Trends to expect in the online money transfer industry in 2022
As with any online industry, the world of money transfers is constantly on the move. With successful growth and transformation spanning the last 10 or more years, online money transfers are reaching more people and quickly becoming the preferred money moving method for migrant workers and others who are looking for a quick and effective way to move money from A to B.
At Sikhona Money Transfers we are one of the biggest online money transfer companies based in South Africa. In the years that we have been offering this helpful service, we have expanded our services to countries throughout Southern Africa, allowing more people to feel empowered and able to take charge of the way that they send and receive money. Our simple solutions are easy and cost-effective, and as we are committed to giving our customers the best possible services, we are constantly on the lookout for the best new trends.
With 2022 knocking, there are certain money transfer trends that are already coming to light. The coming year will see new developments and all sorts of new technology, all of which will be used to further improve an already advanced industry.
2022 Money Transfer Trend Predictions
A look into the future of money transfers challenges
It is not just the immediate changes that are looking set to revolutionise the industry. As a technologically advanced sector, the changes tend to build on top of each other. Although new ideas, products and services are constantly introduced, a lot of the changes are actually just further developments for what is already there.
Since the industry is set to grow by as much as $200 billion by the year 2026, having already been valued at $700 billion by the end of 2020, any further growth is likely to be bolstered by the efforts to secure the industry.
According to the World Bank, the majority of the remittances have come from countries like India, China, Mexico, and Egypt, with Sub-Saharan African showing fast growth, as the services become more easily available to these nations.
And despite all of the chaos of the past year, the impact of the COVID-19 Pandemic did not have even half as big a negative impact as was feared. So when it comes to securing the industry in the future, it is quite apparent that since the industry is mostly online, and since many who use the services are either independent businesses or essential workers, the money transfer world is not as easily impacted as the more physical industries.
But that does not mean that the industry cannot be impacted at all by negative events.
One of the greatest growing threats in this data-driven world, where just about everything is done online, is hacking and system downtime.
Aside from the cyber security issues, companies will in future have to become more focused on service flexibility. As any money transfer company is working with such a diverse range of customers, it is not feasible to create a one size fits all approach. Customers not only want but they need more flexibility in terms of transfer options, currency, and of course, transfer amounts. In some parts of the world, local payment methods are also becoming increasingly sought after.
And then there is the ever-present challenge of industry competition.
Every year it would seem as though there are many new money transfer companies popping up and not only does this competition mean existing companies have to work a bit harder, but it also has an impact on transfer costs. For the most part, money transfer costs are high, which naturally means people will often shop around for the best prices. Although the industry trend is now mostly all about lowering transfer costs, there remain companies who charge a lot, and this does end up doing some damage.
Macro Trends that we could see more of in 2022
It is hard to predict just how the coming year in the money transfer industry will be shaped, simply because if we have learned anything from the past two years, these days it seems difficult to accurately determine how anything will go.
But there are a few indications of how the industry is evolving, and even if we don’t see these particular trends come to light in 2022, they are almost certainly going to be seen somewhere in the next few years.
· More inclusion, more trust
The wonderful thing about the web is how it can reach so many more people that the more conventional financial systems, end up missing. In developing countries, in particular, money transfer systems give those who need to send and receive money the option of using nothing more than their mobile phones to access things like digital wallets.
And since mobile phones are accessible to so many people, especially those in developing nations, they allow for more people to feel included in the financial system.
As for the trust in these systems, because they are accessible, affordable, reliable and convenient, people are more inclined to use the systems for their money movement needs.
· Digital Currency
Conventional forms of money and the use of more official currencies are not going anywhere, but there is growing room for new currencies.
Digital currencies are dominating the world at the moment, mostly because they can be used to make more money, and as such, they have become an investment opportunity. But that is not stopping people from making use of the decentralised money options in order to make purchases.
Since traditional banking institutions don’t necessarily make digital currencies a payment option, those who are keen on using the currency have turned to alternative methods, including money transfer services, many of which are in the process of looking at the various ways that they can incorporate digital currencies into their services.
Cryptocurrencies are going nowhere. If anything they are enjoying more and more popularity and attention, particularly from those who are distrusting of the centralised banking systems.
So one trend that will quite possibly soon be an option for those using money transfer services, is access to digital currencies.
· More effective digital wallets
Digital wallets are already in use by many money transfer companies and they are designed to receive and store payment methods. The reason why these wallets are a growing trend is that they allow for the mobile phone to be used as the primary money transfer device. The digital wallet will normally come as a part of the app that needs to be downloaded by those wanting to use the services of the money transfer company.
The immense popularity of digital wallets has also caught the attention of quite a few big banks, who are looking to move more into the digital age by offering their customers more advanced services.
Overall, the coming year could see more effective and more versatile digital wallets.
· More affordable transfers
One of the struggles mentioned before, money transfer systems are only effective and popular when the transfer prices are kept low.
Whenever a customer uses the service to send or receive money, a small transaction fee is added, and sometimes this fee is so high that it either impacts the customer financially or it causes them to jump ship and look for a cheaper service. The downside is not just that the business loses the customer, but that the customer ends up opting for an inferior service, just to save money.
The trend that we can expect to see more of in the coming months, and something that we are already seeing now, is the fall of transfer costs. This decrease in the price has encouraged more competition and these more affordable price increases are also important in terms of foreign remittances, as migrant workers are always on the lookout for ways to save money when they are sending most of what they earn back home.
There is also an element of economic development, as the ability to send money home at more affordable rates means the migrant’s home economies are in a better position to grow.
· Quicker Transfers
In this fast society, just about everyone wants access to things quickly, from parcel deliveries to money transfers.
With the use of more advanced apps, money can be quickly and easily transferred and received and in the coming years not only will apps be able to move money faster but the app development will also mean there is an element of interoperability. In layman’s terms, this means the app will be better designed to be used across different devices and different operating systems.
Fast transfers can be immensely beneficial for those people and businesses who are in need of the app on a daily basis and who wish to send and receive money in real-time. So, for example, remote workers who need to send part of their salaries back home, can expect an even faster process in the next year or so.
And these quick transfers are not just great for migrant workers. Businesses that need to pay suppliers and salaries will be in a better position to negotiate more affordable transfer rates, which in turn will be a greater financial benefit for their business.
· More partnerships
The money transfer industry does not exist on its own. In order to thrive, especially in this faster-paced world where networking continues to be important, the development of more partnerships between money transfer companies and other businesses can be beneficial to all involved, including customers.
The partnerships are going to mostly come from working with fintech, who in turn will be able to lend their data-driven expertise to those who need it. Other companies who are likely to end up working with the money transfer companies include those in the customer service world, and companies operating in the world of business compliance.
· Improved risk solutions
Naturally, as money is being moved in the virtual world, security concerns are growing, as more people start to use this service. Since the stakes are so high, a lot of development will be focused in the coming year on further reducing risks so that customers can feel confident about using the service offered by the various money transfer companies.
To improve cyber security, you can expect to see more companies teaming up with developers and cyber security experts, who are professionals when it comes to evaluating risks, coming up with implementable solutions, and actually putting the solutions in place.
Not only will money transfer services partner up with cyber security experts, but they will also be working a lot more with banks, to ensure that there are no gaps in security between the two institutions.
· Better cross-border payments
Although one of the greatest benefits of money transfer systems is the fact that they make cross-border payments a possibility, there are still various issues with the process which is hampering the effectiveness of the service.
In the coming year, we can expect one of the trends to be the smoothing out of the issues, with more focus likely be placed on costs related to moving money across the border.
Money transfer services are the way of the future, and not just for the working person. As more businesses start to see the advantages of moving away from conventional banking, even if it is just a partial move, the more businesses are able to see different ways that they can evolve.
And at Sikhona Money Transfers we are one of South Africa’s leading money transfer companies and offer a competitive rand exchange rate. Many of the things you can expect from the industry in 2022, we are already implementing right now. When you work with us, you will get expert help, and transfer services that don’t break your budget.
For more information, you can give us a call today, or you can explore our website further to find out if we are the perfect fit for you.