Slow and steady doesn’t win the financial services race. If you’re not ahead, you’re behind, especially if you’re playing on the global stage.
From user interface technology to security and risk management, the only constant in the financial space is that nothing stays the same for long. Those who wait until they must either invest or fold will find themselves outpaced, and catch-up is not a game that any organization wants to find itself playing.
Innovation can sometimes be seen as a solution looking for a problem, but it’s time to stop thinking of technology as bells and whistles and start looking at it as a necessary element of doing business for a changing consumer base – and up against a changing landscape of challenges and threats.
UAE Exchange CEO Promoth Manghat told PYMNTS’ Karen Webster that staying ahead on technology and working capital investments has not only kept UAE Exchange in the game since 1980, but enabled it to grow into a global leader in the financial services space, handling close to $30 billion in transfers each year. That’s a 6.75 percent share of the global money transfer market and puts the company at No. 2 in the space worldwide.
Not everyone can be in the top five of global financial service providers, but everyone can glean some wisdom from UAE Exchange’s journey. In his conversation with Webster, excerpted below, Manghat shared a few of his secrets for success.
Karen Webster: Let’s get acquainted with UAE Exchange and some of the great work you’re doing in the global remittance, foreign exchange and payments space.
Promoth Manghat: Our company started in Abu Dhabi in 1980. Our chairman, Dr. B. R. Shetty, was very entrepreneurial, with a vision to build capabilities across three different verticals. We now have three brands under us – UAE Exchange, Xpress Money and via a shareholder vehicle, Travelex.
Starting with the Middle East, we saw organic growth across the Indian subcontinent, spreading into Southeast Asia, then Europe, and finally America. Today, we cover more than 150 markets and handle close to $30 billion in transfers. The business has evolved into a device agnostic, any-to-any platform offering transfers in cash, real-time bank account credits, and eWallet transactions.
KW: Since 1980, the payments and remittance market has changed dramatically. You’ve been at the helm for the last decade. Help us understand how you’ve stayed ahead of the trends, particularly some of the digital trends, that have reshaped the market for remittance, whether you’re a sender or a receiver.
PM: We have always been a trailblazer and have invested back into the business. Apart from significant investments in marketing, there are two critical components for the long haul: technology and working capital.
We invested in an in-house technology stack back in 1992 even before institutions started thinking about it. I firmly believe that technology, at the end of the day, should solve problems and bring convenience and value to the consumer. Along with technology, we invested in working capital to ensure our growth aspirations were never curtailed.
We have always invested ahead of time, and that has ensured that we don’t have to play catch-up. For instance, we have invested in blockchain because we feel that that, as a technology, it has the potential to solve many of the issues that the industry is facing. Our approach to technology innovation is to keep the consumer at the center of everything we do, and taking a view from the customer’s standpoint makes it easier for us.
KW: Would you say that a particular remittance or transaction type is at the core of your portfolio? Are there advantages for consumers using a particular transaction method?
PM: The value we provide to the client is alleviating anxiety. We believe that when someone comes to us and places their money with us, it reflects the trust that they have placed with us. What they pay for is not merely for the service; they’re also paying for the convenience it offers and for relieving them of their anxiety.
For example, we were the first in the Middle East region in 2006 to close the loop by sending back a text alert to the remitter that the beneficiary had collected the money. It’s a small thing, but essentially helped remove the anxiety of the customer. Today, fast forward 11 years and it’s real-time APIs that are taking the anxiety off. You find new ways. There is no point having a solution and looking for a problem; we have to make sure that the product adds value.
That’s the world we came from, but the world we are looking ahead to is a place where money transfer may not be a standalone offering going forward. It becomes embedded into a broad range of customer experiences. That’s why we are looking at our technology and the global network to make it truly seamless and channel agnostic. Going forward, the fulfillment of the last mile of money transfer could take various forms. Nevertheless the product promise continues to revolve around reducing the anxiety of the customer, and thus you deliver value.
KW: You talk about technology and how you’re using it to innovate the experience. How do you manage security and risk? That’s a big aspect of your business, and staying a step ahead of the bad guys isn’t as easy as it used to be because they’re pretty smart and sophisticated themselves.
PM: As a CEO, just as important as the time you devote to business strategy, is the time spent on compliance and risk management.
Two key aspects I would touch upon are AML – anti-money laundering – and cybersecurity. When you transfer money across borders, AML compliance becomes very important. You don’t want your system – unknowingly or indirectly – being used for wrong purposes, so you need to protect it. A substantial amount of investments go into doing that: Investments in people, investments in technology, investments in surveillance.
Technology continues to evolve, solving many of these problems. Take for example identification. Today many countries are moving to national ID programs. It gives you access to the identification of the customer from the central registry provided by the government.
When you’re becoming channel agnostic and more than 50 percent of business is done virtually, you need to ensure that customer data is protected. You need to invest in protecting against the malwares and ransomwares. Similarly you have to get the right set of people, because investments in people are a very important aspect of risk management.
KW: Where do you see your business in the next five years?
PM: In the world we’re in, the changes are so dynamic. The emergence of FinTech operators has definitely thrown a fair amount of challenge to players like us. That being said, we are not sitting back and watching them take over; rather we are collaborating with them.
FinTech operators are very nimble. The strength that players like us bring to the table is the customer trust, the customer base and regulatory knowledge. As an industry, though, we are progressing. Many of the issues we face are being addressed by collaborating with FinTech entities and the innovative solutions they have brought to market.
Let me give you an example. One of the things that we’ve done is launching a mobile-driven multi-currency bank in France, called Ditto. It’s totally virtual with no outlets. So fundamentally the way you used to transact on the first mile and last mile has changed. Similarly, the middle layer is also undergoing a substantial amount of change.
Technology disruption will remain a constant in our markets, and going forward we need to look beyond improving experiences at stores or merely adding apps. Money transfer and payments will become embedded into a range of customer experiences. Your success tomorrow depends on how you minimize disruption and make this customer experience seamless.