The FT has reported that British tech start-ups within the remittances market are currently racing to expand into the US. Yesterday, WorldRemit (London-based remittance company) made their first attempt to crack the US market. The global company which already has a reach of more than 100 recieve countries, announced that they have opened offices in Denvor, Colorado and expanded their online/mobile money transfer service to 10 states in the US and hope to be fully licensed across the rest of the states by 2015.
WorldRemit founder and CEO, Ismail Ahemd said: “We are bringing something that people in the U.S. have not seen before; a low fees, online money transfer service that offers truly global coverage. Until now, Africa and parts of Asia have been neglected by most U.S. operators, despite significant immigrant populations.”
The FT reports that WorldRemit isn’t the only UK remittance start-up planning to make a move to the US. Both TranserferWise and Azimo, who are direct rivals to the company, are also considering expanding into the US.
According to the FT, the founders of these start-ups have said that the competition between London digital money transfer groups to enter the US market is counter to the years of fledging Silicon Valley groups expanding into Europe and annihilating local groups.
Ahmed said: “European fintech companies are clearly doing far better than rivals in America that is reflected in the fact that you’re now seeing a lot of fintech players in the UK now going to the USA, rather than them coming to Europe.”
When asked about the move into the US market by World Remit Ahemd also said: “This is a landmark for the European Fintech revolution which has been gathering pace over the last couple of years. To arrive in the U.S., a country known for technological and financial innovation, with a world-leading service is extremely exciting.”
According to the FT, the start-ups are tapping into the growing trend of online and mobile banking to get a slice of the World Bank’s estimate of $529 billion in remittances being sent around the world every year.
WorldRemit told the FT that it plans to hire up to 250 staff in its new US office over the next few years and most of these will be hired within customer service roles. The company, who received $40 million - one of the largest ‘Series A’ funding rounds of investment from Accel Partners, marks this move into the US as its most significant expansion to date.
WorldRemit are continuing to obtain licenses from each US state in order to operate across the country. The FT reports that the company is still seeking approval from New York, California, Texas and Illinois, but are confident that agreements will made by the first quarter of 2015.
The US is the world’s largest sender of remittances, with residents sending more than $50 billion every year to friends and family living overseas, making it the perfect place for remittance start-ups to expand into.
By Nicole Miskelly, bobsguide Lead Journalist