When you send money abroad with your bank, you’re probably using technology from the 1970s. The SWIFT network was launched in 1973 to handle transactions between banks around the world and it hasn’t changed all that much since. Banks still use SWIFT to manage the billions of annual transactions that power the global economy.
Sadly, that’s why a payment sent from London to Amsterdam can still take up to three days. It would be faster to cycle that distance with a suitcase full of cash (albeit less safe). In a world where Amazon can deliver physical products to consumers within hours and food delivery startups promise you your groceries in minutes, people shouldn’t have to wait 72 hours to receive payments.
For decades, banks had no incentive to change this system. They could charge outrageous fees, often hidden in unfair exchange rates, and were insulated from competition by high barriers to entering the global financial system. The technology they used was expensive and exclusive. Regulatory compliance was too complex for startups to handle.
All that changed in the fintech era. A decade ago, cross-border payment companies like Azimo started to build their own networks and acquire the necessary licences to move money around the world. We built our network with a simple mission: to make financial services affordable and available to all. The question begged to be asked: why can’t sending money across borders be as simple as sending a text message?
The engineering challenge we faced was clear but far from easy: build a faster, cheaper, easier way to move money around the world. Since then, we’ve brought instant transfers from the UK, Europe, Australia, and Canada to more than 80 countries around the world, with more being added all the time. Around 40% of Azimo’s transfers are delivered instantly, and 80% within one hour.
Remittance customers were quick to embrace faster digital services because their transfers are not uncommonly a matter of life and death. Migrant workers support loved ones in their country of origin, often sending money for critical medical procedures, food, and energy bills. A fast transfer can literally save a life.
Businesses soon followed suit, realising that they could secure contracts, make investments, and pay staff overseas in a matter of seconds, improving business relationships and reducing their accounting overheads in the process. Faster transactions reduce paperwork and the tiresome back and forth of invoicing and demands for payment.
Azimo has also embraced innovations like Open Banking, which allows people to pay for transfers directly from their bank account, instantly. No card details, no bank details, no hassle. All you have to do is approve the payment with your banking app. This technology is helping to make environmentally unfriendly plastic payment cards obsolete. It also helps to prevent fraud because there are no details to steal.
For transfers to emerging markets where banking infrastructure is less sophisticated, mobile wallets have bypassed the banking system entirely. Over 95% of Azimo’s payments to Kenya arrive instantly to M-Pesa mobile wallets. Where traditional banking has failed, custom payment rails have opened up the financial system, empowering entrepreneurs and driving entire economies.
More and more countries are introducing real-time payments for local banking rails, from Faster Payments in the UK to Instant SEPA in Europe. Similar systems are being developed in Brazil, Hong Kong, the Philippines, Singapore, and Thailand. The world is starting to realise what fintech knew all along: the future is instant.
From 2012 to 2020, innovators and early adopters embraced fintech companies like Azimo and domestic challenger banks. But in 2020, the COVID pandemic brought fintech firmly into the mainstream. With high street banks and money transfer shops shuttered by COVID lockdowns around the world, consumers and businesses flocked to digital services that they could use from the comfort of their homes.
Suddenly, new global networks became the default way to send money for millions of people. Digital providers like Azimo reported increases between 50% and 100% in the number of new customers they acquired during April, May, and June 2020. This was made possible by fast, cheap, and reliable digital infrastructure known as payment rails.
Having built their own payment rails, smart fintech companies are now offering those rails to other Businesses as a Service. This Network as a Service (NaaS) approach allows businesses that don’t have payments capabilities to broaden the services they can offer to their customers.
For example, a travel company could start offering foreign currency exchange at attractive rates to customers who book a package holiday. Given that many fintech companies can now instantly create foreign currency accounts that integrate Apple or Google Pay, customers wouldn’t even need to withdraw cash in destinations where contactless payments are available.
The biggest prizes will go to fintech companies who have built the cheapest, fastest, and most reliable networks. They can offer companies access to tools that help their business grow faster, for a fair price. This is the opposite model to the defensive, exclusive walled garden that banks selfishly perpetuated for decades.
Azimo is using this model in its quest to make instant delivery the industry standard for cross-border payments. We will announce our first NaaS partnerships in the coming months and expect many other companies with their own cross-border payment networks to do the same. The 2010s were the decade of fintech innovation. The 2020s will be the decade of fintech integration.
About Dora Ziambra
Dora Ziambra is COO of Azimo, one of Europe's leading cross-border payments providers. She is responsible for the expansion of Azimo's global network, management of risk and compliance teams as well as supporting any potential corporate development opportunities.
About Azimo
Azimo is one of Europe's leading cross-border payments providers. The company was founded in 2012 with the mission of making financial services affordable and available to all.
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