Why FinTech projects with cross-border transactions are of interest to investors
FinTech-projects are moving the financial services sector in the direction of “faster, more convenient, cheaper” and have made tangible progress in this. A special place in this sense is occupied by FinTech projects, working with money at the international level. They have an increased interest from investors, since the classical instruments here are extremely inefficient and expensive because of the numerous commissions and conversion of currencies. Thus, according to the World Bank, the average cost of an international money transfer is about 7.5% (for 2015). The most expensive instrument of international transfer are banks, where the average commission value is 11.2%. The organizations dealing with money transfers have an average commission of 6.2%. Territorially the lowest level of commission takes place in South Asia. In the G20 countries, the cost of commissions is still high: from 5% in Saudi Arabia and up to 16.59% in South Africa when sending money and from 4.75% in Mexico to 9.72% in China on receipt.
For FinTech projects that can reduce costs by automating all processes, lack of offices and employees, and a more flexible business policy, this is a great space for maneuver. For example, in Great Britain, according to LTP, the 20 largest non-bank money transfer services make currency transactions total up to 40 billion pounds, helping their clients save a total of more than 900 million pounds annually. The average cost of commissions for fintevh-sites engaged in cross-border transfers (TransferWise, World First, etc.) is less than 1%, which is several times less than for banks and classical money transfer companies. Plus, they are moving further towards simplifying processes. For example, one of the trends — the implementation of payments through social networks. Now it becomes possible for international transfers. So, in 2017 the company TransferWise announced the launch of a chat-bot, which will allow you to transfer money directly in Messenger.
The fundamental role in the process of implementing international transactions is played by blockchain technology. By the way, recently the practice of international transfers in the crypto-currency was legalized in South Korea. The cost of FinTech-platforms services in the country starts from $ 3, while the cost of banking services of this kind is $ 50–60.
Another important area to which the blockchain “helps” in the international arena is lending. If the topic of international transfers is most interesting for immigrants, who often need to send money to their homeland, investors are most interested in lending for international development. The possibility of connecting investors from one country and borrowers from other countries forms a balance of supply and demand in this market, because it is quite logical that depending on the economic situation in the country, there may be a shortage of investors or an overabundance of potential borrowers.
Most of international credit blockchain platforms give full transparency of operations and really do not give any security guarantees to the lender. Their credibility is based on the reputation model. Along with them the SHIFT.cash platform opens the possibility of working with loans secured by real movable property.
SHIFT.cash enters the international market, based on blockchain. We are engaged in low-risk loans for investors — secured by borrower’s car title. The built-in module automatically converts currencies. Transactions are carried out on the basis of smart contracts, that is instantly and safely, including through state borders. As a result, borrowers and lenders can be residents from different parts of the world with favorable terms for both parties.
