets, the ecosystem is driven more by retailers and mobile operators as traditional financial players have not touched the majority of consumers with their services. This fragmentation has led to a number of externalities which influence the evolving ecosystem country by country (e.g. regulatory bodies, mobile operating systems, retail point of sale infrastructure, etc.).

Another challenge in the evolution of the business are new regulations. Especially of interest at the moment are APMs (alternative payment methods) like BitCoin and the influence this will have on the industry.

Digitization is another huge challenge in this industry. How do the traditional MTOs modernize their agent-based model when digital money transfer platforms are cannibalizing the trade (especially with multi-channel offers)? And, what roles will digital consumer services (e.g. social & messaging) play in the consumer to consumer money transfer space?

What are some of the key changes you have observed in the money transfer industry over 2014?

In line with increased regulation in the industry, particularly around the KYC (know your customer) and KYA (know your agent) element of the business, many traditional firms have incurred high compliance costs to try to modernize antiquated offline procedures.

With the added costs of doing business in the offline world, margin compression remains a constant concern for some players. With more consumer choice in money transfer providers (both online and offline), customer acquisition and retention costs are a big marketing concern as brand alone might not be enough these days. I expect to see these concerns continue to play out into 2015.

What are some of the trends you expect to see over 2015 and beyond?

The most exciting trend I anticipate in 2015 (hopefully or in the years to come) is some “reverse innovation” in the payments and remittance space.

The media seems to have bias on the way that consumers would embrace a Western mobile payments ecosystem (e.g. ApplePay) as a global standard. However, with a head-start, many emerging or developing markets in Asia and Africa have robust mobile payment ecosystems already.

While there are some inherent development reasons behind these, I am excited to see what influence these ecosystems in Africa or Asia might have on the evolving consumer mobile payments space in the US and Europe.

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Jeffrey Alan Pietras - Vice President, International Product Development at WorldRemit

Responsible for all business development, partnerships, and new market opportunities for WorldRemit. Jeff has extensive knowledge of strategic product & partnership development with a particular focus on consumer mobile & online services within the emerging markets.

Jeff holds an MBA from London Business School and a BS in Finance from the McIntire School of Commerce at the University of Virginia. He has lived in several European countries, North America, and Middle East and speaks several languages including French and Spanish.

 

Charmaine Oak is Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

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http://www.linkedin.com/in/charmaineoak

Join us on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

Mobile Money in Zimbabwe– freely transfer money, in minutes not weeks!

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As mobile penetration reached 106% , and effectively 60% of people in Zimbabwe now have access to mobile services, mobile operators have gone a step further. They now offer people safe and convenient ways to transfer money, pay for electricity and basic services and last but not least, add much needed top-up to their own mobile phones, or those of friends and family. Having helped people communicate, they’re now helping them transact and receive money from abroad, helping the country recover from the hyper inflation of 2008 and the loss of their currency.

 

ZimbabweVictoriaFallsImage

 

When the Zimbabwe dollar failed to recover in spite of multiple rebirths: ZWD in 1980, ZWN in 2006, ZWR in 2008, and it’s fourth incarnation of ZWL in 2009, foreign currency finally got legalised in January 2009 and the Zimbabwean dollar was abandoned by April 2009. It is difficult to imagine how a country of 14 million people quietly went about with “business as usual”, as less than 2 million had access to any kind of formal banking services.

In a country where every individual is an entrepreneur there was a gap for how they pay and get paid locally, regionally and internationally. Now new services are starting to fill the needs, but success for all the entrants can by no means be taken for granted.

 

Mobile money brings new hope

Now though, a transformation is under way as over 5 million people have found new ways to carry out daily transactions through a 10,000+ agent and merchant network of small stores that function as points for people to open accounts, deposit and withdraw cash and pay bills.

 

ecocashThe largest operator in the country, Econet Wireless, now has 3.5 million of their subscriber base using their EcoCash Mobile Money service, since it launched in September 2011. At the time, the other two operators had already launched similar services that failed to capture the market, so it was not clear whether they would succeed. Today though, they already handle over $4.5 billion worth of transactions, and a vibrant ecosystem of merchants and services has built up in a remarkably short time.

 

telecashThe second largest operator, Telecel (Orascom) had entered the market in December 2011 without much success, but just as Telecel closed down their service Skwama, Econet made a break through with their Ecocash service. So while it may have seemed like Telecel had an option, the reality is that mobile money is now a part of the core package subscribers expect in Zimbabwe. Early this year Telecel launched Telecash, and four months ago they launched a mobile money Android app for Telecash. This time with a promise of free transfers, free cash in and cash out have had the desired effect, with 600,000 users taking up the service and reported transaction levels of $17 million.

 

imageThe third operator Netone is also seeing better traction with their mobile money service One Wallet now supported through a 1,100 strong network, though active subscribers are still nearer to 200,000 than to their 750,000 target.

 

 

nettcashMobile operators are not the only active players. In May 2014 a service call NettCash launched with a unique contactless technology called Near Sound Data Transfer (NSDT), an additional API and promise of online payment. As of today it claims to have over 200,000 customers supported by 1052+ agents and merchants. Our Shift Thought knowledge base registers over 18 services from a variety of players, as the market grows to meet the needs of the people.

 

The banks awaken

Now that the people have voted with their feet and regularly visit conveniently located agents, banks are anxious to get a slice of the newly established market. Econet owned Steward Bank supports Telecash, but a few days back launched their own new AllSave Bank Account that is supported at some of the Telecash agents. This low cost account is expected to help to deepen the customer relationship, with loans and other services. As seen in Pakistan, I expect this could result in the other mobile operators looking around for a suitable bank to acquire, to match the business models that Econet can now aspire to.

 

Agent networks: To share or not to share?

The new battleground is the agent network. As the pressure mounts to enrol customers, there has been a reluctance to share agents. This recently resulted in a directive from the Reserve Bank of Zimbabwe to discourage exclusivity of agents. However an interoperable agent network may raise as many questions as it solves and I see a need for new processes and compliance structures that are likely to gain focus in 2015.

 

Remittances made easy

Now that domestic money transfer has been conquered, the providers are turning their attention to the $1.9 billion formal remittances (equal amount of informal?) that are sent into the country. There has been concern as this declined markedly by 15% from $2.1 billion in 2012 to $1.8 billion in 2013. The main send countries include South Africa, UK, Canada, Australia and the United States.

If these transfers can be used to fund mobile money wallets and use digital money for daily transactions, that would help the fledgling services to thrive and grow. UK-based WorldRemit  offers an internet-based money transfer service from UK, from where an estimated 600,000 diaspora send money home to Zimbabwe. Telecel has partnered with UK based Mukuru.com for remittances from South Africa, from where an estimated 2 million migrants send money home. And certainly, Econet is well placed to address the opportunity for regional remittances, thanks to their presence across neighbouring countries in Africa.

 

Online payments – at last!

The vibrant mobile money market is injecting life into other parts of the economy.  In June 2014 card based transactions increased in value by a whopping 21% over the previous month, to reach $361 million. MasterCard recently announced a partnership with EcoNet to offer debit cards for EcoCash Accounts. Mobile and Internet transactions together have risen to $388 million, with electronic payments bringing in a new era of accountability and hope for the country.

 

The future of mobile money in Zimbabwe – will it mature into digital money in 2015?

What happens next depends on whether the Zimbabwe ecosystem is able to make that difficult transition to non-cash payments, merchant payments and retail payments. As the agent network grows, the small stores must fully embrace the services and find their businesses succeeding due to this. The country must go a long way to strengthen the building blocks and weaken the real enemy, cash and this means that all will need to pull in the same direction.

But underlying all this progress is one building block that must not be forgotten. Zimswitch provides the rails that allow for instant funds transfer and also supports mobile and online payment services. These underlying enablers need to be strengthened and connected into the vast developing digital economy – regional and global.

Though this is hard at first, Shift Thought research in markets around the world show that if everyone in the ecosystem starts to believe from their hearts that the success of one money service does not mean the failure of another, more people start to embrace the services and the whole market grows. I believe we have much to look forward to with the march of digital money in Zimbabwe, not just for Zimbabweans or even Africans, but for the future of payments around the world.

 

Charmaine Oak

Practice Lead, Digital Money

Email   : contact@shiftthought.com

 

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

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http://www.linkedin.com/in/charmaineoak

Join me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn