The Boundaries of Cross-Border Transactions Will Shift-AI and Remittances

Let’s talk about AI and remittances. Despite the enormous size and tremendous importance of the money transfer industry, little is heard about how AI is used or is proposed to be used. There are the usual mentions of Generative AI and some references about future developments. One reason for the paucity in news could simply be that many firms prefer to keep their plans confidential. It would also not be unusual for remittance companies to already use AI in the back-office, especially in security and forecasting. But we see little or no evidence, yet, of how it may be utilised in customer engagements, specific to this industry. Nor is there any overt, public indication in a substantative way of what role it will play in any long-term roadmap. 

The remitter may go shopping for rates while sending money. Many continue to use the giant traditional service providers or smaller shops that provide a sense of comfort and familiarity. Yet, the profile of remitters/senders and their spatial relationship to service providers is changing. Migrant workers-who make up the bulk of senders-are a far more diverse cohort than ever before. There has been-and continues to be-an upward movement of job profiles and consequent demographics. At the same time, most recent migrants are completely at ease using digital services, especially on their phones. This means everyone across all socio-economic strata. They may live and work some distance away from one of the usual service counters. Some may just not want to go on a Friday or Sunday.  They may want choices in terms of how they spend their weekends. Much of this has been debated for a long time. Yet it is curious how conversations begin and end with rates and networks. Let us try and shake it up a bit. Let's see if we can't lower those barriers, real or imagined. 

Mike sends money back home to Philippines from Saudi Arabia. It should be entirely possible for Mike to use an app-any app that he frequents-and query for a remittance offer. This is an unstructured ask to embedded service partners of that app. No drop-downs, no menus, no clickable navigation. That is what we do in a market, don’t we? So let’s try that. In a traditional search outcome, he would get back a few links and even some ads which promote specific services. A co-pilot will pop up with some answers, which frankly, Mike could get in the year 2017 anyway. Mike does get contextualised answers. But here’s the thing-he then has to decide which service provider to use and get inside it’s environment. If he has not become a lost customer by then, he may be surprised by seeing that the terms available to him are different from what his search results showed. So how do we make sure that Mike does not go back to his friendly moneychanger or use one of the online services from traditional players? We need a model that has integrated  partners and is able to give the specific answer and service he needs in a single conversational flow. This requires a consortium or partnership of remittance service providers with the app being that of a popular brand. This may be a ride-hail service, or a grocer or another such convenience provider.  Alternatively, these companies promote a single brand. Likely? Not very sure.

On the other hand, perhaps one provider picks up the gauntlet. That player will need to be relatively large, address multiple markets and at the same be a challenger. It has a simplified database and all it wants to do is provide a very different user experience. Mike can type in free form what he wants and it gives him that. If he needs clarity or file a complaint or ask for more information, he can get that via the same interface. No longer does he have to log in somewhere else or worse, endure a bot which can't go very far. Mike can use that app as a messaging service by adding a personal note which is then mailed or sent as a soft-drop to his beneficiary. He can additionally buy other financial services from this app. If the start-up is integrated with FIs via a BaaS integrator, Mike can shop for local banking, card and loan offers too. The noise level-unlike convenience aggregators-is likely to be much less. As a smaller player, the start-up will focus on better service, more attention and repeat purchase. Mike, the shopper for good remittance services, can become a loyal customer.

There are three emerging trends due to which Mike will encounter a lot of changes. One, the app that Mike uses will become a cross-border cultural brand. It will move money, entertainment and messages. Natural Language will play a leading role here with an enhancement as language models begin to come into play with growing offer complexity. We can see how app users at both ends can become part of a single network. Two, banks and other financial service providers on either side of the border will make use of Open Banking integrate with this app and others to maximise their own revenues. AI will play an important part in security as end-point threat anticipation and countermeasures will be necessary. Three, new cross-border rails, brands in themselves, will change the way pricing works. Let us see what UPI and Pix do in the near future. We have just begun.