Over the last ten years, changes wrought from the 2008 financial crisis along with a marked increase in fraud and terrorism funding concerns, have consolidated the world’s system of correspondent banking. Despite positive macro-economic trends and an increasingly interconnected commerce sector, de-risking efforts at large financial institutions have shrunk the world’s correspondent banking relationships by as much as 25% according to research by Accuity.

The result is a growing pool of regional banks that struggle to affordably and securely serve the international transactions needs of their customers. This increase in regional banks is leaving large segments of the world’s population excluded from mainstream financial systems.

Eroding market share for regional banks

This disconnect in correspondent banking has driven up the cost of remittances in smaller, riskier regions, even while overall remittance prices have fallen in larger developed countries. For regional banks, this impacts their ability to serve customer needs and ultimately diminishes their financial performance.

This is because consumers will not simply walk away from international transactions. Immigrants or refugees must get money to their families, expatriates need to manage finances in multiples countries.

So as in any natural ecosystem, when these consumers encounter one barrier they move towards another opportunity. With bank-based remittance prices too high or simply unavailable in these regions, customers are turning to money transfer operators (MTOs) like Western Union or MoneyGram.

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https://www.cryptolook.io/cryptocurrency-news/banks-turn-remittance-obstacles-into-opportunities-with-ripple