Transformation in the money transfer industry: The impact of customer expectations
The money transfer industry is in the middle of a revolution: Confronted with new entrants and specialist money transfer service providers who can capitalise, leveraging digital channels and customer service to continue to grab market share. This article looks into the forces driving this change.
Published September 21, 2020
Last updated November 3, 2021
Over the last ten years the money transfer industry has seen dramatic change. A decade ago, digital international payments was still in its infancy. Companies such as TransferWise, WorldRemit and Remitly were just beginning. For leaders such as MoneyGram and Western Union, digital was a mere 2% of their transactions. Previously an industry entrenched in tradition, with minimal hands-on customer support, the banking industry is in the middle of a revolution. According to Accenture 70% of customers now consider the relationship with their bank to be transactional, rather than relationship driven. This has opened a window of opportunity for new entrants and specialist money transfer service providers who can capitalise, leveraging digital channels and customer service to continue to grab market share. With the COVID-19 pandemic the pace of that change has dramatically accelerated.
The opportunity and threat of changing customer expectations
Customer expectations have never been higher: recent data indicates that 65% of customers, for example, expect service to be faster than it was five years ago. The change in customer expectations is a result of expectation transfer, which happens when new innovations from around the world shape what customers expect when evaluating brands. Uber, for example, changed how quickly customers expected a ride at their door.
Customers are increasingly expecting seamless and intuitive digital experiences in all areas of their lives including financial services. According to 451 Research, the second most important factor why consumers are willing to bank with tech providers, is the "promise of a better digital experience". However, online banking often falls short with only 44% of online customers and 34% of mobile customers reporting that their online banking service is easy to use.
Failing to meet changing expectations has serious consequences. A third of customers are switching providers after one bad experience and 80% switching if they have multiple bad experiences.
It also impacts new customer acquisition through transaction abandonment: as much as 68% of all online transactions are being abandoned. When customer experience leaders are growing revenue 5 times faster than laggards, delivering a superior customer experience is even more vital.
The rise of self-service
Research has shown that more than three quarters of customers want to resolve most issues on their own. However, according to Gartner, of the 70% of customers that attempt self-service only 9% accomplish this. If the customers can’t find a quick answer to their question they will abandon an online transaction.
It's expensive to acquire new customers in this space, so losing a potential new customer at the point of finalising a transaction is detrimental. Supporting a potential customer at this critical moment in the journey with self-service capabilities at the point of transaction, without having to navigate away to another page, can make the difference. Transferwise has been particularly successful at making this kind of customer experience magic happen on razor-thin margins - in a time when main players were facing mounting pressure from international organizations (G20, UN, etc.) to lower the costs of remittances for users.
The impact of not offering easy self-service is not just opportunity loss but has a significant impact on operational costs. According to Gartner, the cost per contact of self-service is $0.10 compared to the average cost per contact involving an agent being $8.01. When it is estimated that up to 40% of contacts could be fully self-serviced, easy access to self-service at the point of transaction becomes critical for your performance.
The emergence of seamless omnichannel experiences
IDC estimates that globally the banking industry is spending almost $120 billion annually to provide better omnichannel customer experiences. And with good reason: Companies offering omnichannel support resolve tickets more than three times faster, and their customers spend 75% less time waiting for agents to respond.
41% of customers say they want other (and often more) options for contacting companies.
Changing communication preferences drive the adoption of new contact channels: Real-time communication (especially chat and messaging) is, for example, known to be more appealing to millenials. WhatsApp alone now has 1.5 billion users (including 200 million in India and 60% of the population in Latin America). No wonder that 41% of customers say they want other (and often more) options for contacting companies.
This has been embraced by the likes of Azimo who offer live chat, email, phone, an online contact form, or social media as contact options. As payment providers look to expand their international footprint, we will continue to see partnerships such as the alliance between WorldRemit and Alipay, which enables a money transfer service that suits Chinese consumer behaviour. Albo and Klar are doing the same now in Mexico.
For 50% of customers, long wait times while interacting with an agent is the biggest frustration. Integratinging additional channels can help reduce reply and resolution times adding further delays due to operational inefficiencies.
Customers also expect to be able to interact seamlessly with a firm across channels. Having to repeat information multiple times is the third biggest frustration when it comes to customer service. 71% of customers now expect companies to have the right processes and technology in place to avoid that.
Integrated omnichannel solutions for more agility
Integrating channels was a strategic driver for Transferwise in 2019. It allowed them to gain a faster overview of the context of customer queries when they come in, enabling them to understand the issue more quickly and reply in a timely manner. The results are impressive: by Q2 2020, 84% of customer contacts over chat get resolved the first time they are contacted, most calls are answered within 15 seconds, 80% of emails are responded to within 15 hours.
This streamlined approach to customer communications allows clients to ask a quick question in chat and follow-up over email or phone without losing context. Having a complete view of the customer is central to a personalised experience, as it gives financial services providers the necessary context for more intimate interactions, such as order history, how long a customer has been with the company or why they last contacted you.
Investing in the future
According to McKinsey, "customers will define the nature of future cross-border payment services, not providers". Under the threat of new entrants financial services firms are realising that investing in customer experience will be critical for their future. For those who embrace expectation transfer and the ensuing impact on customer expectations, the opportunity for top line growth, customer retention and increased operational efficiency is enormous.
The challenge leaders face is that of breaking down back-office and front-office barriers and integrating siloed systems, to deliver a more agile operating model where flowing, real-time, customer-focused processes can be assembled and disassembled at speed. Modern technology is enabling this shift towards faster time to value as it can now be implemented in days and weeks, rather than months and years. Further advancements will ensure that clients will become multi-product, long-term customers of those players in the money transfer industry that adopt this agile approach.