The fintech industry makes it possible for money to float around the world faster. We can now order products from other countries, use instant payment apps to send money to friends and family in the blink of an eye, and can even invest thanks to the existence of the best fintech apps. The regions that pushed the growth of the fintech industry can be credited for creating an ecosystem where global finances were better connected.
A Statista report shows that among these regions, as of May 2023, the Americas had over 11,651 fintech startups, followed by the EMEA (Europe, Middle East, and Africa) region with 9,681 startups and the Asia Pacific region with 5,061 startups.
Traditional international money transfers
Traditionally money was transferred using strategies like telegrams, telegraphs, money transfer operators, etc. These methods were time-consuming and attracted higher costs. Even exchange rates were hard to calculate and manage which impacted international trade often.
To solve such issues, SWIFT was founded where participating banks would communicate with each other to transfer finances in the form of data. However, the process was not as smooth as it was once the fintech industry evolved and witnessed a boom in a number of enterprises.
Fintech industry for international money transfers
Let’s talk about how the fintech industry is transforming international money transfers. For a better understanding, we will have to discuss some benefits.
1. Faster transaction speed
The transaction speed of international money transfers has been boosted thanks to the evolution of the fintech industry. Using technologies like the internet, websites, mobile apps, IoT, and more, the fintech industry is able to process and execute transactions faster than ever before.
The industry has also adapted the blockchain technology now which has the ability to process transactions much faster than traditional servers. Due to its abilities, the fintech blockchain market is booming rapidly.
Blockchain, for instance, allows fintech app developers to deploy smart contracts across servers.
Smart contracts are sets of rules and regulations in the form of codes drafted to approve or disapprove transactions. Using smart contracts, fintech organizations eliminate the need for third-party approvals while a transaction is being processed.
Transactions go through smart contracts and if meet all conditions, get approved instantly. This strategy reduces the overall budget invested into commissioning third parties for transaction reviews, and also significantly reduces the time invested in the money transfer process.
As a Markets and Markets report suggests, between 2017 to 2023, the market is expected to grow from $230 million to $6,228 million at a Compound Annual Growth Rate (CAGR) of 75.9%.
2. Safer transactions
Digital technologies like artificial intelligence (AI), blockchain, mobile apps, etc are enabling users to send money across borders safely. AI plays an important role in making transactions safer significantly. The technology enables the automation of fintech security by being a part of connected servers and hardware.
Fintech software development service providers use AI to keep a constant eye on transactions being processed. AI uses consumer data to filter suspicious transactions from actual ones and takes action accordingly.
For instance, many modern banking systems ask their customers to inform bankers if they are traveling globally. A sudden trip might cause the Bank’s AI to place a block on the customer’s account unless informed in advance. This practice is followed by names like Capital One, Vectra AI, etc to automate threat detection, automated KYC, and risk analysis strategies.
3. International trades
Trades across the border have always been a thing but with time, the activity evolved and grew in size. At the moment, international trade is significantly dependent on the advantages of the fintech industry. Customers in the modern fintech industry can order products from other countries faster now.
By allowing users to safely send money, the fintech industry is also enabling collaborations between businesses beyond borders. It is possible now to hire people from other countries, run businesses remotely, buy foreign goods and services, create partnerships, and more due to the smoother flow of money.
4. Smoother remittances
For people to send money to people across the world has become easier thanks to the collaborations between fintech companies and remittance service providers. These organizations, for a fee, take care of every phase involved in the transaction from receiving approval of the transfer to currency conversions. If required, remittance services can also provide required data on money transfers for fair tax calculations.
5. Lower costs
The usage of financial technologies like cloud computing, AI, blockchain, etc has reduced the cost that was involved in maintaining fintech processes. Fintech technologies are also protecting individuals against cyberattacks which significantly reduces costs involved in investigations, legal actions, recoveries, etc. Reduced cyberattacks impact costs for fintech business operators and customers.
Leading fintech applications that are impacting international money transfer
Fintech applications are one of the common technologies that have a massive impact on boosting the amount of money being transferred around the world. Some leading names in the industry are making international transactions faster and safer. Here are some apps that are dominating the fintech industry:
Wise
Wise supports transactions and banking services in 40+ currencies, and you can also get your bank account details in over 9 currencies. As per a Wise report, the fintech app has over 16 million happy customers and it moves over £9 billion per month.
The Wise money transfer app also has a presence of its employees across 17 countries in 4 continents. The app is massively popular among Android and iOS users. Within just June 2023, the fintech app was downloaded over 500k times and has maintained a 4.7 out of 5-star rating based on 466k reviews on the Google Play Store.
PayPal
Another significant name in the industry of international monetary transfer is PayPal. Between 2010 to 2021, the company collected significant revenue due to its popularity for international settlements. From $3.51 billion in 2010 to $25.37 billion in 2023, as mentioned in the Statista report, the company has been a reliable international transaction partner for several years.
Wrapping up
The fintech industry is making it easier for businesses and people to empower each other. To aid countries in real-time, donate for disasters, invest in foreign companies, and other such monetary activities, money transfer apps are assisting involved parties.
But it is also a truth that as fintech is getting involved and the money is getting virtualized, cyber-attacks are significantly increasing as well. These attacks are done to steal money, scam people, steal data to sell it, and more. And that is why AI and blockchain have become massively popular in the fintech industry and will continue to be so.
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Summary: The role of the fintech industry in international money transfers is the most significant. Thanks to these technologies, the amount being across borders has increased massively, transactions have become safer, and faster. But there is more to it that we are discussing in this blog.
