Azimo – The Future of Remittances
R.I.P Checkbooks and High Bank Fees – How Azimo can transform the remittance market and unleash $15B in the developing world
Introduction
“We believe sending money abroad should be fast, easy, and good value for everyone.” Born out of frustration at the money transfer industry’s high fees and poor customer service, Azimo is disrupting the $529B[1] dollar global remittances market. In June 2015, this UK-Polish based start-up has raised $20M in a funding round and has been valued at $100M.[2] Azimo’s innovative business model has been effectively aligned with an operating model that uniquely positions Azimo to best serve low-income migrant workers across the world.
Business Model
- Service & Value Proposition: Azimo provides low-cost, fast, and secure payments from any device to recipients in more than 190 countries. Azimo’s service is up to 85% cheaper than the high street banks and online money transfer companies.
- Market Segment & Target Customers: Azimo is targeting low-income migrant workers, who regularly send money back home to family in Africa, Latin America, Eastern Europe, and Asia. In 2012, migrant workers sent $401B in remittances to friends and family in developing countries. The World Bank Group estimates that there are about 215M international migrant workers and 700M internal migrants. Azimo is committed to helping such migrant workers reach the 2.5B unbanked potential remittance recipients.
- Revenue Stream: Azimo charges 1-2% of the remittance payment transaction, which is significantly cheaper than the rates currently charged by Western Union, PayPal, and other banks. The Bill and Melinda Gates Foundation has estimated that a cut from 10% to 5% on remittance transaction costs would open up an extra $15 billion in the developing world.
Operating Model
- Technology: Instead of having brick and mortar banks with agents on the ground, Azimo relies on a digital platform, leveraging phones and social media tools to transfer money across borders.
- Process: Azimo uses a simple process to help customers send money abroad. Customers register on the website, provide details of the recipient, and then determine the amount. Recipients are given a range of flexible options to receive cash at agents, bank accounts, m-wallets, cardless ATMs or at their homes.
- Channels: Azimo operates only on online channels via its website, mobile app, or Facebook. The company maintains a simple website given that migrant workers do not always have the most advanced smartphones.
- People: Azimo hires multi-lingual staff to support its operations in 11 different languages to reassure customers. For example, all written communication is specifically written and reviewed by native speakers and Azimo has phone operators available to take calls in a variety of languages.
Conclusion
As demonstrated above, Azimo is able to reduce the cost of sending money abroad by digitizing remittance payments through an online platform. Azimo’s simple process also helps cut the transfer fee significantly. Both its technology and process gives Azimo a cost advantage that strengthens its business model focused on highly competitive transfer fees to customers. Azimo’s online platform is connected with banks and is integrated into social media to deliver an improved and seamless user experience. Furthermore, Azimo’s multi-lingual operational model enables Azimo to effectively serve low-income migrants in developing countries.
Given that the current remittances market is highly fragmented with Western Union controlling 15% of the market, Azimo has the opportunity to take advantage of an underserved market. Therefore, it is no doubt that investors are betting on companies like Azimo to crack the multi-billion dollar remittance market. Azimo is well positioned to do so with its business and operational models that provide unique competitive advantages (i.e., low-cost, superior customer service and user experience, flexibility of payment options, security).
Sources:
- Azimo Website: https://azimo.com/en/
- Forbes: http://www.forbes.com/sites/freddiedawson/2014/11/28/azimo-a-disruptive-uk-polish-remittance-fintech-company/2/
- TechCrunch: http://techcrunch.com/2015/06/15/money-transfer-startup-azimo-raises-20m-at-a-100m-valuation/
- CNN: http://www.cnn.com/2014/11/24/tech/innovation/future-finances-checkbook-pin-number/
- Financial Times: http://www.ft.com/intl/cms/s/0/1c34f6b6-0f75-11e5-b968-00144feabdc0.html
- TechCrunch: http://techcrunch.com/2014/03/11/azimo-series-a/
- Banking Technology: http://www.bankingtech.com/143292/remittances-a-window-to-the-future/
Awesome! My personal interest in this is that Nepal has 40% of it’s national income derived from remittance. If Azimo make’s it more efficient that would be a boon for the whole nation. I think one advantage of this is the potential to minimize corruption and bribery, and streamline the whole process. It might be difficult to transition the older demographic – the typical recipients of remittance – onto online platforms and so the F2F channel is critical.
Great post. Interesting company… I wonder if anyone is using Bitcoin for this kind of thing? Maybe too much variability… could essentially get fees down to 0