«Bank of the Future» Discussions Begin

25.11.2013
«Bank of the Future» Discussions Begin

By 2016, global money transfers will total $700 billion. Today, there are an estimated 232 million migrants worldwide—a figure expected to reach 4% of the world’s population by 2020. Russia’s share of the money transfer market may more than triple by then, reaching 16%.

This data was presented by participants of 1st International “Bank of the Future” Conference, which took place November 14-15 in Venice. The presentation was part of a discussion of the prospects of the global payment and transfer market.

The Conference was opened by Garegin Tosunyan, President of the Russian Bank Association (RBA). He spoke about the key challenges faced by the banking community in Russia and worldwide.

He stated that the Russian banking system has the potential to play a significant role in the national economy, as compared with, for example, Italy. The volume of credit per able-bodied person in Russia is lower than in most European countries, with the population’s gross savings being higher than its gross credit. Innovative development should become a major growth vector for the Russian economy and banking system. An example for Russia here is the Eurozone banking sector, which has the highest growth rates in high-tech investments today.

«Bank of the Future» Discussions Begin

Asked why this symbolic international conference on financial services, payments, and transfers was held in Venice, Gagik Zakaryan, Chairman of Unistream Bank’s BoD said, “As is known, the first banks appeared in Italy, and we are sure that bankers worldwide, especially those dealing with new hi-tech projects, need to visit the banking homeland at least once in order to get back to basics and back to the best traditions.”

The “Bank of the Future” Conference, organized by the International Transfer Payment System Unistream, is aimed at fostering an exchange of experience among colleagues worldwide who work within the payment, transfer, and financial service market. The Conference sought to stir discussion of the volatile banking environment and to demonstrate new innovations in the payment business.

Global shifts and future trends within the global transfer market were disclosed in a report by Leon Isaacs, President of IAMTN (the International Association of Money Transfer Networks) and Developing Markets Associates. Among key trends that will impact the global payment and transfer market soon, he named, are: Asian market growth and US & Europe’s share reduction against general globalization processes, an ageing European population and the rise of a new consumer generation, the shift of workforce to cheaper economies, the growth of terrorist threats and consequently tougher regulation.

«Bank of the Future» Discussions Begin

China and India, whose global production was at 5% back in the 1980s, in 2012 enjoyed a share in the global GDP that exceeded 20%. By decade-end, this figure is projected to increase by approximately one third. International migration is focused today in Europe and Asia and its concentration ratio is very high, with most migrants working in the following 10 countries: the USA, Russia, Germany, Saudi Arabia, the UAE, Great Britain, France, Canada, Australia, and Spain.

The role of migrants and their transfers are especially great in developing economies, as migration flow slowdown and remigration may threaten their economic development. Examples are countries like Tajikistan with transfers making up 44% of GDP, Kyrgyzstan (31%), Moldova (24%), and Armenia (21%).

Transfers today exceed monetary reserves in 15 developing countries and equal at least half the reserves in over 50 developing countries. Top countries in transfer volume today are: India ($71b), China ($60b), Philippines ($26b), Mexico ($22b), Nigeria ($21b), Egypt ($20b), Bangladesh ($15b), Pakistan ($12b), Vietnam ($11b), Ukraine ($9b). Global transfers are expected to total about $550b in 2013 and $700+b by 2016.

«Bank of the Future» Discussions Begin

At present, the number of global migrants is estimated to total 232 million, and by 2020, 4% of the world’s population will be migrants (as reported by Kirill Palchun, Chairman of Unistream Bank’s Management Board). Meanwhile, Russia’s share in the global transfer market is high with an upward trend. K. Palchun says it can more than triple up to 16%.

A key trend in the transfer market, as seen by the Unistream head, is changing migrant behaviour. For years now, the time period in which a migrant client assimilates in his or her host country has been shrinking. Previously, a migrant needed 15-20 years for complete assimilation in a new country, but now this process takes less than 10 years (during which they pass through such stages as immersion, adaptation, integration, and assimilation). At the end of each of these stages, a client gets interested in more banking products, including mobile and online services.

“Traditional business is becoming a thing of the past, and we need to transform to meet our client needs,” Kirill Palchun said in his address. “Now we see a new trend in which a migrant client is transforming into a mobile client, a person in need of not only transferring money home, but also who needs to use other banking services around the clock, regardless of location.”

Another major trend in the current transfer market in Russia, pointed out by Anton Pukhov (a Director in CB Spetssetstroybank LLC) is a shift in price competition towards service competition. According to him, price competition as a conventional weapon in any market has natural restrictions such as operation profitability and client price flexibility. Experience in deploying the Spetssetstroybank franchise has shown that transfer clients are more susceptible to rendered service quality, territorial convenience of service outlets, expanded product line and loyalty program bonuses than to fee decreases within 1-2%.

Irene Ierardi, Head of Banking and Financial Practice in TNS Research Company, presented at the “Bank of the Future” conference a report on client preferences in payment services. She used a British survey as her example. According to TNS, 63% Europeans are web users, 31% use Facebook, 45% have a smartphone and 31% buy products online. 22% of cell phone users worldwide transact from their devices. Active penetration of modern technology into consumer life changes their behaviour and the overall payment ecosystem. Consumer expectations, seemingly contradictory, are about payment convenience, simplicity, reliability and availability. Simultaneously, the consumer wants the service tailored to their personal needs, experience and opportunities. A combination of smart, simple, and accessible technologies customized for various client groups, according to TNS, will be a major driver of the transfer market in the near future.

1st International Conference on Payment Services, Money Transfers, and Innovations “Bank of the Future” was held November 14-15 in Italy. The conference was organized by Unistream and its official partners: RBA, IAMTN, MasterCard Europe, Diasoft, CJSC Interveil, Gamma Center and others.

About Unistream

International Money Transfer Payment System Unistream is one of the most popular ones in Russia and the CIS. It works in over 100 countries via 333,5+k service outlets including cash-ins.

Clients can also transact payments through the Unistream system for loans, utilities and other services. Unistream includes networks of its own service outlets and payment terminals.

Unistream is a cofounder of the National Payment Council (since 2012) under the aegis of the CBR and RBA.



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