The greatest challenge for the African market today is the need to reduce transfer costs. According to the World Bank, the average commission for a transfer of $200 is around 9 percent with the global average of approx. 7 percent. Spoko.app is trying to change this by offering commission-free transfers, e.g. to Mali, Niger, Burkina Faso, Nigeria and Senegal. The Nigerian market is of great importance in its region, accounting for approx. 40 percent of remittances in sub-Saharan Africa. Funds flow to Nigeria, from France, Italy and Great Britain, which are also mediated by Spoko.app.
Low transfer costs are not only about attracting new customers. Low-cost remittances also help support national economies. Many poor families live largely from migrant resources. Thanks to their support, local people can maintain a higher standard of living and purchase more goods and services provided by local businesses.
Large sums transferred to Africa
Spoko.app is currently reaching 12 African countries with its services, incl. Nigeria, Ghana, Senegal and Cameroon. Receiving money orders in cash is still very popular on this continent, but an increasing number of transactions are moving completely to the digital world. Deposits to a mobile or bank account are the most popular, among others in Benin, Ghana, Mali, Nigeria and Niger.
The number of local fintechs on the continent with whom you can establish cooperation and expand the product offer is also increasing. The future success of the market will depend on the construction of the appropriate infrastructure and the implementation of policies supporting the mobile population. From an infrastructure point of view, Africa has rapidly embraced mobile technologies and digital wallets. There is also growing collaboration and partnerships between money transfer operators, mobile operators, banks and fintechs to improve the transfer infrastructure and maximize the potential of digital technologies.
– Africa has one of the most mobile populations in the world, and countries on this continent constitute a significant and growing part of the global money transfer market. In recent years, the number of migrations in Africa has increased rapidly, driving the increase in cross-border transfers. In the long run, migration transfers from Africa are expected to increase significantly due to the income gap, rapidly growing working-age population and climate change, says Maksym Mykhailovskyi, head of Marketing at Spoko.app.
The scale of the African remittance market is confirmed by World Bank data, according to which the value of remittances to Africa and the Middle East in 2020 amounted to approximately USD 98 billion. It is expected that the value of remittances to this region will increase this year as a result of economic growth in high-income countries.
Asia also has potential
With regards to South Asia, Spoko.app intends to offer its services in the near future in Indonesia, Malaysia, Vietnam, Pakistan and Bangladesh. According to the World Bank, the money transfer market in this region grew by 5.2 percent in 2020 to over $ 280 billion. For many poor households, money transfers are still an important source of livelihood. Additionally, during the pandemic, transfers became more accessible and popular.
– Africa and Asia have great potential for growth in the coming years. Both continents are already significant players on the money transfer market, but there are a number of factors that make us look at these areas with great optimism in terms of the value of transfers. There has been a belief that rich western countries are the best markets for fintech services, but it turns out that countries generally perceived as less developed, due to the fact that they are in the phase of dynamic economic development, are a great opportunity, adds Maksym Mykhailovskyi.
Expansion must be done carefully
Entering new countries, regardless of whether it is Africa, Asia or Europe, is a complicated process of analysing and assessing the potential for development of remittance services. Spoko.app,after checking out the competition, and the number of available pay-in and pay-out methods and currencies, decides whether a specific country or geographic area is a promising market for money transfers. Each market requires a separate approach and flexibility, because based on local payment methods, the most important thing is to thoroughly understand the expectations and habits of users.
One of the biggest challenges for global market participants is the lack of freedom in transfer methods. Users expect that they will be able to transfer funds from anywhere in the world without worrying about the method of transfer, regardless of what tool the person sending and receiving the funds has. Spoko.app is regularly introducing new payment systems, such as Klarna, Trustly and Giropay. The same applies to Apple Pay and Google Pay, which are in the final stage of integration.
In the coming years, Spoko.app wants to be the market leader in Africa and Asia to help expats around the world financially support their families with immediate money transfers.