Bulletin
Investor Alert

April 26, 2018, 6:56 a.m. EDT

The $600-billion-a-year opportunity that’s up for grabs

With an average fee as high as 7.2%, there’s plenty of space for competition

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Square Inc. Cl A (SQ)
  • X
    Alphabet Inc. Cl C (GOOG)
  • X
    Apple Inc. (AAPL)

or Cancel Already have a watchlist? Log In

By Andrea Riquier


Getty Images
Pedestrians walk outside a Western Union office in Lisbon, Portugal

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.

Read: An Amazon bank could rival Wells Fargo with 70 million customers, analysis suggests

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.

Read: Bank of America shows you don’t have to be cool to win in peer-to-peer payments

/zigman2/quotes/205989440/composite
US : U.S.: NYSE
$ 157.72
+5.41 +3.55%
Volume: 8.78M
Sept. 25, 2020 4:00p
P/E Ratio
263.35
Dividend Yield
N/A
Market Cap
$69.95 billion
Rev. per Employee
$984,824
loading...
/zigman2/quotes/205453964/composite
US : U.S.: Nasdaq
$ 1,444.96
+16.67 +1.17%
Volume: 1.32M
Sept. 25, 2020 4:00p
P/E Ratio
32.23
Dividend Yield
N/A
Market Cap
$980.76 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 112.28
+4.06 +3.75%
Volume: 149.98M
Sept. 25, 2020 4:00p
P/E Ratio
34.13
Dividend Yield
0.73%
Market Cap
$1946.64 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 254.82
+5.29 +2.12%
Volume: 18.35M
Sept. 25, 2020 4:00p
P/E Ratio
31.13
Dividend Yield
N/A
Market Cap
$725.94 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 137.27
+0.57 +0.42%
Volume: 7.54M
Sept. 25, 2020 4:00p
P/E Ratio
21.88
Dividend Yield
1.57%
Market Cap
$388.99 billion
Rev. per Employee
$223,654
loading...
/zigman2/quotes/208548401/composite
US : U.S.: Nasdaq
$ 2.76
+0.06 +2.22%
Volume: 894,917
Sept. 25, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$200.03 million
Rev. per Employee
$594,253
loading...

Andrea Riquier reports on housing and banking from MarketWatch's New York newsroom. Follow her on Twitter @ARiquier.

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.