written by
Renjit Philip

10 reasons why “sending money is a good feature to start a fintech.

Fintech Startups 2 min read , February 10, 2024

I wondered why most fintechs start with the use case of sending money.

Revolut Landing page from 2015 (Wayback Machine)

Starting with a narrow customer need as a wedge into the large financial services market- after all, you have very few resources as a fintech startup. You cannot chase all the opportunities, not with the few resources you have at an early stage. But there is more to it. When I get these questions about which segment to attack from the fintech founders I coach, I find it instructive to go back into history. The Wayback Machine is a great way to dip into history. So, I looked up Revolut's landing page from 2015.

Revolut Landing Page (2) from 2015 (Wayback Machine)

Why is the "Sending money" feature a sound market entry strategy for retail fintechs?

1. Market Demand: There is a high demand for easy and affordable ways to send money domestically and internationally. An increasing number of expatriates and immigrants who must send remittances back to their home countries amplifies this demand. (GCC / US/ EU are large corridors).

2. Disruption Opportunity: Traditional banking transactions, especially international ones, can be slow and fee-laden (5-8% of the amount transferred and 5-8 days to confirm receipt). Fintechs seize the opportunity to disrupt this by offering quicker, cheaper alternatives.

3. Network Effects: Money-sending services can benefit from network effects. As more people use the service (send & receive), it becomes more valuable to each user, creating a viral growth loop.

4. Regulatory Navigation: Unlike other financial services, money transfers have a more straightforward regulatory framework (compared to Banking services), allowing Fintechs to launch and scale these services more rapidly.

6. Data Collection: Sending money requires users to provide valuable data (customer on both sides, KYC, Bank Account, reason for sending money, etc.), which Fintechs can use to understand customer behavior, manage risks, and tailor other financial products.

7. Cross-Selling Opportunities: Once users are onboarded for money transfers, Fintechs can introduce them to other financial products, such as savings accounts, investment products, or insurance.

8. Brand Trust: Managing and transferring money requires trust. Successfully providing this service can establish a fintech as a reliable financial partner, paving the way for offering additional services.

9. Platform Foundation: Money transfer can act as a foundational service upon which a fintech can build an ecosystem of financial services, turning single-service users into multi-product customers. This is the same point as the above two, but platforms can be pretty sticky.

10. Licensing and Partnership Leverage: By establishing money transfer services, Fintechs can leverage their licenses and partnerships to expand into other services with a lower marginal cost.

Offering money transfer services addresses immediate consumer pain points and enables future product expansion.

Look at Revolut's landing page and see its services and products. It has become indistinguishable from a bank. That is the pathway to follow for any startup if it lives long enough!

Revolut's home page- 2024
Revolut's home page (2024)