The global retail financial services sector faces significant digital upheaval, driven by changing customer expectations, technological innovation and regulation.
Despite that, consumers in mature markets like North America maintain huge levels of trust in traditional banks – and most tend not to switch their checking accounts on a regular basis. In fact, a recent survey published by Bankrate and MONEY found that the average U.S. adult had used the same primary checking account for about 16 years, with older consumers aged 65+ staying put for 26 years on average.
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The rise of MSBs
This suggests that more people will seek alternatives to traditional banks as target demographics get younger and the services on offer from Money Service Businesses (MSBs) continue to become simpler and more convenient.
MSBs have already grown in importance in recent years. According to financial supervisory body CSBS, in 2017 they were responsible for handling $1 trillion in transactions. Even so, MSBs tend to focus on niches within the financial sector, such as short-term loans, cross-border payments or crowdfunding.
Those MSBs that want to expand their propositions beyond the fringes of the traditional banking sector need to prove they can handle money as safely and effectively as traditional banks. And as well as offering low cost, reliable services based on smart technologies, MSBs need to comply with regulation, including Anti-money laundering (AML) and Bank Secrecy Act (BSA).
Building on stable platforms
The good news for MSBs is that there has been a massive shift in the way financial systems and applications are delivered. Rather than build and test their own systems from scratch, new players can rely on established payment platforms that are already proven in the marketplace, just as app developers plug Google Maps into their systems instead of constantly building new mapping tools.
Using Open Application Programming Interfaces (APIs), MSBs can integrate with those established platforms and take advantage of providers’ commitments to remain compliant with international and regional standards that govern payments.
Not only does integrating a tried and tested platform improve access to the broadest set of currency exchange rates, it serves to build trust in services, both from customers and other third parties.
“Not only does integrating a tried and tested platform improve access to the broadest set of currency exchange rates, it serves to build trust in services, both from customers and other third parties.”
An example of where this has worked in practice is the iconic slogan ‘Intel Inside’, which launched in 1991 and helped to drive the sales of millions of PCs through a smart co-marketing effort between the chip maker and its partners.
MSBs that decide to follow this route to growth have a head start, because there are proven platforms available. Currencycloud is one of these, providing the capabilities that MSBs need to build trust with consumers.
Using a trusted third-party can be a strong benefit for the organization, if it chooses to reveal its association – ‘Currencycloud Inside’ if you like. It can be an effective way to communicate to consumers with real proof points that can engender trust, such as the number and type of organizations that use the platform; the number of currencies/countries covered; and the regulatory frameworks with which the platform complies.
Whatever lies ahead for the retail financial services industry, change will be a constant. The certainty of a proven platform in an uncertain industry sector will become increasingly important, especially for ambitious MSBs looking to expand their propositions.
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