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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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Alberto Guerra (00:03):
This is Essential Audio.
Micky Tesfaye (00:15):
Hello, our dear listeners, Welcome to the Money
Pot Live coming to you fromMoney 2020 Asia in Bangkok and
today.
I am co-hosting this wonderfulepisode with my one and only US
content head, Rach Morrissey.
Hey Rach, how are you?
Rachel Morrissey (00:35):
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 (00:43):
No, you should call me Rach.
Most people call me Rachelshould I call you Rach?
Rachel Morrissey (00:45):
no, you should call me Rach.
I like that you call me Rach.
Micky Tesfaye (00:47):
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 Ilove to nerd on about, which is
remittances.
Joining us is Alberto Guerra,from UniTell er, CEO and founder
?
- no- just CEO.
Rachel Morrissey (01:07):
You're Just the CEO.
Micky Tesfaye (01:09):
CEO of Unitell er Alberto, how are you doing?
Thank you for having me Doingwell.
Very happy to be here, Rachel,good meeting you and very nice
being here at the podcast.
So, yeah, thank you.
Rachel Morrissey (01:23):
How are you enjoying the show so far?
Alberto Guerra (01:24):
It's been great.
It really means being back herein Asia for 2020.
So we came here for theSingapore events and it's great
being back here in Asia for thisevent.
Rachel Morrissey (01:39):
Yeah, I'm excited about it.
I think it's great it has beengreat, it's been a lot of fun.
Micky Tesfaye (01:44):
So let's just, you know, dive right in.
And I guess one of the things Iwas super interested about this
topic and conversation isbecause it's remittances as a
service across borders and as apayment solution.
So maybe, alberto, you canstart by telling us a little bit
about that and why they're sosignificant.
Alberto Guerra (02:07):
Yeah, remittances are very significant
for the world economy as awhole.
People migrate.
That's a fact that has beenhappening ever since the
beginning of humanity.
And people looking for a way tofind food and better living for
(02:28):
themselves and their families.
So in today's world, peoplecontinue to migrate.
Differences in the economies ofdifferent countries and
political and geopoliticalcrisis make people to travel and
search for a better quality ofliving, and this is where
(02:50):
remittances take place, wherepeople have to send money and
are looking for ways of sendingmoney to their families in a
very as efficient as possible,as quick and efficient and
transparent as possible.
So, eventually, remittanceshave become a major help for
(03:12):
individuals and their familiesand the economies where not only
these individuals work but,more important, the economies
where the families and thebeneficiaries live, because all
this money gets invested orexpensed in the home countries
through food, education,healthcare, construction.
(03:34):
So many many use cases ofremittance money.
Rachel Morrissey (03:39):
So this is interesting.
I know there are countrieswhere remittances are incredibly
important to the GDP and I knowthat there's others that are.
I mean, I'm from the UnitedStates.
Remittances are not somethingthat we think about.
I mean, the common personinside the United States thinks
about a lot, which is oddbecause we have a very large
(04:01):
immigrant population that issending money out, but because
it isn't about the incoming somuch, 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 Asianmarkets, as you're looking at
them, which of the countries aremore reliant on remittances and
(04:23):
and how does that kind of workin the scale of just Asian
markets?
Are you seeing a lot of that,or are you seeing remittances
coming in from more otherregions into the Asian markets?
Alberto Guerra (04:44):
Yeah, there are larger countries where
remittances may be very largebut relative to the size or the
economy of that country, may notbe that relevant.
Like India could be an exampleof a country that receives a lot
of money of remittances.
Official numbers may vary, butwe're talking about $60 billion
of remittances.
Official numbers may vary, butwe're talking about $60 billion
(05:08):
in remittances, but the Indianeconomy is huge.
So, as a percentage of GDP,remittances may not be that
relevant.
A similar case in the Americaswould be Mexico.
Mexico receives more than $60billion per year of remittances,
which is a huge amount for thefamilies that receive this money
(05:31):
, but as the overall of theMexican economy is not, even
though it's a big number, is notthat relevant in terms of GDP
participation.
Smaller countries in theAmericas or in Asia remittances
play a larger role Countrieslike Nepal or like Bangladesh or
(05:54):
even the Philippines that alsois.
The Philippines is a veryunique case because the
Philippines has through manyyears the Philippines has
through many years promote theFilipinos to work abroad and
they have very interestingincentive programs and support
programs to allow Filipinos totravel and work abroad.
(06:15):
So, even though the Philippinesis an important economy, it is
very embedded in the culturalsituation of the society that
Filipinos travel abroad to workabroad.
So remittances in thePhilippines play a larger role.
So there are differentcharacteristics in different
(06:39):
countries but, yeah, there arecountries where remittances are,
you know, a key component ofthe economy of those countries.
On the origination side, youknow there are countries that
are key recipients ofimmigration, of immigrants here
in Asia.
Singapore is a good example,other countries like Malaysia,
(07:05):
the Gulf countries, saudi Arabia, the United Arab Emirates,
qatar, kuwait all these are bigrecipients of immigrants.
And then you like Hong Kongalso.
It's another big recipient ofimmigration.
So, at the end of the day, youhave different components.
(07:31):
Europe, the US, canada are alsobig countries, but there are
also other very interestingcorridors Because at the end,
the remittances and immigrationis becoming more of a global
component.
Even though there are dominantcorridors in Asia and in the
Americas and between Europe andAfrica.
At the end of the day, thereare interesting, very local
(07:53):
components of remittances thatsometimes, when you look at the
data, you're really surprised tosee some of these elements.
Micky Tesfaye (08:03):
That's fascinating and, as Rich said at
the beginning, I'm Ethiopianand remittances play a big role
in the economy there andparticularly also because we
have a very sizable Muslimpopulation and there's very
Islamic remittances.
That's probably one of the mostofficial ones in terms of
(08:23):
coverage in terms of thechannels for transfers.
You can, I think that'sprobably like the most, one of
the most official ones in termsof coverage in terms of like the
channels for transfers.
Right, you can like I thinkit's called Hawala and you can.
Basically, you've got likemultiple shops and they've got
incredible network and you knowwhen you watch a spy movie, when
they send money they don't wantto trace you see sometimes the
(08:45):
American CIA agents and you knowbut like it's so advanced in
terms of like and it shows theimportance of remittances, right
.
I guess one of the things thathas happened in a lot of
countries, but it hasn'thappened in ethiopia, however,
is that the payment flows havebecome more and more digitized.
So I guess my question is maybehow, how has your business?
You need to know how has yourbusiness evolved over time as
(09:07):
like the global, like remittanceflow?
Alberto Guerra (09:09):
has evolved with the emergence of digital
technologies, digital paymentsolutions yeah, and that's a
great question because at theend of the day, it's uh, it's
been a transformation that it'sbeen happening in some corridors
faster than others, but at theend of the day, it's a very,
(09:29):
very interesting trend wheredigitization is taking over
remittances as a whole in theindustry.
If you look at data of themajor public companies in the
sector, when you really look andanalyze the growth data of the
public companies that are in theremittance space and you see
their growth from their cashbusiness and then they post
(09:54):
their growth of their digitalchannels and digital business,
you see the clear effect of howthe cash business is, in some
cases, not growing or evendecreasing, but all of them have
very dynamic digital channels.
Digital business growths were,in some cases, double digits,
(10:19):
triple digits, because it's justthe consumer adoption of
digital remittances is there.
There are multiple factors ofwhy this is happening.
I think one of them is the useevery time the wider use of
mobile phones and smartphones asa concept, where not just you
(10:40):
have a mobile phone, but youhave a smartphone that allows
you to download apps that canthen be used as digital wallets
for you to use and send money,and also not only having a
smartphone, but also, throughoutthe world, the use of data is
(11:03):
also becoming more available.
Throughout the world, the useof data is also becoming more
available.
You know, before it was, youknow, mostly very difficult for
people, individuals, to havesmartphones and they have an
adequate data plan for them touse them.
So now, you know, having accessto public Wi-Fi networks is
(11:23):
very common nowadays, very lowcost data plans.
It's also becoming moreaccessible.
So that's, you know, allowingpeople to use their smartphone
for having electronic money and,within that, you know, download
(11:46):
apps and services that you canuse to send money or receive
money In the originationcountries.
You have another component thatmay be more difficult, even
though you may have a betteraccess to mobile phones, to
smartphones, to mobile data.
You have the component ofvanguardization.
Some of the immigrants that aregoing to, especially to the US
(12:10):
or to Europe, have a harder timein getting involved in the
financial sector because theyare afraid of going to a bank or
they are afraid that if theyopen a bank account or a mobile
wallet, they may be subject to,you know, supervision from the
(12:30):
local entities, tax entities,immigration entities.
So a lot of people want to stayundercover in the cash world,
and that's, I think, one of themain challenges in some of the
countries that have, you know,these immigration issues that
impede users to fully adoptdigital technologies, impede
(12:51):
users to fully adopt digitaltechnologies but on the
recipient side, when you don'thave that situation, the use of
digital wallets and mobilephones and smartphones to
receive money and to have amobile wallet and use that
mobile wallet for other uses isbecoming more and more popular.
(13:11):
So, yeah, it's very interesting, very evolution.
Rachel Morrissey (13:16):
It is interesting because there's a
couple of different as I've beentalking to different people
about different use casescenarios.
About six years ago I had theopportunity to go to Kenya and
the innovation labs that weretaking place there, building
certain kinds of digitalsoftware on top of M-Pesa to
(13:36):
enable micro-businesses todigitize a lot of their
operations and digitize theirordering, digitize their wallets
, all of these kinds of things,and some of the people were very
slow to adopt because they wereuncomfortable with the fact
that the government would knowthis, but the fact that the
government didn't have access tosome of that data, that they
(13:59):
didn't kind of know where thingswere flowing, and that meant
that they were restricted in theinformation they could use to
create policies that reallycould aid in some of this, and
so it was this kind of push-pull.
And then there's other placeswhere, like I mean, I know there
are places like where wealthierindividuals and more
(14:23):
traditional banks actuallyresist a certain amount of
digitization because they're notas interested in the digital
services as they are in notallowing the government to have
a full understanding of alltheir assets.
So there's all of these kind ofinformation gaps or tilts in
information that happen.
I think this is a perfect timeactually to pivot to what
(14:47):
Uniteller is doing.
So I am really interested.
So what are some of thesolutions and what are some of
the things that Uniteller isdoing in this space that kind of
are attempting to help kind ofsolve some of the problems with
remittances?
Alberto Guerra (15:03):
Yeah, and it's very interesting because we saw
at Uniteller, we saw how thistrend was going to eventually
take over in the industry, howthis trend was going to
eventually take over in theindustry.
So I think it was like in theyear 2010,.
So 14 years ago, when we firstpitched to our board the need to
(15:23):
start investing in building adigital capability.
Now, us at Uniteller we're nota large retail name for
remittances because we don't gospecifically to the consumer Our
main business model is buildingsolutions and platform for the
industry or for companies in theindustry white label solutions
(15:47):
that help individuals andcompanies to have access to
remittances or cross-borderpayments.
So we saw that remittances wereeventually going to move from a
situation where consumers,instead of going to a small
mom-and-pop shop to make a cashpayment, they eventually will
(16:11):
either go to larger corporations, larger stores, digital
applications or even their owntelco provider or even their own
bank to provide them low-costremittance payments.
So in Uniteller, we saw thatopportunity and we invested in
providing solutions, bettersolutions that were more
(16:33):
digitalized, not only forconsumers but also for fintechs,
other companies, corporationsthat wanted to get into the
space.
So we developed solutions as aservice remittances as a service
business remittances as aservice business, cross-border
business payments as a service,where we empower companies to
(17:00):
offer to their customer basethese type of transactions in a
more efficient and seamless way.
So we invested in thesecapabilities and we you know,
obviously it takes time not onlyfor us to develop our solutions
, but also the market adoption,the industry adoption, where
(17:22):
companies are now thinkingshould I, should I develop my
own platform for my consumers orshould I take an already built
platform and connect thatplatform into my digital
solution?
So that's where we see thevalue and that's how we invested
(17:42):
in building these capabilitiesand leverage on the global
network that we already have,because, again, it's not just
having a product and a nicefront end.
What are you doing with that isbuilding a regulatory capability
, a very sophisticated riskmanagement also capabilities,
(18:03):
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 verysophisticated risk-fraud model
to make sure that you do itright with very little
aggravation to the consumer, butalso with a very good result in
(18:26):
keeping your fraud at a very,very low level, so that your
product can go to the consumeras low cost as possible.
So it takes time to build thatknowledge, that know-how.
From a risk perspective, from acompliance perspective, from a
(18:46):
regulatory perspective.
Europe, the US, the Gulfcountries, the South Asian
countries they all have verydifferent regulatory
implications that you need to beaware and you need to be able
to adapt to that from complianceperspective, from consumer
protection perspective, the waythat you sell your capabilities,
(19:10):
the way that you go out to theconsumer.
So there's a very complex.
And then you need to build adistribution network and you
need to have volume so that thecost of your distribution
network is sufficient.
So for a new company, a fintechor a telco provider that wants
to offer remittances, in ouropinion it's just very
(19:34):
inefficient for them to buildeverything from scratch.
It's partnerships, and gettingaccess to a solution like the
one that we provide now is avery efficient way of putting in
front of your consumers, infront of your consumer base, a
very competitive cross-borderremittance solution that is not
(19:59):
just efficient but it's alsoreal-time, low-cost and access
to all of the countries thatyour consumer base needs.
So that's where Uniteller fitsin, and it's been a while since
we began this effort and I thinkwe're very happy where we are
(20:19):
now and it's just we just seethe evolution of the industry
going that way.
Rachel Morrissey (20:26):
So there was one thing that you told me when
we were talking before, and oneof the platforms or one of the
platform solutions that you haveis a super app, and this I
found kind of fascinating.
First of all, in the US, superapps sure, there's elements of
super apps everywhere.
We have like Uber and Uber Eatsand yeah, okay, you can do it
Like we don't have a super app,like we have pretend parts of
(20:50):
super apps but we do not haveanything that resembles, you
know, wechat or some of theother things that are available
and that hasn't been really partof the ecosystem out there.
So I'm kind of fascinated withwhat a super app, how that, how
(21:10):
remittances work inside of thesuper apps, and where are you
seeing the most use for thosekinds of things because of
adoption rates and how thatworks.
Alberto Guerra (21:19):
Yeah, there's a huge debate as to this trend of
the super apps and, yes, you'reright, in the US, it's
experienced a very differentevolution of the super apps
versus Asia, and there are a lotof people that have said no,
(21:40):
because the US is more difficult, because consumers already had
very solid, let's say, socialmedia apps when they became more
digital in nature for financialservices and this and that, and
then you have consumerprotection and then you have
data privacy implications.
(22:02):
So a lot of things of why peopleare trying to find excuses, of
why the super app concept hasnot been successful in the US,
and I think, at the end of theday, yes, there may be truth to
all of these explanations thatare out there, but the reality,
yes, is that super apps in Asiahave had a very different
(22:22):
evolution in the US.
At the end of the day, ouropinion is remittances need to
be as efficient and astransparent and as low cost as
possible.
So, at the end of the day,having a standalone app that
only offers remittances, in ouropinion, is going to be very
(22:46):
difficult if your solution isonly a single product solution.
A single product solutionBecause, yes, you can have the
most efficient consumerinterface for onboarding, for
placing a transaction, forpaying for collecting,
(23:07):
interacting with yourbeneficiary.
But at the end of the day it'sa single product and if the cost
of remittances continue todecrease, there is not just a
long-term business case for this.
So we tend to think thatremittances at the end of the
(23:29):
day have to be part of a broadersolution.
The end of the day have to bepart of a broader solution where
remittances is part of, again,a broader range or financial or
other type of services.
And this is what we're seeinghere in Asia.
Micky Tesfaye (23:47):
Sorry to interrupt you I was just going
to ask because, on that pointaround it being a part of a
broader set of solutions, I wasjust thinking about and thinking
about asia, a point you madeearlier on about the kind of
varied impact of remittancesamongst different economies.
Right, india we mentioned, wementioned singapore, and I guess
that's just making me thinkaround some of the solutions
(24:08):
that are emerging, not just fromthe private sector, but like
the connecting of the real-timepayment solutions from these two
economies which have that flow.
Now we're seeing real-timepayment solutions emerging in
Brazil, for instance.
The US is about to have one.
Rachel Morrissey (24:27):
Technically we have one it launched.
Micky Tesfaye (24:30):
Sorry, fednow has launched, so we've got
real-time payments emergingacross many countries in the
world, and one of the thingsthat's emerging now is
connecting these real-timepayment solutions.
I guess, if that is happening,how does this remittance
solution discussion we've had sofar fit into that?
Alberto Guerra (24:52):
Yeah, I think, at the end of the day, the ideal
solution, or the utopicsolution, where in the future,
every country has a real-timepayment system that is connected
with each other, you wouldthink that the banks or the
mobile wallets, as analternative to banking, will be
(25:15):
the only app that a consumerwill need to hold half your
money in your bank account, yourmobile wallet and be able to do
a p2p transfer.
You know, like in the us, youcan do sell or you can do venmo.
It's very popular, no cost andeventually remittances should be
the same.
Now, the only problem with thatis that how do you manage
(25:41):
compliance implications?
How do you manage exchange rateconversions?
How do you manage pricing?
But eventually, at the end ofthe day, that's what we should
aspire is how do we manage that?
All the countries have thesereal-time payment platforms that
you can connect through thesedifferent type of banking apps
(26:03):
or mobile apps, mobile walletapps.
So going to that end is, if Ihave a bank account in the US or
in Singapore or in Europe, anyof the bank provides me a
similar solution, like in the US, to provide, like a real-time
(26:26):
P2P payment like cell.
You know I shouldn't reallyneed to use Venmo, but I still
use Venmo.
Why is it that I still useVenmo and not my bank account?
And that's a very interestingquestion is because when you try
to sell in the US through yourbank account, then when you get
(26:48):
your bank statement it becomes anightmare because you get a 10,
20 page bank statement whereyou have multiple and you say I
don't want that on my bankaccount, so I'd rather have send
money to a wallet and I can doall my P2P needs on that wallet
(27:08):
and I don't need to mix all ofmy P2P transactions on my main
bank account.
So then you have a businesscase of why a remittance app or
a P2P app needs to exist.
But at the end of the day, who'sproviding that and at what cost
(27:29):
?
So there are different businessmodels because Venmo can say
you know I make money because Ihold all those balances and I
can make money on the floatingand I can make money on other
type of business arrangements.
But in the international P2P,where your compliance costs are
higher, when you have exchangerate conversions and risks, you
(27:52):
know you need to have anotherbusiness model.
So at the end of the day, thediscussion is very complex.
You would aspire to be there,you would aspire to be in a
situation where remittancesshould be zero cost.
But that's just a topic.
But at the end of the day, itdoesn't mean that they need to
(28:14):
be cheaper, and they still cango cheaper.
But that's why I still thinkthat the super app concept,
where Revita says it's justembedded in other type of
services, that's what the futureI would think the future will
have to be.
Rachel Morrissey (28:30):
Okay, so this is.
We're going to have to wrap upsoon, but I have one last
question, and it's not a shortone, but as you've worked with
different clients, you know whatare some of the success stories
that you've seen with some ofthese solutions that you have.
You know what kind of smoothingover of this problem have you
(28:52):
been able to accomplish.
Alberto Guerra (28:55):
Yeah, there are many.
One of the solutions we have, Ithink, different success
stories.
One of them if I can categorizethem into broader groups one of
them would be new fintechs, youknow, new solutions that have
already a customer base and wantto provide remittances as an
(29:18):
added solution to their product,their wallet, their product
portfolio and they come to uswith can you provide us a
remittance as a service?
Because I want to provide thisas a key component as a service,
because I want to provide thisas a key component and I'm
willing to subsidize the cost ofthe remittance because I
already have a business modelwith my consumer base.
I think that's and we havemultiple neobanks and apps and
(29:42):
fintechs cases of fintechs inthe US that have approaches and
have established very successfulremittance as a service program
with us.
Establish very successfulremittance as a service program
with us.
The other group would befinancial institutions like in
LATAM in Southeast Asia, likePhilippine banks, philippine
(30:02):
pawn shops, latin American banksthat they used to have retail
locations in the US or in Europeoffering remittance services.
That became impossible to keepbecause remittances cost came
lower and the cost of having aphysical location just increased
(30:27):
.
So your product price was lowand your costs were increasing,
but they still want to have apresence.
So the digital as a servicesolutions for Latin American
banks, for Philippine banks, forAfrican banks, have become like
the perfect fit and saying Istill want to have my brand in
(30:48):
the US or in Europe or in Asia,in in Singapore, but I can't
longer afford to have a physicalpresence.
So in those cases, you know, wehave multiple Latin American
banks that are using already oursolution Philippines pawn shops
and banks already using oursolution that saw in our
(31:10):
platform, in our solution, thebest way to continue forward
with this.
Rachel Morrissey (31:15):
Hence remittances as a service.
It makes perfect sense.
Micky Tesfaye (31:18):
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 (31:27):
Thank you, mickey, thank you for having me
and thank you, rachel, forhaving me.
It's been a pleasure.
You.
Thank you, mickey, thank youfor having me and thank you.
It's been a pleasure.
You're most welcome.
Micky Tesfaye (31:33):
Thank you, it has been a pleasure, and thank you
to our listeners for joining usfrom Money 2020, asia, where
we're recording live.
If you want to record live atthe show with us, please send us
your submissions to podcasts atmoney2020.com and we'll see you
soon.
We love you.
This is Essential Audio.
Micky Tesfaye (00:15):
Hello, our dear listeners, Welcome to the Money
Pot Live coming to you fromMoney 2020 Asia in Bangkok and
today.
I am co-hosting this wonderfulepisode with my one and only US
content head, Rach Morrissey.
Hey Rach, how are you?
Rachel Morrissey (00:35):
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 (00:43):
No, you should call me Rach.
Most people call me Rachelshould I call you Rach?
Rachel Morrissey (00:45):
no, you should call me Rach.
I like that you call me Rach.
Micky Tesfaye (00:47):
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 Ilove to nerd on about, which is
remittances.
Joining us is Alberto Guerra,from UniTell er, CEO and founder
?
- no- just CEO.
Rachel Morrissey (01:07):
You're Just the CEO.
Micky Tesfaye (01:09):
CEO of Unitell er Alberto, how are you doing?
Thank you for having me Doingwell.
Very happy to be here, Rachel,good meeting you and very nice
being here at the podcast.
So, yeah, thank you.
Rachel Morrissey (01:23):
How are you enjoying the show so far?
Alberto Guerra (01:24):
It's been great.
It really means being back herein Asia for 2020.
So we came here for theSingapore events and it's great
being back here in Asia for thisevent.
Rachel Morrissey (01:39):
Yeah, I'm excited about it.
I think it's great it has beengreat, it's been a lot of fun.
Micky Tesfaye (01:44):
So let's just, you know, dive right in.
And I guess one of the things Iwas super interested about this
topic and conversation isbecause it's remittances as a
service across borders and as apayment solution.
So maybe, alberto, you canstart by telling us a little bit
about that and why they're sosignificant.
Alberto Guerra (02:07):
Yeah, remittances are very significant
for the world economy as awhole.
People migrate.
That's a fact that has beenhappening ever since the
beginning of humanity.
And people looking for a way tofind food and better living for
(02:28):
themselves and their families.
So in today's world, peoplecontinue to migrate.
Differences in the economies ofdifferent countries and
political and geopoliticalcrisis make people to travel and
search for a better quality ofliving, and this is where
(02:50):
remittances take place, wherepeople have to send money and
are looking for ways of sendingmoney to their families in a
very as efficient as possible,as quick and efficient and
transparent as possible.
So, eventually, remittanceshave become a major help for
(03:12):
individuals and their familiesand the economies where not only
these individuals work but,more important, the economies
where the families and thebeneficiaries live, because all
this money gets invested orexpensed in the home countries
through food, education,healthcare, construction.
(03:34):
So many many use cases ofremittance money.
Rachel Morrissey (03:39):
So this is interesting.
I know there are countrieswhere remittances are incredibly
important to the GDP and I knowthat there's others that are.
I mean, I'm from the UnitedStates.
Remittances are not somethingthat we think about.
I mean, the common personinside the United States thinks
about a lot, which is oddbecause we have a very large
(04:01):
immigrant population that issending money out, but because
it isn't about the incoming somuch, 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 Asianmarkets, as you're looking at
them, which of the countries aremore reliant on remittances and
(04:23):
and how does that kind of workin the scale of just Asian
markets?
Are you seeing a lot of that,or are you seeing remittances
coming in from more otherregions into the Asian markets?
Alberto Guerra (04:44):
Yeah, there are larger countries where
remittances may be very largebut relative to the size or the
economy of that country, may notbe that relevant.
Like India could be an exampleof a country that receives a lot
of money of remittances.
Official numbers may vary, butwe're talking about $60 billion
of remittances.
Official numbers may vary, butwe're talking about $60 billion
(05:08):
in remittances, but the Indianeconomy is huge.
So, as a percentage of GDP,remittances may not be that
relevant.
A similar case in the Americaswould be Mexico.
Mexico receives more than $60billion per year of remittances,
which is a huge amount for thefamilies that receive this money
(05:31):
, but as the overall of theMexican economy is not, even
though it's a big number, is notthat relevant in terms of GDP
participation.
Smaller countries in theAmericas or in Asia remittances
play a larger role Countrieslike Nepal or like Bangladesh or
(05:54):
even the Philippines that alsois.
The Philippines is a veryunique case because the
Philippines has through manyyears the Philippines has
through many years promote theFilipinos to work abroad and
they have very interestingincentive programs and support
programs to allow Filipinos totravel and work abroad.
(06:15):
So, even though the Philippinesis an important economy, it is
very embedded in the culturalsituation of the society that
Filipinos travel abroad to workabroad.
So remittances in thePhilippines play a larger role.
So there are differentcharacteristics in different
(06:39):
countries but, yeah, there arecountries where remittances are,
you know, a key component ofthe economy of those countries.
On the origination side, youknow there are countries that
are key recipients ofimmigration, of immigrants here
in Asia.
Singapore is a good example,other countries like Malaysia,
(07:05):
the Gulf countries, saudi Arabia, the United Arab Emirates,
qatar, kuwait all these are bigrecipients of immigrants.
And then you like Hong Kongalso.
It's another big recipient ofimmigration.
So, at the end of the day, youhave different components.
(07:31):
Europe, the US, canada are alsobig countries, but there are
also other very interestingcorridors Because at the end,
the remittances and immigrationis becoming more of a global
component.
Even though there are dominantcorridors in Asia and in the
Americas and between Europe andAfrica.
At the end of the day, thereare interesting, very local
(07:53):
components of remittances thatsometimes, when you look at the
data, you're really surprised tosee some of these elements.
Micky Tesfaye (08:03):
That's fascinating and, as Rich said at
the beginning, I'm Ethiopianand remittances play a big role
in the economy there andparticularly also because we
have a very sizable Muslimpopulation and there's very
Islamic remittances.
That's probably one of the mostofficial ones in terms of
(08:23):
coverage in terms of thechannels for transfers.
You can, I think that'sprobably like the most, one of
the most official ones in termsof coverage in terms of like the
channels for transfers.
Right, you can like I thinkit's called Hawala and you can.
Basically, you've got likemultiple shops and they've got
incredible network and you knowwhen you watch a spy movie, when
they send money they don't wantto trace you see sometimes the
(08:45):
American CIA agents and you knowbut like it's so advanced in
terms of like and it shows theimportance of remittances, right
.
I guess one of the things thathas happened in a lot of
countries, but it hasn'thappened in ethiopia, however,
is that the payment flows havebecome more and more digitized.
So I guess my question is maybehow, how has your business?
You need to know how has yourbusiness evolved over time as
(09:07):
like the global, like remittanceflow?
Alberto Guerra (09:09):
has evolved with the emergence of digital
technologies, digital paymentsolutions yeah, and that's a
great question because at theend of the day, it's uh, it's
been a transformation that it'sbeen happening in some corridors
faster than others, but at theend of the day, it's a very,
(09:29):
very interesting trend wheredigitization is taking over
remittances as a whole in theindustry.
If you look at data of themajor public companies in the
sector, when you really look andanalyze the growth data of the
public companies that are in theremittance space and you see
their growth from their cashbusiness and then they post
(09:54):
their growth of their digitalchannels and digital business,
you see the clear effect of howthe cash business is, in some
cases, not growing or evendecreasing, but all of them have
very dynamic digital channels.
Digital business growths were,in some cases, double digits,
(10:19):
triple digits, because it's justthe consumer adoption of
digital remittances is there.
There are multiple factors ofwhy this is happening.
I think one of them is the useevery time the wider use of
mobile phones and smartphones asa concept, where not just you
(10:40):
have a mobile phone, but youhave a smartphone that allows
you to download apps that canthen be used as digital wallets
for you to use and send money,and also not only having a
smartphone, but also, throughoutthe world, the use of data is
(11:03):
also becoming more available.
Throughout the world, the useof data is also becoming more
available.
You know, before it was, youknow, mostly very difficult for
people, individuals, to havesmartphones and they have an
adequate data plan for them touse them.
So now, you know, having accessto public Wi-Fi networks is
(11:23):
very common nowadays, very lowcost data plans.
It's also becoming moreaccessible.
So that's, you know, allowingpeople to use their smartphone
for having electronic money and,within that, you know, download
(11:46):
apps and services that you canuse to send money or receive
money In the originationcountries.
You have another component thatmay be more difficult, even
though you may have a betteraccess to mobile phones, to
smartphones, to mobile data.
You have the component ofvanguardization.
Some of the immigrants that aregoing to, especially to the US
(12:10):
or to Europe, have a harder timein getting involved in the
financial sector because theyare afraid of going to a bank or
they are afraid that if theyopen a bank account or a mobile
wallet, they may be subject to,you know, supervision from the
(12:30):
local entities, tax entities,immigration entities.
So a lot of people want to stayundercover in the cash world,
and that's, I think, one of themain challenges in some of the
countries that have, you know,these immigration issues that
impede users to fully adoptdigital technologies, impede
(12:51):
users to fully adopt digitaltechnologies but on the
recipient side, when you don'thave that situation, the use of
digital wallets and mobilephones and smartphones to
receive money and to have amobile wallet and use that
mobile wallet for other uses isbecoming more and more popular.
(13:11):
So, yeah, it's very interesting, very evolution.
Rachel Morrissey (13:16):
It is interesting because there's a
couple of different as I've beentalking to different people
about different use casescenarios.
About six years ago I had theopportunity to go to Kenya and
the innovation labs that weretaking place there, building
certain kinds of digitalsoftware on top of M-Pesa to
(13:36):
enable micro-businesses todigitize a lot of their
operations and digitize theirordering, digitize their wallets
, all of these kinds of things,and some of the people were very
slow to adopt because they wereuncomfortable with the fact
that the government would knowthis, but the fact that the
government didn't have access tosome of that data, that they
(13:59):
didn't kind of know where thingswere flowing, and that meant
that they were restricted in theinformation they could use to
create policies that reallycould aid in some of this, and
so it was this kind of push-pull.
And then there's other placeswhere, like I mean, I know there
are places like where wealthierindividuals and more
(14:23):
traditional banks actuallyresist a certain amount of
digitization because they're notas interested in the digital
services as they are in notallowing the government to have
a full understanding of alltheir assets.
So there's all of these kind ofinformation gaps or tilts in
information that happen.
I think this is a perfect timeactually to pivot to what
(14:47):
Uniteller is doing.
So I am really interested.
So what are some of thesolutions and what are some of
the things that Uniteller isdoing in this space that kind of
are attempting to help kind ofsolve some of the problems with
remittances?
Alberto Guerra (15:03):
Yeah, and it's very interesting because we saw
at Uniteller, we saw how thistrend was going to eventually
take over in the industry, howthis trend was going to
eventually take over in theindustry.
So I think it was like in theyear 2010,.
So 14 years ago, when we firstpitched to our board the need to
(15:23):
start investing in building adigital capability.
Now, us at Uniteller we're nota large retail name for
remittances because we don't gospecifically to the consumer Our
main business model is buildingsolutions and platform for the
industry or for companies in theindustry white label solutions
(15:47):
that help individuals andcompanies to have access to
remittances or cross-borderpayments.
So we saw that remittances wereeventually going to move from a
situation where consumers,instead of going to a small
mom-and-pop shop to make a cashpayment, they eventually will
(16:11):
either go to larger corporations, larger stores, digital
applications or even their owntelco provider or even their own
bank to provide them low-costremittance payments.
So in Uniteller, we saw thatopportunity and we invested in
providing solutions, bettersolutions that were more
(16:33):
digitalized, not only forconsumers but also for fintechs,
other companies, corporationsthat wanted to get into the
space.
So we developed solutions as aservice remittances as a service
business remittances as aservice business, cross-border
business payments as a service,where we empower companies to
(17:00):
offer to their customer basethese type of transactions in a
more efficient and seamless way.
So we invested in thesecapabilities and we you know,
obviously it takes time not onlyfor us to develop our solutions
, but also the market adoption,the industry adoption, where
(17:22):
companies are now thinkingshould I, should I develop my
own platform for my consumers orshould I take an already built
platform and connect thatplatform into my digital
solution?
So that's where we see thevalue and that's how we invested
(17:42):
in building these capabilitiesand leverage on the global
network that we already have,because, again, it's not just
having a product and a nicefront end.
What are you doing with that isbuilding a regulatory capability
, a very sophisticated riskmanagement also capabilities,
(18:03):
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 verysophisticated risk-fraud model
to make sure that you do itright with very little
aggravation to the consumer, butalso with a very good result in
(18:26):
keeping your fraud at a very,very low level, so that your
product can go to the consumeras low cost as possible.
So it takes time to build thatknowledge, that know-how.
From a risk perspective, from acompliance perspective, from a
(18:46):
regulatory perspective.
Europe, the US, the Gulfcountries, the South Asian
countries they all have verydifferent regulatory
implications that you need to beaware and you need to be able
to adapt to that from complianceperspective, from consumer
protection perspective, the waythat you sell your capabilities,
(19:10):
the way that you go out to theconsumer.
So there's a very complex.
And then you need to build adistribution network and you
need to have volume so that thecost of your distribution
network is sufficient.
So for a new company, a fintechor a telco provider that wants
to offer remittances, in ouropinion it's just very
(19:34):
inefficient for them to buildeverything from scratch.
It's partnerships, and gettingaccess to a solution like the
one that we provide now is avery efficient way of putting in
front of your consumers, infront of your consumer base, a
very competitive cross-borderremittance solution that is not
(19:59):
just efficient but it's alsoreal-time, low-cost and access
to all of the countries thatyour consumer base needs.
So that's where Uniteller fitsin, and it's been a while since
we began this effort and I thinkwe're very happy where we are
(20:19):
now and it's just we just seethe evolution of the industry
going that way.
Rachel Morrissey (20:26):
So there was one thing that you told me when
we were talking before, and oneof the platforms or one of the
platform solutions that you haveis a super app, and this I
found kind of fascinating.
First of all, in the US, superapps sure, there's elements of
super apps everywhere.
We have like Uber and Uber Eatsand yeah, okay, you can do it
Like we don't have a super app,like we have pretend parts of
(20:50):
super apps but we do not haveanything that resembles, you
know, wechat or some of theother things that are available
and that hasn't been really partof the ecosystem out there.
So I'm kind of fascinated withwhat a super app, how that, how
(21:10):
remittances work inside of thesuper apps, and where are you
seeing the most use for thosekinds of things because of
adoption rates and how thatworks.
Alberto Guerra (21:19):
Yeah, there's a huge debate as to this trend of
the super apps and, yes, you'reright, in the US, it's
experienced a very differentevolution of the super apps
versus Asia, and there are a lotof people that have said no,
(21:40):
because the US is more difficult, because consumers already had
very solid, let's say, socialmedia apps when they became more
digital in nature for financialservices and this and that, and
then you have consumerprotection and then you have
data privacy implications.
(22:02):
So a lot of things of why peopleare trying to find excuses, of
why the super app concept hasnot been successful in the US,
and I think, at the end of theday, yes, there may be truth to
all of these explanations thatare out there, but the reality,
yes, is that super apps in Asiahave had a very different
(22:22):
evolution in the US.
At the end of the day, ouropinion is remittances need to
be as efficient and astransparent and as low cost as
possible.
So, at the end of the day,having a standalone app that
only offers remittances, in ouropinion, is going to be very
(22:46):
difficult if your solution isonly a single product solution.
A single product solutionBecause, yes, you can have the
most efficient consumerinterface for onboarding, for
placing a transaction, forpaying for collecting,
(23:07):
interacting with yourbeneficiary.
But at the end of the day it'sa single product and if the cost
of remittances continue todecrease, there is not just a
long-term business case for this.
So we tend to think thatremittances at the end of the
(23:29):
day have to be part of a broadersolution.
The end of the day have to bepart of a broader solution where
remittances is part of, again,a broader range or financial or
other type of services.
And this is what we're seeinghere in Asia.
Micky Tesfaye (23:47):
Sorry to interrupt you I was just going
to ask because, on that pointaround it being a part of a
broader set of solutions, I wasjust thinking about and thinking
about asia, a point you madeearlier on about the kind of
varied impact of remittancesamongst different economies.
Right, india we mentioned, wementioned singapore, and I guess
that's just making me thinkaround some of the solutions
(24:08):
that are emerging, not just fromthe private sector, but like
the connecting of the real-timepayment solutions from these two
economies which have that flow.
Now we're seeing real-timepayment solutions emerging in
Brazil, for instance.
The US is about to have one.
Rachel Morrissey (24:27):
Technically we have one it launched.
Micky Tesfaye (24:30):
Sorry, fednow has launched, so we've got
real-time payments emergingacross many countries in the
world, and one of the thingsthat's emerging now is
connecting these real-timepayment solutions.
I guess, if that is happening,how does this remittance
solution discussion we've had sofar fit into that?
Alberto Guerra (24:52):
Yeah, I think, at the end of the day, the ideal
solution, or the utopicsolution, where in the future,
every country has a real-timepayment system that is connected
with each other, you wouldthink that the banks or the
mobile wallets, as analternative to banking, will be
(25:15):
the only app that a consumerwill need to hold half your
money in your bank account, yourmobile wallet and be able to do
a p2p transfer.
You know, like in the us, youcan do sell or you can do venmo.
It's very popular, no cost andeventually remittances should be
the same.
Now, the only problem with thatis that how do you manage
(25:41):
compliance implications?
How do you manage exchange rateconversions?
How do you manage pricing?
But eventually, at the end ofthe day, that's what we should
aspire is how do we manage that?
All the countries have thesereal-time payment platforms that
you can connect through thesedifferent type of banking apps
(26:03):
or mobile apps, mobile walletapps.
So going to that end is, if Ihave a bank account in the US or
in Singapore or in Europe, anyof the bank provides me a
similar solution, like in the US, to provide, like a real-time
(26:26):
P2P payment like cell.
You know I shouldn't reallyneed to use Venmo, but I still
use Venmo.
Why is it that I still useVenmo and not my bank account?
And that's a very interestingquestion is because when you try
to sell in the US through yourbank account, then when you get
(26:48):
your bank statement it becomes anightmare because you get a 10,
20 page bank statement whereyou have multiple and you say I
don't want that on my bankaccount, so I'd rather have send
money to a wallet and I can doall my P2P needs on that wallet
(27:08):
and I don't need to mix all ofmy P2P transactions on my main
bank account.
So then you have a businesscase of why a remittance app or
a P2P app needs to exist.
But at the end of the day, who'sproviding that and at what cost
(27:29):
?
So there are different businessmodels because Venmo can say
you know I make money because Ihold all those balances and I
can make money on the floatingand I can make money on other
type of business arrangements.
But in the international P2P,where your compliance costs are
higher, when you have exchangerate conversions and risks, you
(27:52):
know you need to have anotherbusiness model.
So at the end of the day, thediscussion is very complex.
You would aspire to be there,you would aspire to be in a
situation where remittancesshould be zero cost.
But that's just a topic.
But at the end of the day, itdoesn't mean that they need to
(28:14):
be cheaper, and they still cango cheaper.
But that's why I still thinkthat the super app concept,
where Revita says it's justembedded in other type of
services, that's what the futureI would think the future will
have to be.
Rachel Morrissey (28:30):
Okay, so this is.
We're going to have to wrap upsoon, but I have one last
question, and it's not a shortone, but as you've worked with
different clients, you know whatare some of the success stories
that you've seen with some ofthese solutions that you have.
You know what kind of smoothingover of this problem have you
(28:52):
been able to accomplish.
Alberto Guerra (28:55):
Yeah, there are many.
One of the solutions we have, Ithink, different success
stories.
One of them if I can categorizethem into broader groups one of
them would be new fintechs, youknow, new solutions that have
already a customer base and wantto provide remittances as an
(29:18):
added solution to their product,their wallet, their product
portfolio and they come to uswith can you provide us a
remittance as a service?
Because I want to provide thisas a key component as a service,
because I want to provide thisas a key component and I'm
willing to subsidize the cost ofthe remittance because I
already have a business modelwith my consumer base.
I think that's and we havemultiple neobanks and apps and
(29:42):
fintechs cases of fintechs inthe US that have approaches and
have established very successfulremittance as a service program
with us.
Establish very successfulremittance as a service program
with us.
The other group would befinancial institutions like in
LATAM in Southeast Asia, likePhilippine banks, philippine
(30:02):
pawn shops, latin American banksthat they used to have retail
locations in the US or in Europeoffering remittance services.
That became impossible to keepbecause remittances cost came
lower and the cost of having aphysical location just increased
(30:27):
.
So your product price was lowand your costs were increasing,
but they still want to have apresence.
So the digital as a servicesolutions for Latin American
banks, for Philippine banks, forAfrican banks, have become like
the perfect fit and saying Istill want to have my brand in
(30:48):
the US or in Europe or in Asia,in in Singapore, but I can't
longer afford to have a physicalpresence.
So in those cases, you know, wehave multiple Latin American
banks that are using already oursolution Philippines pawn shops
and banks already using oursolution that saw in our
(31:10):
platform, in our solution, thebest way to continue forward
with this.
Rachel Morrissey (31:15):
Hence remittances as a service.
It makes perfect sense.
Micky Tesfaye (31:18):
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 (31:27):
Thank you, mickey, thank you for having me
and thank you, rachel, forhaving me.
It's been a pleasure.
You.
Thank you, mickey, thank youfor having me and thank you.
It's been a pleasure.
You're most welcome.
Micky Tesfaye (31:33):
Thank you, it has been a pleasure, and thank you
to our listeners for joining usfrom Money 2020, asia, where
we're recording live.
If you want to record live atthe show with us, please send us
your submissions to podcasts atmoney2020.com and we'll see you
soon.
We love you.
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