How big are the stakes for banks facing down newer, more technologically savvy financial upstarts? It’s likely do or die, Moody’s Investors Service argues in a report out Wednesday .
While established banks have some advantages, fintechs are muscling in on their turf when it comes to newer products and services, like payment processing. Companies like Square Inc. /zigman2/quotes/205989440/composite SQ +3.55% , Alipay, and WeChat Pay are already in the space, but Moody’s also notes that big consumer technology companies like Google /zigman2/quotes/205453964/composite GOOG +1.17% , Apple Inc. /zigman2/quotes/202934861/composite AAPL +3.75% and Facebook Inc. /zigman2/quotes/205064656/composite FB +2.12% could take an interest.
Cryptocurrencies could also gain enough of a foothold to challenge incumbents.
But it’s a look backward that gives a sense of how much is at stake in the movement of money. Global remittances – generally referred to as people sending money home – totaled nearly $600 billion in 2016. The average cost for sending a $200 payment across international borders was 7.2% in 2017, Moody’s said.
The visual below, courtesy of Moody’s, illustrates those flows.
That suggests a marketplace ripe for disruption. In April, Walmart Inc. /zigman2/quotes/207374728/composite WMT +0.42% and MoneyGram International Inc. /zigman2/quotes/208548401/composite MGI +2.22% recently announced the creation of a service called Walmart2World, Moody’s noted. Others will surely follow.