“Everyone Wants To Become More Than The Messenger”

Managing partner of Singapore venture capital Fund Life.SREDA Vladislav Solodkiy on the results of the annual survey “the future of Money” wrote vc.ru a column about how to develop services of money transfer online. The other day, two the next FINTECH start-up money transfer online has raised $74 million — British CurrencyCloud got a new 25 million from venture capital division of Google, and the Korean service Toss has closed a round of $48 million from PayPal and other investors. This is the direction in vintage is one of the most dynamic. As we can see, in preparation for our new release of the study “future of Money”, the region is largely due to the huge interest in the social networks and messengers.

Messengers aggregates huge volumes of audience of 1.2 billion users of Whatsapp, over 1 billion have Facebook Messenger, 858 million in Viber, WeChat 846 million, 220 million from Line 158 million in Snapchat, Telegram at 100 million, 48 million, KakaoTalk, 5 million from Slack (his success emboldened WeChat and Line to launch their own versions for their audience), and they all think about how to become “more than a messenger.”. Most of them international, in addition to KakaoTalk, which is the number of users outside of Korea dropped from 10 to 6.8 million, and the Japanese Line, which owns a large market share in Thailand and several Southeast Asian countries. Two of them went to the exchange — Line in 2016 (quotes stable, capitalization of around $7.3 billion) and Snapchat at the beginning of 2017 (quotes until “calibrated”, capitalization of around $22 billion). WeChat, KakaoTalk, Line — successfully monetized, unlike their American counterparts, as highly diversified by product line.

Through the app you can order a taxi, make purchases, pay bills, play games, pay and do money transfers. From WeChat from 846 million users, 300 million are customers of WeChat Pay. The service received $46 million in revenue as a Commission from the transfers, which gives an indication that the volume of transactions through the service is around $550 billion per year. This is almost two times more than PayPal with its turnover of $282 billion. The company is now integrated with ApplePay and Starbucks to expand its influence in China, and with Adyen to enable foreign clients to their wallets in other countries in nine currencies.

Unlike AliPay — its main competitor in China — WeChat Pay has not yet begun active expansion abroad through investment or purchases of foreign FINTECH startups. Success KaKaoWallet made KakaoTalk to allocate the service into a separate company. In 2016, she received her license from the regulator to the creation of an online Bank, and in early 2017, AliPay has invested $200 million. Players like Facebook Messenger and Telegram, is now actively develop the technology of chat-bots, and develop games.

Facebook Messenger provides a service for online money transfers not only in US but also in Europe — the company received a license for e-wallets in Ireland. News from Whatsapp in 2016 in this direction was not. Only rumors from India that the company plans to launch online transfers in this country. There service 200 million customers (more than 15% of the entire database) and have integration with a mobile wallet FreeCharge.

Snapchat in 2014 launched a service for money transfers in partnership with Square, but the special news about the success of this direction was not. In 2016 there were rumors about the launch of the product for online trading for young people like Robinhood, but, again, the information has not been confirmed. Development of palankov there was a whole galaxy of mobile banking for “Snapchat generation”. Perhaps buying one of them would allow the company finally successfully enter the financial services market and to better monetize customer base.

In America and Europe most active in the transfers via instant messengers demonstrate such startups like Transferwise, Azimo and WorldRemit. Most likely, all will end their shopping about for the past two years, says the market. As in many other verticals, in vintage most of the leaders in the field of money transfer online are in the US (Venmo, Dwolla, Remitly, ClearxChange) and the UK (TransferWise, WorldRemit, Azimo, Revolut, CurencyCloud).

France (Lydia), Ireland (CurrencyFair), Israel (TravelersBox), South Korea (Toss), Singapore (Instarem, Fastacash, Kashmi), Philippines (Ayannah) and other countries might boast several strong local solutions, but rather to actually grow the assets for their sale to larger start-UPS than actually capable of changing the balance of power in the market. Local players more profitable to actively expand the product line of “breadth” than trying to compete with international monolayers for market share. Such low-margin products such as money transfers require either reactive explosive growth of the client base, or are forced to increase margins through complementary products. To compete at the expense of quality here is almost impossible.

Active building audience requires a corresponding constant cash infusions. Most startups have successfully raised new rounds (and some even twice a year): Compared with Venmo (us$17.6 billion of remittances in 2016) turnover other players look much more modest. For example, Toss — $3 billion, Revolut — $0.5 billion. While major instant messengers and social networking (Facebook Messenger, KakaoTalk, Line) actively flirting with online money transfer, focusing on the immense success of WeChat in China, the startups themselves are integrated with the chat-bots for money transfers.

TransferWise (also recently came out in Russia) and So (drew a new round from Rakuten, the owner of Viber) integrated with bots Facebook Messenger, and Lydia — with Slack. A large number of experiments conducted on the integration of artificial intelligence technologies and services on remittances. If you had all fought for supremacy in developed markets, like TransferWise, which develops in Canada, Japan and the United States — the 2016 showed a mass migration of startups on remittances to markets with low penetration of banking services. Azimo is in Asia, Google is actively developing in Africa, Remitly in Latin America. For the unbanked markets formed their own local leaders, such as Ayannah in the Philippines or Red Dot Network in Myanmar, which enable the integration of online ofline as new applications and traditional leaders.

Part of start-UPS, such as the Revolut, CurrencyCloud, CurrencyFair, Travelers Box, focus rather on the “fair” conversion rates than on cash transfers. Others Revolut, Instarem, ClearxChange, AirWallex — though work with individuals, but actively attract small business. In addition to the chat-bots in 2016 has caused practical interest and other complementary areas. American Venmo is actively integrating with points of sales, connected to PayPal, giving them the opportunity to accept payments offline through the app.

Migration from net transfers and offline payments should allow the company to increase revenue from customer base. Services on remittances historically attract customers, but have problems with yield. It is strange that we have not seen major partnerships, mergers or acquisitions in the area of collaboration services on remittances and mPOS-acquiring players. Although there are precedents.

In India, Ezetap integrated with Paytm and Mobikwik, a Square just by this logic and develops Square Cash. Two promising areas for the expansion of product range and increase the profitability of your customer base. South Korean service Toss launched a micro-lending and the PFM service to its 4 million young customers; Kashmi Singapore startup is also looking towards the development of PFM functionality, and subsequently a full-fledged mobile Bank for youth audiences not only in Singapore but also for the unbanked markets. The Philippines, Sri Lanka, Indonesia and Cambodia.

It became obvious that the historical giants of the industry of remittances see the arrival of new players, not just a threat, and is the direct fact of redistribution of the market. And in contrast to trying to rethink its role in the new digital world. Western Union, MoneyGram, XPressMoney has launched a number of activities for the integration through API with new market participants, as well as trying to get ahead of them through tighter partnerships and joint projects with banks. One of them is already eliminated from the race.

Now the worlds largest FINTECH company Ant Financial (AliPay) is waiting for approval of the transaction on purchase MoneyGram for $880 million. Trade will be beneficial for both parties. For MoneyGram is an opportunity to find their place in the online world, and to enter the Chinese market, and AliPay — close offline integration through access to thousands 350 partners in 200 countries, which together are connected to banks with 2.4 billion customer accounts. On development of its own open API and become a platform not only think of the traditional giants, but also new market participants. American startup Dwolla with 650 thousands of customers has changed its strategy in this direction.

Trying to find your place in the niche and Telecom operators. The British launched Lebara Lebara Money, trying to repeat the success of mPesa by Vodafone in Africa. But to speak about success still early. Technology solution and product that clients love are two different things. In this way is much less risky and final it would be cheaper to buy one of the startups.

In the field of remittances based on blockchain someone focuses more attention on the provision of services to final retail consumers. As, for example, the American Circle, which attracted a new $60 million in 2016 at a valuation of $428,3 million. Others, like American Ripple, attracted a new $55 million at a valuation of $339 million, and canadian Blockstream, which attracted a new similar $55 million more to work with partner banks to create them faster and cheaper infrastructure to implement the transfers. Interestingly, all three companies have invested heavily Asian investors.

Chinas Baidu and CreditEase in Circle, Japanese SBI — Ripple in the Hong Kong-based Horizons Ventures — in Blockstream. First, accordingly, is actively developing the Chinese market, the second in Japan and Southeast Asia. Send columns, corresponding to the requirements of the editorial Board, [email protected]

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