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Money drives the world mad
Money drives the world mad
Money drives the world mad – an article from The Marker
The next generation of money is already here, and soon enough, you’ll be able to say goodbye to paper money, and even to bank accounts. Eran Sarouk, Chairman of GMT, the company that controls the Israeli remittance market, is joining us today to reorganize your balance sheets.
As the Chairman of GMT, a company that specializes in remittances, Eran tells us about the technologies that soon will be introduced to the Israeli financial market, his eyes shine bright like diamonds. “The remittances market is changing right before our very eyes”.
“Until recently, technological advances and changes in work practices were taking place covertly inside the systems of financial organizations. Supervision methods, such as compliance, regulations, security, internal and external database lookups – they all had changed over time, especially due to the importance of preventing funding of terrorist organizations and money laundering. But the basic practice of money transferring itself has barely changed at all. Currently, there is a revision of this field on a global scale. For example, in many countries, namely in the Scandinavian ones, the usage of cash has been reduced to a bare minimum. In other places, such as in Africa or The Philippines, where banking infrastructure wasn’t as advanced to begin with, they skipped three generations ahead, gave up on ATMs and credit cards altogether, and now transfer money directly to and from mobile devices. In our day and age, we can easily load funds to virtual accounts and e-wallets, which could then be used to purchase products and services”.
So, why hasn’t it caught on in Israel yet?
“Because most Israelis still have a bank account, as well as credit cards linked to said account. Their need for alternative solutions is low, and the services provided by most Israeli banks are backed by adequate technology for now. In addition to that, the banks are investing much into their digital communication channels. Leumi Bank, for example, has some great digital features, all while maintaining the Pepper app, which gives the user a look and feel of an e-wallet”.
According to Sarouk, the field of money transfers in Israel can be divided in two: “The first part would be all the wire transfers, a part which is obviously dominated by the banks, at least for now, and is used mainly to pay service providers abroad, as well as other things of similar nature. The other part is what we call ‘cash transfers’ – essentially, you give cash to a service provider of your choice, and said vendor allows your beneficiary, that is the person you wish to whom you send the money, to withdraw this cash from them at any service point in the world, all within just a few minutes. This service is mainly used by foreign workers who send their salary to their families abroad, or alternatively, by Israeli citizens for sending gifts in the form of cash, for providing financial support to relatives abroad, to pay for tuition fees abroad, or even to withdraw the money themselves when traveling. This second part of the market is mostly controlled by two major players – Western Union, who works with the Israeli Postal Service; and MoneyGram, who work with GMT”.
“Because most Israelis still have a bank account, as well as credit cards linked to said account. Their need for alternative solutions is low, and the services provided by most Israeli banks are backed by adequate technology for now. In addition to that, the banks are investing much into their digital communication channels. Leumi Bank, for example, has some great digital features, all while maintaining the Pepper app, which gives the user a look and feel of an e-wallet”.
What direction do you think that the market is currently taking?
“Currently, from what we see, clients want the service to be more easily and comfortably accessible. Many fintech companies have entered the game and are trying to use technology to provide better service for the customer – mainly through mobile or online platforms”.
“The next step for GMT would be adding debit cards, which could be linked to international credit cards by the client. This would allow the client to keep track of their spending. The current situation is such that if, for example, you were to send 1000 Euros to a relative somewhere in Europe, that same relative would have to withdraw everything at once, and in cash”.
“With our new system, the beneficiary would be able to withdraw some of the money in cash, and transfer the rest onto a debit card, which could then be used in most stores across the world. We are currently testing a new feature we’ve cooperatively developed with two foreign banks. This feature will allow client to automatically transfer money to pay for bills in foreign countries. Just to illustrate how it would work, let’s say that a person abroad sends you a payment request for an electric bill. That request would contain a payment code, using which we will be able to automatically transfer them the necessary funds to pay for that bill”.
What are the features that you are going to introduce to your system in Israel?
“Currently, we have roughly 300 franchisees in Israel who are licensed currency service providers. We would like to utilize the advanced computer system to offer additional services to the public. We have several things planned, such as sales of pre-paid debit cards and gift cards – like the major commercial networks do. Other plans include test runs of various financial services that we would like to market using our platform. These include various financing and credit solutions, insurance solutions for travelling abroad – which could be purchased along with any foreign currency purchased by the client, exchange of exotic currencies. Our long-term goal is to have a fully-equipped financial system for all intents and purposes. Israelis are very open to trying new tech, and so, we’ve expanded our innovation department and now we are providing various services to fintech companies both in Israel and abroad. These partnerships include cooperative development efforts and distribution of new products and solutions both in Israel and amongst the clientele of our foreign partners. We would like to eventually spread our technology into Europe as well, where regulations are very similar to what we have in Israel”.
