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The MoneyPot Live: Wired for Connections: Remittances as a Service-Cross-Border Payments with UniTeller
Join me for an enlightening sit-down with Alberto Guerra, the mastermind at the helm of UniTeller, as we peel back the layers of the remittance economy. You'll be treated to a panoramic view of how these financial lifelines are not just money transfers but the very threads that weave through the fabric of families' lives across the globe. We traverse from the highlands of Nepal to the bustling cities of the Philippines, uncovering the profound impact of remittances on local economies and cultural landscapes. Whether it's financing education in Bangladesh or healthcare in Mexico, these funds are pivotal in bettering the lives of millions, making this discussion a must-listen for anyone interested in the true power of money across borders.
Fasten your seatbelts as we zoom into the future of money transfers, where technology is redefining the art of the possible in cross-border remittances. Guerra and I dissect the buzz around real-time payment solutions and the persistent allure of P2P apps in an era when sending money is as easy as a tap on your smartphone. Diving into the world of super apps, we critique their success (or lack thereof) in different global markets and debate their potential to revolutionize financial services. This episode promises not just a glimpse into the innovative business models reshaping the industry, but also spotlights the trailblazers who have adapted and thrived in this fast-paced domain.
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Micky Tesfaye:Hello, our dear listeners, Welcome to the Money Pot Live coming to you from Money 2020 Asia in Bangkok and today. I am co-hosting this wonderful episode with my one and only US content head, Rach Morrissey. Hey Rach, how are you?
Rachel Morrissey:I am great, Vicky. How are you doing? I love it that you call me Rach. Most people don't call me Rach. Most people call me Rachel. Should I call you Rachel?
Micky Tesfaye:No, you should call me Rach. Most people call me Rachel should I call you Rach?
Rachel Morrissey:no, you should call me Rach. I like that you call me Rach.
Micky Tesfaye:Nobody else ever does that and today, you and I are joined by an awesome guest, because we're going to talk about something which you know I love to nerd on about, which is remittances. Joining us is Alberto Guerra, from UniTell er, CEO and founder?- no- just CEO.
Rachel Morrissey:You're Just the CEO.
Micky Tesfaye:CEO of Unitell er Alberto, how are you doing?
Alberto Guerra:Thank you for having me Doing well. Very happy to be here, Rachel, good meeting you and very nice being here at the podcast. So, yeah, thank you.
Rachel Morrissey:How are you enjoying the show so far?
Alberto Guerra:It's been great. It really means being back here in Asia for 2020. So we came here for the Singapore events and it's great being back here in Asia for this event.
Rachel Morrissey:Yeah, I'm excited about it. I think it's great it has been great, it's been a lot of fun.
Micky Tesfaye:So let's just, you know, dive right in. And I guess one of the things I was super interested about this topic and conversation is because it's remittances as a service across borders and as a payment solution. So maybe, alberto, you can start by telling us a little bit about that and why they're so significant.
Alberto Guerra:Yeah, remittances are very significant for the world economy as a whole. People migrate. That's a fact that has been happening ever since the beginning of humanity. And people looking for a way to find food and better living for themselves and their families. So in today's world, people continue to migrate. Differences in the economies of different countries and political and geopolitical crisis make people to travel and search for a better quality of living, and this is where remittances take place, where people have to send money and are looking for ways of sending money to their families in a very as efficient as possible, as quick and efficient and transparent as possible. So, eventually, remittances have become a major help for individuals and their families and the economies where not only these individuals work but, more important, the economies where the families and the beneficiaries live, because all this money gets invested or expensed in the home countries through food, education, healthcare, construction. So many many use cases of remittance money.
Rachel Morrissey:So this is interesting. I know there are countries where remittances are incredibly important to the GDP and I know that there's others that are. I mean, I'm from the United States. Remittances are not something that we think about. I mean, the common person inside the United States thinks about a lot, which is odd because we have a very large immigrant population that is sending money out, but because it isn't about the incoming so much, we don't tend to focus on it in the same way, and it's not, it's not top of mind, and so I'm. This is an where in the Asian markets, as you're looking at them, which of the countries are more reliant on remittances and and how does that kind of work in the scale of just Asian markets? Are you seeing a lot of that, or are you seeing remittances coming in from more other regions into the Asian markets?
Alberto Guerra:Yeah, there are larger countries where remittances may be very large but relative to the size or the economy of that country, may not be that relevant. Like India could be an example of a country that receives a lot of money of remittances. Official numbers may vary, but we're talking about $60 billion of remittances. Official numbers may vary, but we're talking about $60 billion in remittances, but the Indian economy is huge. So, as a percentage of GDP, remittances may not be that relevant. A similar case in the Americas would be Mexico. Mexico receives more than $60 billion per year of remittances, which is a huge amount for the families that receive this money, but as the overall of the Mexican economy is not, even though it's a big number, is not that relevant in terms of GDP participation.
Alberto Guerra:Smaller countries in the Americas or in Asia remittances play a larger role Countries like Nepal or like Bangladesh or even the Philippines that also is. The Philippines is a very unique case because the Philippines has through many years the Philippines has through many years promote the Filipinos to work abroad and they have very interesting incentive programs and support programs to allow Filipinos to travel and work abroad. So, even though the Philippines is an important economy, it is very embedded in the cultural situation of the society that Filipinos travel abroad to work abroad. So remittances in the Philippines play a larger role. So there are different characteristics in different countries but, yeah, there are countries where remittances are, you know, a key component of the economy of those countries.
Alberto Guerra:On the origination side, you know there are countries that are key recipients of immigration, of immigrants here in Asia. Singapore is a good example, other countries like Malaysia, the Gulf countries, saudi Arabia, the United Arab Emirates, qatar, kuwait all these are big recipients of immigrants. And then you like Hong Kong also. It's another big recipient of immigration. So, at the end of the day, you have different components. Europe, the US, canada are also big countries, but there are also other very interesting corridors Because at the end, the remittances and immigration is becoming more of a global component. Even though there are dominant corridors in Asia and in the Americas and between Europe and Africa. At the end of the day, there are interesting, very local components of remittances that sometimes, when you look at the data, you're really surprised to see some of these elements.
Micky Tesfaye:That's fascinating and, as Rich said at the beginning, I'm Ethiopian and remittances play a big role in the economy there and particularly also because we have a very sizable Muslim population and there's very Islamic remittances.
Micky Tesfaye:That's probably one of the most official ones in terms of coverage in terms of the channels for transfers. You can, I think that's probably like the most, one of the most official ones in terms of coverage in terms of like the channels for transfers. Right, you can like I think it's called Hawala and you can. Basically, you've got like multiple shops and they've got incredible network and you know when you watch a spy movie, when they send money they don't want to trace you see sometimes the American CIA agents and you know but like it's so advanced in terms of like and it shows the importance of remittances, right. I guess one of the things that has happened in a lot of countries, but it hasn't happened in ethiopia, however, is that the payment flows have become more and more digitized. So I guess my question is maybe how, how has your business? You need to know how has your business evolved over time as like the global, like remittance flow?
Alberto Guerra:has evolved with the emergence of digital technologies, digital payment solutions yeah, and that's a great question because at the end of the day, it's uh, it's been a transformation that it's been happening in some corridors faster than others, but at the end of the day, it's a very, very interesting trend where digitization is taking over remittances as a whole in the industry. If you look at data of the major public companies in the sector, when you really look and analyze the growth data of the public companies that are in the remittance space and you see their growth from their cash business and then they post their growth of their digital channels and digital business, you see the clear effect of how the cash business is, in some cases, not growing or even decreasing, but all of them have very dynamic digital channels. Digital business growths were, in some cases, double digits, triple digits, because it's just the consumer adoption of digital remittances is there. There are multiple factors of why this is happening. I think one of them is the use every time the wider use of mobile phones and smartphones as a concept, where not just you have a mobile phone, but you have a smartphone that allows you to download apps that can then be used as digital wallets for you to use and send money, and also not only having a smartphone, but also, throughout the world, the use of data is also becoming more available. Throughout the world, the use of data is also becoming more available.
Alberto Guerra:You know, before it was, you know, mostly very difficult for people, individuals, to have smartphones and they have an adequate data plan for them to use them. So now, you know, having access to public Wi-Fi networks is very common nowadays, very low cost data plans. It's also becoming more accessible. So that's, you know, allowing people to use their smartphone for having electronic money and, within that, you know, download apps and services that you can use to send money or receive money In the origination countries.
Alberto Guerra:You have another component that may be more difficult, even though you may have a better access to mobile phones, to smartphones, to mobile data. You have the component of vanguardization. Some of the immigrants that are going to, especially to the US or to Europe, have a harder time in getting involved in the financial sector because they are afraid of going to a bank or they are afraid that if they open a bank account or a mobile wallet, they may be subject to, you know, supervision from the local entities, tax entities, immigration entities. So a lot of people want to stay undercover in the cash world, and that's, I think, one of the main challenges in some of the countries that have, you know, these immigration issues that impede users to fully adopt digital technologies, impede users to fully adopt digital technologies but on the recipient side, when you don't have that situation, the use of digital wallets and mobile phones and smartphones to receive money and to have a mobile wallet and use that mobile wallet for other uses is becoming more and more popular. So, yeah, it's very interesting, very evolution.
Rachel Morrissey:It is interesting because there's a couple of different as I've been talking to different people about different use case scenarios.
Rachel Morrissey:About six years ago I had the opportunity to go to Kenya and the innovation labs that were taking place there, building certain kinds of digital software on top of M-Pesa to enable micro-businesses to digitize a lot of their operations and digitize their ordering, digitize their wallets, all of these kinds of things, and some of the people were very slow to adopt because they were uncomfortable with the fact that the government would know this, but the fact that the government didn't have access to some of that data, that they didn't kind of know where things were flowing, and that meant that they were restricted in the information they could use to create policies that really could aid in some of this, and so it was this kind of push-pull.
Rachel Morrissey:And then there's other places where, like I mean, I know there are places like where wealthier individuals and more traditional banks actually resist a certain amount of digitization because they're not as interested in the digital services as they are in not allowing the government to have a full understanding of all their assets. So there's all of these kind of information gaps or tilts in information that happen. I think this is a perfect time actually to pivot to what Uniteller is doing. So I am really interested. So what are some of the solutions and what are some of the things that Uniteller is doing in this space that kind of are attempting to help kind of solve some of the problems with remittances?
Alberto Guerra:Yeah, and it's very interesting because we saw at Uniteller, we saw how this trend was going to eventually take over in the industry, how this trend was going to eventually take over in the industry. So I think it was like in the year 2010,. So 14 years ago, when we first pitched to our board the need to start investing in building a digital capability. Now, us at Uniteller we're not a large retail name for remittances because we don't go specifically to the consumer Our main business model is building solutions and platform for the industry or for companies in the industry white label solutions that help individuals and companies to have access to remittances or cross-border payments.
Alberto Guerra:So we saw that remittances were eventually going to move from a situation where consumers, instead of going to a small mom-and-pop shop to make a cash payment, they eventually will either go to larger corporations, larger stores, digital applications or even their own telco provider or even their own bank to provide them low-cost remittance payments. So in Uniteller, we saw that opportunity and we invested in providing solutions, better solutions that were more digitalized, not only for consumers but also for fintechs, other companies, corporations that wanted to get into the space. So we developed solutions as a service remittances as a service business remittances as a service business, cross-border business payments as a service, where we empower companies to offer to their customer base these type of transactions in a more efficient and seamless way. So we invested in these capabilities and we you know, obviously it takes time not only for us to develop our solutions, but also the market adoption, the industry adoption, where companies are now thinking should I, should I develop my own platform for my consumers or should I take an already built platform and connect that platform into my digital solution? So that's where we see the value and that's how we invested in building these capabilities and leverage on the global network that we already have, because, again, it's not just having a product and a nice front end.
Alberto Guerra:What are you doing with that is building a regulatory capability, a very sophisticated risk management also capabilities, because there's also, you know, sending money digital. A lot of fraud may be involved, so it's not as easy as just opening up a service. You need to have a very sophisticated risk-fraud model to make sure that you do it right with very little aggravation to the consumer, but also with a very good result in keeping your fraud at a very, very low level, so that your product can go to the consumer as low cost as possible. So it takes time to build that knowledge, that know-how. From a risk perspective, from a compliance perspective, from a regulatory perspective. Europe, the US, the Gulf countries, the South Asian countries they all have very different regulatory implications that you need to be aware and you need to be able to adapt to that from compliance perspective, from consumer protection perspective, the way that you sell your capabilities, the way that you go out to the consumer. So there's a very complex.
Alberto Guerra:And then you need to build a distribution network and you need to have volume so that the cost of your distribution network is sufficient. So for a new company, a fintech or a telco provider that wants to offer remittances, in our opinion it's just very inefficient for them to build everything from scratch. It's partnerships, and getting access to a solution like the one that we provide now is a very efficient way of putting in front of your consumers, in front of your consumer base, a very competitive cross-border remittance solution that is not just efficient but it's also real-time, low-cost and access to all of the countries that your consumer base needs. So that's where Uniteller fits in, and it's been a while since we began this effort and I think we're very happy where we are now and it's just we just see the evolution of the industry going that way.
Rachel Morrissey:So there was one thing that you told me when we were talking before, and one of the platforms or one of the platform solutions that you have is a super app, and this I found kind of fascinating. First of all, in the US, super apps sure, there's elements of super apps everywhere. We have like Uber and Uber Eats and yeah, okay, you can do it Like we don't have a super app, like we have pretend parts of super apps but we do not have anything that resembles, you know, wechat or some of the other things that are available and that hasn't been really part of the ecosystem out there. So I'm kind of fascinated with what a super app, how that, how remittances work inside of the super apps, and where are you seeing the most use for those kinds of things because of adoption rates and how that works.
Alberto Guerra:Yeah, there's a huge debate as to this trend of the super apps and, yes, you're right, in the US, it's experienced a very different evolution of the super apps versus Asia, and there are a lot of people that have said no, because the US is more difficult, because consumers already had very solid, let's say, social media apps when they became more digital in nature for financial services and this and that, and then you have consumer protection and then you have data privacy implications.
Alberto Guerra:So a lot of things of why people are trying to find excuses, of why the super app concept has not been successful in the US, and I think, at the end of the day, yes, there may be truth to all of these explanations that are out there, but the reality, yes, is that super apps in Asia have had a very different evolution in the US.
Alberto Guerra:At the end of the day, our opinion is remittances need to be as efficient and as transparent and as low cost as possible. So, at the end of the day, having a standalone app that only offers remittances, in our opinion, is going to be very difficult if your solution is only a single product solution. A single product solution Because, yes, you can have the most efficient consumer interface for onboarding, for placing a transaction, for paying for collecting, interacting with your beneficiary. But at the end of the day it's a single product and if the cost of remittances continue to decrease, there is not just a long-term business case for this. So we tend to think that remittances at the end of the day have to be part of a broader solution. The end of the day have to be part of a broader solution where remittances is part of, again, a broader range or financial or other type of services.
Alberto Guerra:And this is what we're seeing here in Asia.
Micky Tesfaye:Sorry to interrupt you I was just going to ask because, on that point around it being a part of a broader set of solutions, I was just thinking about and thinking about asia, a point you made earlier on about the kind of varied impact of remittances amongst different economies. Right, india we mentioned, we mentioned singapore, and I guess that's just making me think around some of the solutions that are emerging, not just from the private sector, but like the connecting of the real-time payment solutions from these two economies which have that flow. Now we're seeing real-time payment solutions emerging in Brazil, for instance. The US is about to have one.
Rachel Morrissey:Technically we have one it launched.
Micky Tesfaye:Sorry, fednow has launched, so we've got real-time payments emerging across many countries in the world, and one of the things that's emerging now is connecting these real-time payment solutions. I guess, if that is happening, how does this remittance solution discussion we've had so far fit into that?
Alberto Guerra:Yeah, I think, at the end of the day, the ideal solution, or the utopic solution, where in the future, every country has a real-time payment system that is connected with each other, you would think that the banks or the mobile wallets, as an alternative to banking, will be the only app that a consumer will need to hold half your money in your bank account, your mobile wallet and be able to do a p2p transfer. You know, like in the us, you can do sell or you can do venmo. It's very popular, no cost and eventually remittances should be the same. Now, the only problem with that is that how do you manage compliance implications? How do you manage exchange rate conversions? How do you manage pricing? But eventually, at the end of the day, that's what we should aspire is how do we manage that?
Alberto Guerra:All the countries have these real-time payment platforms that you can connect through these different type of banking apps or mobile apps, mobile wallet apps. So going to that end is, if I have a bank account in the US or in Singapore or in Europe, any of the bank provides me a similar solution, like in the US, to provide, like a real-time P2P payment like cell. You know I shouldn't really need to use Venmo, but I still use Venmo. Why is it that I still use Venmo and not my bank account? And that's a very interesting question is because when you try to sell in the US through your bank account, then when you get your bank statement it becomes a nightmare because you get a 10, 20 page bank statement where you have multiple and you say I don't want that on my bank account, so I'd rather have send money to a wallet and I can do all my P2P needs on that wallet and I don't need to mix all of my P2P transactions on my main bank account. So then you have a business case of why a remittance app or a P2P app needs to exist.
Alberto Guerra:But at the end of the day, who's providing that and at what cost? So there are different business models because Venmo can say you know I make money because I hold all those balances and I can make money on the floating and I can make money on other type of business arrangements. But in the international P2P, where your compliance costs are higher, when you have exchange rate conversions and risks, you know you need to have another business model. So at the end of the day, the discussion is very complex. You would aspire to be there, you would aspire to be in a situation where remittances should be zero cost. But that's just a topic. But at the end of the day, it doesn't mean that they need to be cheaper, and they still can go cheaper. But that's why I still think that the super app concept, where Revita says it's just embedded in other type of services, that's what the future I would think the future will have to be.
Rachel Morrissey:Okay, so this is. We're going to have to wrap up soon, but I have one last question, and it's not a short one, but as you've worked with different clients, you know what are some of the success stories that you've seen with some of these solutions that you have. You know what kind of smoothing over of this problem have you been able to accomplish.
Alberto Guerra:Yeah, there are many. One of the solutions we have, I think, different success stories. One of them if I can categorize them into broader groups one of them would be new fintechs, you know, new solutions that have already a customer base and want to provide remittances as an added solution to their product, their wallet, their product portfolio and they come to us with can you provide us a remittance as a service? Because I want to provide this as a key component as a service, because I want to provide this as a key component and I'm willing to subsidize the cost of the remittance because I already have a business model with my consumer base. I think that's and we have multiple neobanks and apps and fintechs cases of fintechs in the US that have approaches and have established very successful remittance as a service program with us. Establish very successful remittance as a service program with us.
Alberto Guerra:The other group would be financial institutions like in LATAM in Southeast Asia, like Philippine banks, philippine pawn shops, latin American banks that they used to have retail locations in the US or in Europe offering remittance services. That became impossible to keep because remittances cost came lower and the cost of having a physical location just increased. So your product price was low and your costs were increasing, but they still want to have a presence. So the digital as a service solutions for Latin American banks, for Philippine banks, for African banks, have become like the perfect fit and saying I still want to have my brand in the US or in Europe or in Asia, in in Singapore, but I can't longer afford to have a physical presence. So in those cases, you know, we have multiple Latin American banks that are using already our solution Philippines pawn shops and banks already using our solution that saw in our platform, in our solution, the best way to continue forward with this.
Rachel Morrissey:Hence remittances as a service. It makes perfect sense.
Micky Tesfaye:Exactly, it really does. Wow, well, we are out of time, but what a fascinating conversation. Thank you to our guest, alberto, the CEO of Uniteller.
Alberto Guerra:Thank you, mickey, thank you for having me and thank you, rachel, for having me. It's been a pleasure. You. Thank you, mickey, thank you for having me and thank you.
Rachel Morrissey:It's been a pleasure. You're most welcome.
Micky Tesfaye:Thank you, it has been a pleasure, and thank you to our listeners for joining us from Money 2020, asia, where we're recording live. If you want to record live at the show with us, please send us your submissions to podcasts at money2020.com and we'll see you soon. We love you.
