With most of the world’s poorest people not having a bank account, those in most desperate need of money can face the greatest challenges in actually getting access to it even when it is sent from relatives and friends in other countries.

With a huge worldwide surge in migration, it’s no surprise the remittances market, covering all the ways people send and receive money, is skyrocketing. While remittances serve as a lifeline for millions, the way cash is transferred is often expensive, slow and unsafe.

Recent figures from the World Bank show remittances to developing countries rose to a record level in 2017, growing 8.5 per cent to $466 billion (€398bn). Moreover, total remittances – which also includes money sent to high-income countries – were up 7 per cent to $613 billion (€524bn).

While technology has gone some way towards providing more reliable money transfer services, there is significant room for improvement. One man busy trying to make life easier for those who rely on remittances to survive is Ismail Ahmed, founder and chief executive of WorldRemit, one of the fastest growing fintech companies globally.

“Many people in the world might not have bank accounts, but they do have mobile phones, and these can be used to provide similar services,” he told The Irish Times on a recent visit to Dublin for MoneyConf.

The entrepreneur who was recently ranked as the third most important black person in the UK, and also named one of the world’s leading entrepreneurs by British chancellor of the exchequer Philip Hammond. is no ordinary businessman.

Born and brought up in Somaliland, a self-declared war-torn state that declared independence from Somalia in 1991, his family was one of many with first-hand experience of the pros and cons of remittances, having relied on them for their survival.

Problems

“Remittances account for about 40 per cent of GDP in Somaliland, and this has probably been the case for the last 30 to 40 years. My brother used to send money home, so I knew how difficult it could be to get remittances, with a lot of travel often involved.

“Later when I ended up studying in London I became a sender, and saw the problems on that side as well for myself. It could cost Africans as much as 30 per cent of the sum they were hoping to send home in fees and it might be months before the money was received, if it made it at all.”

WorldRemit is a digital money transfer service that allows users to send money to loved ones via their mobile phones from over 50 countries to more than 145 receiving destinations. It also enables them to receive mobile top-ups that often serve as a form of credit, and to pick up money in person or via bank transfers.

Founded in 2010, the London-headquartered company has secured almost $220 million in funding since it was established, with backers including AccelPartners and TCV, who have both previously been early investors in well-known companies such as Airbnb, Facebook, Dropbox, Spotify, Netflix and Slack.

Ahmed’s knowledge of the difficulties people face sending and receiving money led him to create a disruptive digital service that focuses primarily on the great unbanked.

While we in Ireland might be busy debating whether Apple Pay is better than Google Pay, it is easy to forget that close to 40 per cent of the world’s population do not have bank accounts, meaning they can’t use these services at all.

WorldRemit, a service anyone can use, has brought millions into the financial system while providing customers with a safer, secure and cost-effective way to transfer money to friends and loved ones around the world.

Transformed

“People may talk about mobile payment services such as Apple Pay being revolutionary but we are having considerably more impact in terms of making a difference to people’s lives on a day-to-day basis,” said Ahmed.

“Our customers’ lives have been transformed by what we provide because we are talking about people who do not have bank accounts and who have previously hidden any money they have under their mattresses.”

That’s not all though, according to the businessman.

“There was a major drought in Somaliland recently and historically these have usually led to famine, but for the first time mobile money has helped the region avert this because family members in big cities could share money instantly with those affected by the drought,” he said.

WorldRemit’s competitors are not just traditional money transfer providers like Western Union and Moneygram, but also the many unregulated bit players.

“Until recently as much as 50 to 60 per cent of remittances were done through informal networks. We have played a major role in helping to move remittances away from underground unlicensed players to a formal regulated entity,” said Ahmed.

Having been smuggled out of Somaliland to Djibouti while still a youngster, Ahmed eventually made his way to Britain, where he attended the University of London on a World Bank scholarship. After earning his PhD, he became an advisor to the United Nations, where he helped companies comply with tough new money-transfer regulations introduced after the 9/11 terrorist attacks.

While working for the UN, however, Ahmed uncovered widespread corruption within the remittance project and became a whistleblower. This resulted in him losing his job, although he eventually received £200,000 (€226,000) in compensation for the way he was treated. He used the money to establish WorldRemit.

Transactions

The company now processes more than 1.1 million transactions a month, and employs about 500 people globally. It recorded revenues of about £60 million (€68m) last year, up from £41.1 million in 2016, and it is looking to grow customer accounts fivefold to 10 million in 2020, with about half of them in Africa.

The company has about 130 million active mobile money accounts, about 20 per cent of the global figure, and claims the largest market share. Nonetheless, Ahmed added that some of the mobile data put about does not tell the whole story.

“The World Bank keeps highlighting meaningless stats about how many people globally have mobile phones, but we’ve seen situations where there might well be between 7,000 and 8,000 people in a village or town sharing two or three mobile phones. There are often massive communities sharing maybe just one WorldRemit account.”

The company launched its services in Ireland a year after it was established, and it has proven to be a highly successful market. The service is growing at over 50 per cent year-on-year here, with the largest receiving countries being Nigeria, Zimbabwe, Kenya and the Philippines.

Ahmed has been vocal in his wish for WorldRemit to IPO within the next few years. Ahead of that the company is making a major push in the US, where it sees huge potential. The company is licensed across all 50 states, and it expects the US to become its largest send market by the end of 2018, and will account for 40 per cent of global revenue over the next few years.

“We’ve made a great start, but we want to bring our service to millions more customers across the globe,” said Ahmed.

irishtimes.com