Accessing the world via the UAE
With a large expat base, the UAE is among the world's top 10 countries for sending remittances.
HI-TRAC: Shorthand for Happiness Index, Infrastructure, Talent, Regulations, Access and Capital. The six pillars that make UAE a great place for a startup. This week, the focus is on access to markets around the UAE, exemplified by a startup in the remittances area.
Over 20,000 school students from almost 120 different nationalities celebrated Flag Day at Za'abeel Park on the morning of Thursday, November 3, 2016.
With a large and diversified expatriate population base, UAE is in the list of the top 10 countries worldwide for sending remittances. This is according to the World Bank Group's Migration and Remittances Factbook 2016. The Factbook indicates that the total volume of remittances globally was $441 billion in 2015. This statistic does not include the huge grey market that thrives partly on the inefficiencies and high prices of incumbents. Evidence suggests that there is strong opportunity for technology and digitisation to drive significant efficiencies in pricing and customer experience. This in turn will help in reducing volume in the grey market. It will also create healthy competition in pricing and value added services. These observations are based on the author's experience with two of the world's largest payment brands.
The objective of finding efficiencies in pricing is being realised rapidly by startups in this business. For example, a quick comparison of using a mobile transfer app from an entrant versus incumbent money transfer organisations shows the significance of this trend. On a base transfer of $1,000 from the UAE to the UK, the sender can expect to save up to $160 on transfer fees and foreign exchange markups. With the startup, the remittance goes straight into the recipient's bank account, saving time and the effort spent in getting to a cash-out location. For the sender, it means no more treks to exchange house counters or filling up of forms with banks. The effort required is to simply download the app once and complete the set-up, usually in less than 15 minutes. A search for serious contenders in the remittance transformation arena brings Remitr into focus. Remitr is a UAE-based company that has an excellent model. Kanchan Kumar, the founder and CEO of the company, has been associated closely with startups. He's been in two earlier ventures and he also headed the Mumbai chapter of The Indus Entrepreneurs (TIE). A core strength is his strong technological background.
Kanchan's journey into payments began by chance. His scientific mind led him to query the basis for the 5 to 7-per cent markups that were incurred in business on payments originating in India to payees outside the country. He would not take "that's the way it is," for an answer. This process of query led him into serious conversations with the regulator, banks and treasury managers. As an outsider to the industry, he was able to identify opportunities to transform the customer experience journey, treasury management and know-your-customer processes. In banks, these areas are traditionally resource intensive, leading to high costs. Grey market operators typically work outside these constraints.
Sensing the opportunity for a massive shift delivered through technology-based disintermediation of routine, resource-intensive tasks, he began the process of building and road-testing solutions. He realised that the India-outbound market was an unnecessary constraint that was being put on the venture. He was determined to expand his model globally, and what better place to start than in the UAE.
His drive and determination attracted the attention of senior professionals in the banking industry - Altaf Ahmed and Sandeep Jhingran. Ahmed is an experienced banking professional and left a senior position at ENBD to join in the vision. Jhingran is a veteran banker from IndusInd Bank and HDFC Bank in India. Sandeep Todi, a successful and seasoned techno-entrepreneur also came on-board.
They set up Remitr by bootstrapping for the first few months. When the first flow-in of investments happened, the team agreed to zealously guard the utilisation of the funds. Kumar, Ahmed, Jhingran and Todi work relentlessly on a number of areas including building a network of banks globally, managing treasury functions, creating the most viable technology product, following KYC processes, ensuring regulatory compliance and marketing the platform. Remitr now has a team of 20. It has been working closely with in5 in the Knowledge Village, set up under the umbrella of Dubai Creative Clusters Authority.
Another important strategic decision taken by the team was to find complementary partners in areas where there was little value in building themselves or where there was a need for regulatory approval. For example, the firm is fully open to working in partnership with exchange houses in the Middle East which have regulatory licences. Remitr also set themselves up as a licenced, regulator-compliant entity in North America to access funding from accounts there as well as to gain access into the global network of banks. Remitr is banking on ease-of-usage, simple and effective pricing and reduced costs coming from technology deployment.
The startup is poised to go to the next level. It's no wonder that the team has been recognised by Forbes as one of the most promising UAE startups in 2016. It is proof that startups are not synonymous with millennials. People with the right drive and talent can begin the entrepreneurial journey at any age.
The writer is director at Vyashara and a digital banking and digital payments evangelist, practitioner, advisor and consultant. Views expressed are his own and do not reflect the newspaper's policy. He can be reached at email@example.com.