Money transfer app gives financial services the social treatment

If you’ve ever tried to transfer money to friends and family or suppliers abroad, then the likelihood is that you will have used your bank or perhaps an ‘old-fashioned’ money agent like Western Union.

Either way, you almost certainly felt the double whammy of a hefty transaction fee and poor exchange rate.

But Azimo, a UK startup (unveiled at tech conference Finovate and backed by a number of well-known angel investors) has become the first provider to take the remittance market social.

The first of its kind, Azimo is a boldly ambitious social money transfer service with a refreshingly ethical focus. The plan is to disrupt an industry that for decades has been dominated by ‘the billionaires club’ of large multinational banks and the likes of Western Union and Moneygram.

Those legacy providers have monopolised a global market estimated to be worth $534bn; one in which the UK is playing an increasingly important role. In 2010, the UK for instance accounted for around 7% of annual remittances to Bangladesh, worth £533m and about 10% of annual remittances to Pakistan totalling £627m. In the latest figures to 2009, the World Bank estimated that the UK’s increasingly diverse migrant community which by 2011 numbered 7 million sent as much as £3.7bn home, while inward remittances, largely from expats totalled £7bn.

Business Matters met Azimo founder Michael Kent and asked how he intended to shake up a global market. “Our aim is simple,” he says, “that is to only charge what is fair. That’s not too difficult surely! We’ve built a global network and after a couple of years of research and planning, we believe that a fair price is about 1-2% of the transaction value, rather than say up to 12% like a traditional bank would charge. Importantly, we also wanted to make it both quick and easy for anyone to transfer their money overseas and for the person at the other side to receive it.”

Azimo cite their extensive network, lower overheads and ethical values as the main reasons they can out-price their rivals. Costs start at a flat fee of £5 for transfers up to £500 and 1 per cent commission up to £15, for any larger sums meaning that it outperforms other players in the market who regularly charge between 4 and 15 per cent.

At those rates users could save up to £30 on a £300 transfer- a not insignficant saving. Could the long-term result be that Azimo and other startups like Transfer Wise, help increase competition and drive down the costs for overseas transfers? For small businesses who are increasingly using virtual and online services or who have outsourced their physical supply chain abroad, new providers could save them thousands of pounds every year in fees and exchange rates. At the same time the service is both faster and more reliable than traditional providers.

But while great rates have sparked significant interest; it is the social integration which has created the most excitement, coming just days after American Express announced a limited pay-by-tweet consumer payment service. “Our research found that nearly three quarters of our users were regularly using Facebook and of those, over 60% were already connected to the person they wanted to send money to”, explained Kent. “Money transfer is unlike other areas of financial services in that social media is very applicable to remittances. People share pictures, status updates and chat on Facebook – this allows you to send money just as easily. Facebook has more than a billion registered members around the world and over 26m active daily users in the UK- all people who use the channel to keep in touch with friends and family, which makes it a natural and far more personalised way of sending money. It becomes a digital wallet within your Facebook profile.”

The Facebook service is in fact exceptionally simple with the sender inviting their intended recipient to sign up to Azimo via an automatic Facebook invitation. The recipient then logs into Azimo’s Facebook mobile app or via the website and fills out their own details, including where they want the money sent, be it a cash collection, mobile phone ‘top up’, or to a bank account. Because the person receiving the money fills actually completes the details themselves it reduces the data risk of sending important information via email of messaging.

Kent is rightfully excited not just about the buzz around his product but the disruptive potential, “Azimo is here to shake up the money transfer market and help people keep more of their own money in their back pocket. We estimate that in 2011 alone, using Azimo would have saved people in the UK a collective £200m. Added to that as an ethical company, 10 per cent of our profits go directly to charity- so we’re all about making a positive impact.”