Innovation around cross-border remittances is driving growth for startups using mobile technology to expand access and drive down costs, while many banks are still relying on slower, costlier approaches to international funds transfers.

Toronto-based CIBC, one of Canada's largest banks, last year decided to overhaul its remittance services, not just to keep up with new technology for existing customers, but to win new ones in a market that's becoming vital to local banks' growth, according to Jimmy Dinh, CIBC's executive director of alternate solutions.

Canada has the largest per-capita outbound remittance market in the world, with its domestic population of 34 million sending out CAD$24.8 billion (USD$19 billion) annually, driven by a large base of immigrants sending money across borders, Dinh said during a presentation at Mobey Forum's annual Mobey Day event taking place this week in Toronto.

Bloomberg News
Bloomberg News

"Instead of interacting with us on cross-border payments, many customers were using much more expensive third-party services, so we decided to disrupt ourselves by creating an entirely new, lower-cost and more convenient approach to cross-border payments," Dinh said.

The result was Global Money Transfer, an app enabling cross-border remittances that's "exponentially cheaper" than CIBC's previous international remittances services (costs vary based on amount and size of funds sent). The app supports funds transfers in 46 markets around the world, with more coming on line soon, said Jimmy Dinh, CIBC’s executive director of alternate solutions.

Since launching the app a year ago, CIBC has seen a surge of growth in new customers. "Global Money Transfer has become a really important part of the on-ramp for CIBC in marketing to an audience whose banking needs are changing and expanding," Dinh said.

CIBC isn't resting on its laurels, though. The global remittances market continues to evolve rapidly, with a constant stream of innovations around cost and convenience, Dinh noted.

"We're keenly interested and curious about blockchain and its relevance for global remittances," Dinh said. "Where I struggle is understanding what exact problem it may solve, but it's still very early in blockchain development and there will be a lot of experimentation and investment in this area in the next few years.

Another area Dinh hopes to crack is finding efficient, affordable ways to send low-value payments across borders. "Right now it's a very expensive proposition to send a $5 payment across borders, but finding a solution here could be a big deal," he said.

The other benefit to expanding and improving remittance products is creating more value for small and midsize business customers that rely heavily on consumer-targeted remittance products, Dinh added.

"Among our customers, the lines are blurring between the consumer experience and the small-business customer's experience, as more people participate in the gig economy with services like Lyft," Dinh said. "We see global remittances playing a key role in serving customers across all these spectrums over the next several years."
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