How to Keep Your 2018 Small Business Financial Resolutions.

It happens every year. When January 1 comes, business owners examine what happened during the past 12 months and decide to start anew by making business financial resolutions. Resolutions are often easier said than done, however. Psychologists tell us that it takes at least three weeks for a habit to start to become a permanent change. Many of us have forgotten or dropped our individual New Year’s resolutions by Groundhog Day.

Small business owners often vow to examine their operations during the past year and find ways to improve them. Once the holidays end and things start running as before, many of us fall back into our same routines and the vows to change become unfulfilled.

According to Psychology TodayNew Year’s resolutions fail when goals are unrealistic and when we place time bounds on changing behavior. Instead, create an area of focus and keep at it, rather than specific goals with time constraints that you may not be able to reach (and then become disappointed because of failure to meet the deadlines).

Recommended Financial Resolutions for Your Small Business

When small business owners seek my advice for securing capital, I tell them that they must become financially prepared to apply for loans. Consider the following to be business financial resolutions that any small business can carry out:

Trim Your Budget

Before you expand, you may need to trim. Entrepreneurs often seek funding because they plan to expand their operations in the coming year. Cutting excess weight is a good first step. Review expenses with your accountant to find areas where costs can be reduced, thus improving cash flow. Monitor inventory; unless there is significant financial incentive (in the form of a price reduction) to buy more, use what’s already on hand before ordering more inventory. Examine staffing. Businesses with seasonality should be the most vigilant. Cutting the hours of underutilized staff – especially part-timers – can result in significant cost reductions and improved cash flow. The better your financials look when applying for a loan, the better your chances of securing funding.

Become Neater

Shoddy record-keeping can easily lead to losses. Keep track of all of the revenue your company has generated and all of its expenses. Be sure to hang onto petty cash slips and keep records of anyone you may have paid cash. After all, you can’t become profitable without having a firm grasp on revenue and expenses. If you do your own accounting but don’t feel like you’re an expert in it, hire an accountant who specializes in small business. The benefits will likely outweigh the costs.

Be the Early Bird

If you plan to apply for a small business loan, you will need to provide tax returns for the past two to three years. By getting your 2017 forms into IRS in January or February, rather than April 15, you will be able to provide the required documentation more quickly. It’s an added bonus if you are expecting a refund because you will get it sooner. However, even if you wind up owing money to the Uncle Sam, paying it off sooner rather than later will put you in a stronger position to ask for a loan a little bit down the road.

3 Tips for Keeping Your Small Business Financial Resolutions

So now that you have some advice, here are 3 tips for keeping your small business financial resolutions:

  1. Focus on one goal at a time. If cutting expenses is you main goal, once a week schedule time to sit down and analyze expenditures and find out where the excess is. Then get rid of the excess. Once you find success, move onto the next goal.
  2. Celebrate the small victories. If you found a way to reduce staff hours by 10 percent, be proud – even if your goal was a 25 percent reduction. Keep track of your progress and keep working towards your goal.
  3. Stick with it. Keeping resolutions should be a year-long effort. Don’t wait until Dec. 31 to try it again.

The beginning of the year gives everyone a chance to turn the page and start anew. Making financial New Year’s resolutions and sticking to them will take a lot of effort. By striving continuously to achieve goals – and accepting that there will be setbacks from time to time – will put you in the right frame of mind to achieve them in the long run. The ultimate measure of success will be whether your business is in better financial shape in December 2018 than it is at the beginning of January.



How Bank Branch Shutdown Hits Small Businesses and Creates ‘Financial Deserts’

As the pressure on the banking system increases, banks are looking for ways to cut down on costs and transform their business models to stay relevant. One of the ways that banks respond to changing needs and tightening competition from neobanks is by closing branches and shifting their focus towards digital experiences.

The trend of cutting down on physical presence, however, started even earlier. Since the financial crisis in 2008, nearly 5,000 bank branches were closed in the US. Aside from transforming the banking industry, the massive branch shutdown raised concerns about certain areas in the country turning into “banking deserts” as expressed by the Federal Reserve Bank of New York. The phenomenon could lead to reduction of credit access, even with other branches present, by destroying “soft” information about borrowers that influences lenders’ credit decisions.

As mentioned before, US banks closed 4,821 branches between 2009 and 2014, according to the FRB. The number accounted for around 5% of bank branches in the country. Economists believe the trend could be demand- or supply-driven. Since the demand for physical branches has decreased, banks saw maintaining them as an unprofitable activity, which led to the closures. There are different opinions on the reasons that the demand for braches has decreased, but the two most vivid ones state that slower economic growth since the crisis, increased online banking, increased cost of supplying those services  (owing to more stringent bank regulation or other factors) could have been a significant contribution to the trend.

Either way, while the trend may be seen as a positive one from the innovation point of view and the shift towards online banking, there are major downsides to it discovered by experts.

As the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York shared, there is evidence that access to bank credit, particularly for small businesses, declines as the distance between the bank and borrower grows (which is a result of a branch shutdown). Moreover, the study “Distance, Lending Relationships, and Competition” performed in 2005 has revealed that small business loan rates increased with the heater distance between firm and bank. As with real estate, location matters for customers’ access to and use of banking services.

A study called “Do Bank Branches Still Matter? The Effect of Closings on Local Economic Outcomes” published in October 2015 by UC Berkley economist Hoai-Luu Q. Nguyen has revealed that when merging banks close a branch, the number of small business loans decreased by 13% for more than 8 years afterward. Moreover, the supply of mortgages also fall, although temporarily.

The most interesting part was, however, that the shortage and fall in small business lending continued even when new branches arrived instead of the closed one. The conclusion that the author came to was that the trend continued because of the loss of information when the local branch-business relationship was broken.

Bank branch workers and small business owners in neighborhoods are usually connected through personal relationships more than through CRM, which leads to a loss of leads and opportunities when a branch closes and workers are not serving their contacts anymore. Branch managers usually know borrowers on a more personal level and are armed with more detailed information than a record in the system. They understand particular traits and needs of those entrepreneurs and are more successful in serving their needs than a fresh entrant would be. That kind of information is permanently lost once the branch is closed and a manager is fired. A new branch would take years to create those bonds and develop a deep understanding of the client base.


Despite the positive effects bank branch closures may have (like cost reduction, focus on superior mobile experience, higher convenience of online than physical branch, etc.), the banking industry should address the drawbacks and negative effects that bank branch closure has on small businesses and on lending.

There are important implications, as we have mentioned before. One of them is that bank branch closure causes high barriers for borrowers to access loans and hence, may have to go through rough times (economic shocks or other unforeseen traumatic events). Small businesses lose connections with branches that know them personally and are aware of their needs better than a new branch worker would be. While major financial institutions would find benefits from cutting down on branches, they often underestimate the consequences for the ones on the other side.

Another important insight is that while regulators and big banks take into account the number of branches, they fail to recognize the importance of destroying the lender-specific information. It is not the count of branches that is important, rather it is every particular branch that matters. Two new branches that come in place of one will not be able to restore the damage done to borrowers and the small business community. The number of branches have little to no impact on actual credit access in the end.

And finally, even though the technology has advanced tremendously and online lending is seen as the next level of service, there are markets and segments of the population that heavily rely on local branches with history in their neighborhoods. They play an immense role in fostering financial inclusion and providing access to credit for low-income and disadvantaged neighborhoods.


What Defines Alternative Lending Platforms?

The alternative lending industry went from an explosive growth, a goldmine for banks, to the cause of hot discussions over the viability of the very business models in the FinTech family. Some of the largest alternative lenders have been originating loans at such a pace that any bank can marvel at what technology can do in finances nowadays.

Although alternative lending was never a “cure from cancer” for small businesses and individuals with no hope on banks (since it carries certain risks for everyone), the industry gained an outstanding traction. In the UK alone, marketplace lenders are expected to control up to 6% across key segments by 2025, including personal lending, SME business lending and the retail buy-to-let market, which may represent approximately £600 billion of lending.

With all the problems and benefits associated with alternative lending, there are three pillars upon which the industry raised its head and expected to continue its growth and development. According to the World Economic Forum (WEF),“future lending processes will be streamlined with greater emphasis on meeting funding requests in a timely manner.”

The key characteristics of alternative lending

As defined by WEF, there are three key characteristics of alternative lending platforms:

  • P2P. Online platforms and legal contracts are leveraged to directly match funds between savers and borrowers with no need to hold reserves and costs kept to a minimum by acting as an online marketplace;

Cost-efficiency has been one the major appeals of alternative lending platforms both for customers and for financial institutions.

For banks that have noticed the inability to compete with alternative lending platforms, the most optimal solution was collaboration and integration – some financial institutions found it to be more effective to fuel the loans originated on those platforms rather than to compete with them.

Alternative lending platforms have released the assessment of one’s creditworthiness from the boundaries of human bias and let data and AI make a choice. Whether it’s an advantageous shift in the long term or not, alternative lending platforms opened up opportunities for those not fitting into traditional assessment model.

Only in the US in 2015 there were 26 million credit invisible consumers, according to the report by the Consumer Financial Protection Bureau (CFPB). In addition, CFPB suggests that ~8% of the adult population has credit records that are considered unscorable based on a widely-used credit scoring model. Those records are almost evenly split between the 9.9 million that have an insufficient credit history and the 9.6 million that lack a recent credit history.

  • Lean automated processes. Assessment of borrowers is at least partly automated against pre-defined rules via platforms that are free of legacy processes and technology.

By using proprietary underwriting algorithms that were built free of legacy systems and its limitations, alternative lenders have been able to expand the horizons of the business by shedding light on previously skipped by the formal sector groups of the population. Automated processes have enabled greater speed and transparency resulting in user-friendly interfaces and experiences with platforms.

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Financial Tech and Digital Wallets: Innovative Approach vs Security Concerns.


We are progressively being occupied with more up-to-date and better installment systems. In 2017, we witnessed these new methodologies in the Consumer Electronics Show or CES. While all these money-related advanced and creative techniques for payment are probably going to develop further, there is an equivalent level of security concern. Since we are amidst the principal wave of FinTech appropriation over the budgetary organizations, there are excessively numerous holes in security and compliance. New application engineers and IT organizations harbor a comparative sentiment. Juned Ghanchi of IndianAppDevelopers organization drives the mobile application development organization in India. The organization stated, “Conveying money-related tech at the cost of security is the exact opposite thing we can consider. This is the reason the reception is still moderate crosswise over banks and budgetary foundations.” Before we assess these concerns, let’s discuss the rising FinTech, computerized payment procedures and the conceivable outcomes they offer.

New FinTech at CES 2017

During CES 2017, Mastercard offered some clever innovations on managing an account upon the associated condition and home IOT. It introduced an application utilizing where individuals can order their basic needs (groceries) from their Samsung fridge. The savvy fridge, which should arrive in the market in the not-so-distant future, will stay associated with the application. At the same time, it permits clients to make, oversee, and share their rundown of required basic supplies. All these things need to be arranged based on their own requirement details. Mastercard has found a way to make payments less complicated. They have proven it through a wide range of wearable gadgets including fitness bands and smartwatches by collaborating with Coin.

New integration of smart pay

In CES 2017, Samsung declared that its Gear 2 product will be outfitted with Samsung Pay, the digital wallet application of the organization. In the coming years, we can see more gadget producers integrate advanced wallet services. The expanding combination of smart pay services with new gadgets and interfaces will lead towards further digitization of retail and cash dealing. Rabin Dsouza, from SushMobile, said that “the development of digital wallet with headsets, smartwatches and other wearable will convey new turn to the scene of keen cash.” He also said this is a consummately coordinated choice with respect to Samsung to incorporate its brilliant pay arrangement with Gear 2.

Bitcoin, the beginning of digital currency

Bitcoin as a digital currency rapidly got to be distinctly well-known both as an investment alternative and method for payment. All you need is to pick a bitcoin wallet, and you will be prepared for bitcoin transactions. The greatest draw that can make this cryptocurrency a future wager for investors is the hype it picked up and the developmental system. A solitary bitcoin is now worth more than $1000 USD. Actually, we can expect more organizations latching on to this currency for making payments and transactions.

Then there is Litecoin

Litecoin is another cryptocurrency that rose with a solid recommendation for computerized cash clients and investors. Litecoin, dissimilar to bitcoin, offers a quicker, more propelled, innovation-guaranteeing installment and accompanies a powerful supply of coins. In addition, while mining bitcoin requires the use of energy/resources, Litecoin is more vitality-proficient.

What’s at stake?

It is obvious that any product is helpless against new security flaws. In that regard, no advanced cash or computerized pay software is the same. As cryptocurrencies and digital wallets have quite recently begun to end up distinctly incorporated with our financial transactions and money-related exercises, the smooth appropriation will be tested until and unless they get to be standard methods of payment and transaction. At present, most organizations are still uninformed about these money-related innovations that can emphatically get them more accuracy, adaptability and speed in transactions. A large portion of the monetary establishments still underplay digital pay and cryptocurrencies in their plan of things.

Mobile pay and biometric authentication

Mobile payment procedures including bank transfers and cards are more secure now with the assurance of biometric validation. The unique mark scanner or face identification programming on a few handsets and platforms permit the users to enlist his/her biometric data with the gadget and from that point, utilize them for any transaction when it needs confirmation. On account of biometric validation, security vulnerabilities with mobile payment could be limited as it were. In the future, we can expect the expansion of such computerized transactions with biometric confirmation constraining the security risks.

Blockchain and bitcoins

Blockchain offers an astounding way to boost the security plans for a wide range of transactions made with digital currencies. Essentially, it is an open record which stays open to different gatherings. The crucial motivation behind this is to record all the mysterious transactions without permitting some other to adjust and transform them. The best thing about it is that when a transaction is recorded in this ledger, it can’t be modified or erased. So, any transaction in bitcoin is recorded, permitting anybody to see the points of interest of the transfers. Boasting a far-reaching and overall record of all the exchanges, it enables straightforwardness and clearness. Any sort of physical record just cannot alter or eradicate the recorded information in the bitcoin. Blockchain offers a really progressive approach to managing the security vulnerabilities related to bitcoin.


The One Financial Resolution You Need in 2017: Automation


“Out of sight, out of mind” isn’t typically the kind of advice you get from a financial professional. However, taking some financial decisions off of your mind and out of your hands can be one of the smartest money decisions you’ll ever make. We’re talking about the power of automation. Automating most or all of your recurring financial decisions can be a huge help when it comes to saving, investing, and digging yourself out of debt.

Even better, many popular financial resolutions for the new year — paying off debt, building an emergency fund, investing, saving for a large purchase, and building your credit score — are easy to automate.

What Is Automation?

Dr. Barry Schwartz, a behavioral economist and author of The Paradox of Choice: Why More Is Less, says we may be naturally programmed to live in the here and now and think about the future when we get there. By learning to use tools and life hacks to automatically make choices for our financial well-being, we’re removing one of the biggest barriers toward financial health: ourselves.

“People have a hard time thinking accurately about risk, and they have a very hard time giving adequate weight to the future,” says Dr. Schwartz. “Automated investment would address both of these problems. But, of course, the software would have to be doing the right thing for the client rather than the company.”

When you automate, you eliminate the opportunity for that negative feeling to affect your decisions because you won’t be actively making that payment.

7 Ways Automation Can Help You Keep Your 2017 Resolutions

If your goal this year is to learn budgeting, save up for a large purchase, or simply try to better manage your finances, automation can be a huge help.

  1. Automate Your Budget

Creating a budget is the easy part. Following it becomes the real challenge.Try these two automation hacks to stick with your budget in 2017.

Create a bank account for your allowance

  1. Open up a secondary checking account with your bank, but don’t get a debit card for this one. The account will act as your “reserve” account. You’ll keep your fixed and flexible spending money there and schedule bills to be paid from this account.
  2. Figure out how much money you can freely spend each week (after your bills are paid).
  3. Set up an automatic weekly transfer from your reserve account to your “spending” account (main checking account) for that amount.

It will be like getting a weekly allowance to spend on whatever you want, just like in middle school.

Use apps that do the math for you

Sometimes all we need is a little nudge to follow through with our goals. Budgeting apps like Level Money, Budgt, or Daily Budget can be the reminder you need to keep to your budget each day. The apps take into account your income, fixed expenses, and savings goal to come up with a daily spending number.

Level Money will connect to your bank accounts and generate the number automatically, while Budgt and Daily Budget require you to enter your spending manually, then generate what you have left to spend for the day. The apps will notify you daily with how much cash you can spend each day and still stick to your budget.

  1. Automate Routine Expenses

This one is for anyone who has ever walked into a grocery store to buy a gallon of milk but walked out with bags full of things they didn’t really need.

You can save time and money on groceries by avoiding the grocery store. That doesn’t mean you have to stop buying groceries and splurge on dining out. Automate your grocery shopping with services such as AmazonFresh or Fresh Direct. The services cost about $150 to $200 annually. With these services, you are able to compare prices and add and subtract items from your cart to stay on budget, then schedule your delivery time.

You could also try a meal delivery service like HelloFresh or Plated to deliver fresh ingredients coupled with recipes for meals weekly. Using these services, dinner for two costs about $10 to $15 a person. If you’re a couple that dines out often, scheduling weekly meal delivery and cooking could help you cut back significantly on spending.

If you live in an urban area like New York or Los Angeles, you may have several other options for grocery delivery available to you.

  1. Automate Your Savings

Automation makes it easy to set aside funds for an emergency fund or a large purchase such as a down payment for a home.

….at work

If you get paid via direct deposit, check with the human resources department at your place of employment to see if you can split your paycheck into different accounts. If you can, send the amount you want to save from each check into your savings account. If your pay is inconsistent, you may be able to set this amount as a percentage of your pay.

If your human resources department doesn’t offer that option or you simply want to handle it on your own, you can set up an automatic transfer to your savings account and schedule it for the dates you get paid.

…on your smartphone

You can also try automated savings software such as Digit, Qapital, or Simple.

Digit, backed by Google’s venture arm, analyzes your spending habits then uses an algorithm to determine how much it can transfer to your Digit savings account and how often to make transfers. When you need the money, you can have it transferred in one business day by sending a text.

Qapital lets you set savings goals and rules to match them, then automatically transfers money toward your goal when the rule applies. For example, you can set a savings goal to purchase $200 tickets to a music festival, then set a rule to round up all purchases you make with your debit card to the next dollar and save the difference. Qapital will transfer the difference to the account designated for your festival tickets.

Some new digital banks have added budgeting tools. Simple, for example, calculates a “safe-to-spend” number so you know how much you can spend freely.

  1. Automate Your Investments

You don’t have to be a financial whiz to invest your money. If you plan to start investing this year, you can do so passively with automation.

An important and easy way to do this is to automate savings to your retirement account(s). If you contribute to a 401(k) or an IRA through your employer, you can set a contribution as a percentage of each paycheck. Some plan providers allow you to automate annual contribution increases. This way, you’re automatically saving more each year without having to do any extra legwork. Even an annual increase of 1% or 2% can drastically improve your savings outlook.

If you use robo-adviser services like Betterment or Stash, set up auto deposits for your accounts and let them grow. Acorns is a great tool for beginners to automate investing. Acorns rounds up each of your transactions to the nearest dollar, then invests the difference.

You can find more details about these apps, such as what fees they might charge to manage your investments, here.

  1. Automate Your Student Loan Payments

If you resolved to stay on top of your student loan payments this year, setting up automatic payments could be tremendously helpful. Automating your payment can help ensure you pay on time each month. With most servicers, you’ll get the added benefit of .25% off interest on your loans.

If you want to pay back your loans faster, you can automate an additional payment to all of your accounts when you set up direct debit. If you can’t set up an automatic additional payment to a specific loan, you can set alerts with a calendar or a budgeting app to remind you to make an additional payment to your loans on payday.

  1. Automate All Your Bills

You can automate most recurring bills like your rent, credit card payment, auto loan payment, utilities, and subscription services to avoid missed payments. This tactic can also help time your payments to ensure you have enough money in your accounts to cover them. There are several options to help schedule bills you know need to be paid each month.

Choose whichever of the following methods work best for you:

  • Set up automatic bill pay through your bank’s online banking platform.
  • Use a budgeting app like Mint, Level Money, or YNAB to link to your accounts and schedule automatic payments.
  • Set up an automatic debit with each individual service provider through their online platform or over the phone.

If you pay an individual each month for something like rent or shared utilities, you can pay them via automatic bill pay to their bank account, or set up automatic payments using a tool like PayPal.

  1. Automate Your Credit Makeover

If your goal is to improve your credit, paying bills on time and lowering your utilization rate are the two most powerful things you can do.

Debitize lets you use your credit card like a debit card. The app automatically transfers money from your checking account to pay off charges to your credit card with money. You’ll be using your credit card, then paying it off in full each month. Even better, it’s more difficult to overspend, since you’ll be using up the funds in your checking account.

If you’re building or rebuilding your score with a secured card or a new credit card, you can try this “set it and forget it” method:

  1. Figure out what 20% of your credit limit is. Example: 20% of $200 is $40.
  2. Find something that you pay for each month that costs less than that. This might be a payment for a streaming service such as Hulu, Netflix, or Spotify.
  3. Set up your account to take the payment from your credit card each month.
  4. Set up your checking account to pay your credit card balance each month.
  5. Watch your score grow with a credit monitoring service like Mint or Credit Karma.

When your score reaches the high 600s or mid-700s, you’ll have an easier time qualifying to borrow large amounts for an auto loan or a mortgage.


The Solution to the Segmented Mobile Payments Industry.


It’s difficult to find an industry as segmented as mobile payments. No single platform or application has emerged as the clear favorite, with companies big and small trying to find their position in the market. While this offers consumers plenty of options, it poses a problem for an industry that prides itself on convenience.

Most tech companies look for the widest audience possible, yet mobile payments seem to aim for a sliver of the market and then aim even smaller by the time the app goes into production. Companies look at the payment stack to find layer-specific solutions when they should be working towards a universal interface.

The Solution to the Segmented Mobile Payment Industry

Photo by Mobiles Bezahlen mit Vodafone SmartPass

Rich Potential

There’s no doubt that mobile payments are growing at a healthy clip. All the major companies, from  mobile phone manufacturers to credit card companies, are getting involved in the hopes of staking a claim. Although only 18% of Americans report using mobile payments on a regular basis, the total value of transactions in 2016 is expected to triple to $27 billion. This is a gold rush that everyone wants to get in on.

Industry Problems

While there’s definitely money to be made, the mobile payment industry has been on something of a bumpy road. Companies are chasing the market with digital products that are an afterthought to their core products. The technology is often outdated and a dependency on the cloud has its vulnerabilities. None of this is in the best interest of the customer. Each solution is tailor-made to a specific pool of eligible customers and excludes the rest. The pool of customers shrinks with each competing service. Retailers might accept one or two payment options but reject equally popular options. What’s a customer to do when paying cash or using a credit card is guaranteed to work while their mobile payment platform might not even be accepted?

The Solution

Competition is essential, yet the fragmentation of the industry is holding back potential growth. For mobile payments to become as common as cash or credit, there needs to be one universal payment platform. If you look at the payment stack, companies want to be a first-layer player in order to control the downstream benefits. That’s what’s going on now and it isn’t working.

Instead of controlling a layer of the stack, all layers need to be removed. At the very least, as Alex Rampell writes onTechCrunch, the top stack needs to be opened up. Imagine a universal platform that’s not tied to a single hardware technology (Bluetooth, NFC, etc.) or manufacturer (Apple, Samsung, Google). Ideally, this platform would have heightened privacy measures and the means to exchange all digital tender types. It’d be frictionless, fast, and built with the consumer in mind. Such a platform could go beyond payments and become so much bigger than anything on the market now. This technology would be harnessed to send personally identifiable information like medical data with the same sensitivity that payment information is sent. This, more so than any existing platform, would be the future.

Hit and Miss

The very mixed results of companies highlight why a universal platform is needed.

Apple launched its Apple Pay digital wallet back in 2014 and data from PYMNTs shows a modest adoption rate despite the enormous installed base. Google Wallet, meanwhile, has been repositioned as a peer-to-peer solution. Samsung Pay and Android Pay are locked in heavy competition for a pool of mostly disinterested users. E-commerce solutions are also lackluster. PayPal’s has been focusing on high-profile acquisitions in the past couple years even though there’s been very little innovation in their product for the past decade.  Visa and MasterCard have partnered with some big-time clients, yet haven’t obtained a critical mass of active users.

The Feasibility

A universal platform is what customers really need. Companies are trying to stake their claims in the industry while customers aren’t being served in a way that they deserve. Such a solution isn’t impossible once the industry realizes that a universal interface would be the best way for mobile payments to succeed.


The Role of Mobile Money in Democratizing International Remittances and Driving Financial Inclusion.

Mobile money is one of the most exciting innovations in financial services, with more than 400 million registered consumer accounts across over 90 countries,” said John Giusti, Chief Regulatory Officer, GSMA. “While today mobile money services are largely used for domestic transactions, international transfers represent the fastest-growing segment of mobile money services.”

GSMA took up a task to assess the role of mobile money in democratizing international remittances and driving financial inclusion in the developing world. A few weeks ago, the organization published a report called Driving a Price Revolution: Mobile Money in International Remittances, outlining the promise of mobile money for international remittances.

The World Bank’s Migration and Remittances Factbook 2016 suggests that today, close to 250 million people (~3.4% of the world population) live outside their countries of birth. In 2015, global remittances totaled $581.6 billion, of which $431.6 billion, or nearly 75%, was sent to the developing world.

Professionals from GSMA believe that mobile money is revolutionizing the international remittance industry by leveraging broad mobile penetration and the asset-light business models of mobile operators. Mobile money is believed to be driving a price revolution by increasing competition, leveraging existing networks and infrastructure, and capturing smaller remittance values than traditional players.

The promise of mobile money international remittances

The Role of Mobile Money in Democratizing International Remittances and Driving Financial Inclusion

Source: Driving a Price Revolution: Mobile Money in International Remittances

  • The study suggests that using mobile money is, on average, more than 50% cheaper than using global money transfer operators (MTOs). In the 45 country corridors surveyed, the average cost of sending $200 using mobile money was 2.7%, compared to 6% using global MTOs. Lower transaction fees can translate directly into additional income for remittance recipients.
  • The low-value transactions segment is particularly competitive. Using mobile money is 58% cheaper for $50 transfers, compared to 55% cheaper for $200 transfers. This way, mobile money caters to the needs of low-income migrants who may find it more convenient to make low-value transactions on a frequent basis. Moreover, in addition to being a force for financial inclusion, mobile money have a broad macroeconomic impact as it is increasing the disposable income of developing market consumers who need it the most.
  • Mobile money facilitates competition and, hence, drives down the price of remittance services. The study notes that global MTOs tend to offer their services at lower prices in markets where they are in competition with mobile money providers. To leverage the trend, governments need to enable regulatory frameworks, which promote competition by allowing non-traditional players, such as mobile money providers, to offer international remittance services.
  • Mobile money-enabled international remittances are contributing to broader financial inclusion and financial integrity objectives. Not only does mobile money represent a powerful tool to digitise large flows of informal transfers, it also act as a gateway to financial inclusion for both remittance senders and recipients, allowing them to join the digital financial ecosystem and to access a broad range of digital financial services beyond remittances, such as storing money in a secured account or performing digital payments.

With mobile money growing more than 400% YoY in 2015 and a democratizing effect of the industry on international remittances, mobile money providers are well-positioned to secure a strong footprint in the developing world and facilitate financial inclusion for large un/underbanked population.

Certain African countries are expected to become the hottest mobile money markets by 2020 – Ghana, Kenya and Tanzania. According to CGAP, 17% of Ghana’s 27.3 million citizens had a mobile money account in 2015, which has doubled from 2014. Ghana demonstrated a rapid growth of mobile money and a potential to become the world’s most successful mobile money market moving previous leaders.

Moreover, 92% of adults in Ghana have the required ID necessary to open an account and 91% of Ghanaians own a mobile phone. As stated by The World Bank, Ghana has an even greater potential for mobile money than Kenya and Tanzania, which are considered two of the most successful markets in the world.



Canada is One of the Best Markets to Build and Test Innovative FinTech Solutions.

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Being on the verge of tech-powered evolution, Canada’s FinTech landscape has been a hotbed of activity with over 100 Canadian FinTech startups raising over $1 billion since 2010. A progressive traditional sector, supportive governmentand international interest serve as the foundation for the strong performance of Canada’s FinTech industry – the six most powerful banks in Canada recognize that innovations are inevitable, so the banks have an incentive to be active participants, rather than facing challenges from powerful outsiders. By 2018, technology spending by Canadian financial sector is expected to hit almost $15 billion.

Just in 2016, venture capital financing in Canadian FinTech reached ~$138 million, up more than 35% on the year. While the total funding of its US colleagues has been much more generous, Canada’s FinTech witnessed an acceleration in comparison to the decline in the US. In fact, investments declined at least 30% in the US in 2016, while in the UK they fell nearly 25% and Singaporean FinTech investment sank 65%, according to some estimates.

“From a global stage, Canada is a relatively small market,” said Adam Nanjee to Reuters, who heads the FinTech group in Toronto’s MaRS research hub. “But it’s one of the best markets to build a company around innovation because we have a great test market, great infrastructure for financial services.

Reuters also emphasizes that the province of Ontario has among the highest concentrations of tech firms outside Silicon Valley, according to the provincial government, thanks in part to cheaper costs and the cluster of Toronto and Waterloo area universities producing engineers and developers. In fact, Toronto hosts ~12,000 financial firms and 360,000 finance workers and makes up 37% of Canada’s total GDP, which makes the province a strong economic driver for the nation. Toronto has also been noted as North America’s second largest financial services hub after New York.

A strong collaborative culture among entrepreneurs is also contributing to the accelerated development and implementation of innovative solutions – Canada’s FinTech ecosystem has a unique lifestyle appeal to talented professionals and strategically important proximity to the world’s hottest FinTech hubs – Silicon Valley and abundant with opportunities Asian markets. National FinTech hub – Vancouver – is also known to be home to a variety of successful startups, including Trulioo, Zafin, Payfirma, FrontFundr and many more.

The uniqueness of Canada’s FinTech industry is in its enabling role in the national ecosystem – FinTech in Canada is an enabler first, rather than a disruptor. The traditional financial sector in Canada has been accepting to technology startups as it appeared to be the most productive course of development in the financial services industry. Understanding that the threat is more likely to come from the likes of Facebook, Google, Apple, Tencent, Alibaba and other international technology giants rather than the young counterparts, led to an unconventionally fertile ground for innovators.

Outlining expectations of Canada’s FinTech explosive growth, Christine Duhaime, Executive Director at Digital Finance Institute, shared in the report on Canada’s FinTech, “The FinTech space in Canada and in Vancouver faces an exciting opportunity ahead, including our founding membership in the Global FinTech Hubs Federation – an international network of cities that fosters innovation across the world’s financial services industry and aspires to facilitate trade and investment in Canada in FinTech.”

Canada is One of the Best Markets to Build and Test Innovative FinTech Solutions

Image source: Global FinTech Hub Review, 2016

In the report on global FinTech hubs, the Global FinTech Hubs Federation notes that the FinTech industry in Canada has been gaining considerable momentum in recent years. Toronto boasts the largest financial services sector in Canada, followed by Montreal and Vancouver. Canadian FinTech companies are attracting increasing attention on both a local and international stage, as waves of investment capital are constantly reinvigorating the organic growth of the industry.