The opportunities of engaging FinTech companies into the system of cross-border money transfers in Ukraine

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Despite the increasing role of cross-border payments within the globalization processes and rapid growth of venture sector, an issue of its implementation remains to be a debatable point for many countries. The paper identifies disruptive challenges for financial institutions need to adapt. The research investigates the value and the investment flows structure as most obvious indicators of FinTech and describes types of payments relationships there. The paper considers relationships between enterprises, financial institutions and individuals, which are formed in digital payments. To understand the difference between regular cross-border money transfers and P2P cross-border money transfers with TransferWise, both mechanisms were researched and the benefits underlined. For Ukraine, the improvement of existing cross-border payments system with FinTech is a crucial challenge. That is why it is important to focus on providing knowledge for people, supporting start-ups in the sector and learning the best implementation practices. A great example of cross-border payments of FinTech in Ukraine is TransferWise. The difference between regular cross-border money transfers and peer-to-peer (P2P) money transfers appears in its benefits, such as lower and more expectable transfer fee, mid-market exchange rate, less transaction period. By transforming existing cost structures and mitigating market imperfections, they provide innovative services that meet the users’ needs for speed, trust, low cost, usability, security and transparency. The results show high potential of FinTech for cross-border payment processing.

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    • Figure1. The probability of the global financial sectors (in %) to be disrupted by FinTech over 2018–2022
    • Figure 2. Total and venture investments into global FinTech sector in 2011–2016
    • Figure 3. Investments in global blockchain FinTechs, US$ million
    • Figure 4. Regular cross-border payment transfer
    • Figure 5. P2P cross-border money transfers with TransferWise
    • Table 1. The most successful FinTech in payment sector
    • Table 2. New promising European FinTech in payments
    • Table 3. The ranking of the most successful FinTech in cross-border payments
    • Table 4. Efficiency comparison of the regular cross-border transfers and transfers with TransferWise