Long unable to understand why banks are not anywhere as successful in the remittance business as money transfer operators (MTOs) like Western Union and MoneyGram, I found some clues in this recent article written by Charlie Corbett of Western Union.
According to Corbett, many banks still view remitters in developed countries as impoverished, nearly illiterate, and hence not worthy of selling checking accounts, credit cards, mortgages and other banking products. According to one former banker and remittance specialist quoted in this article, “not all banks will want the footflow into their branches on the sending side. They don’t want these guys coming into their branches and cluttering up their nice clean offices”. Apparently, banks fear that putting remittance service stickers on their windows would dilute their brands.
Banks had better start worrying about dilution of their brands caused by their own staff before looking down on the stereotype remitter.
Banks offer remittance services based on the account-to-account model, which demands more information like account number, SWIFT BIC code, and so on. Agreed that such information is beyond the grasp of a typical remitter who finds the cash-to-cash remittance model offered by traditional money transfer operators like Western Union and MoneyGram much simpler. However, in my personal experience, banks’ own staff are clueless about the greater information needs of the account-to-account model.
A couple of years ago, I was trying to remit some money from London to a leading bank in India. When I called the beneficiary bank’s call center to get their BIC code, I was told that it was ABCDINBBNNN. Since I knew a thing or two about BIC codes, I was able to instantly point out to them that the last three places had to be numerals and couldn’t be “NNN”. Only then did they check and got back with 005 as the right value. I shudder to think about the fate of my payment had I naively used the BIC code the bank had given to me in the first instance.
In another instance, another leading bank in India told me to use a BIC code that I noticed was only 8-digit long. I was looking for the 11-digit version because (a) the sending bank in the UK asked for a 11-digit beneficiary BIC code, and (b) because I knew that the 8-digit BIC code only pertained to the bank whereas my money had to go to a particular account in a particular branch of the bank, which could only be identified by a 11-digit BIC code. When I insisted upon the 11-digit version, the bank staff had no clue. In the absence of this critical piece of information, I decided to abandon the transaction instead of risking my money floating around somewhere in the bank’s systems without a destination account available to be credited.
Banks surely know that their account-to-account remittance model calls for greater knowledge and sophistication not just from remitters but also from themselves. What they need to do is to train their staff so that they’re able to better respond to its greater information needs. Only then can they hope to make any dent on the towering market shares of money transfer operators using the far simpler cash-to-cash model.
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