SingX – Remittance that is cheaper, faster and more convenient?

Image result for singx

With the Southeast Asia remittance market estimated to be ~$80B in 2018 (from ~$48B in 2012), and intra-SEA to be ~$7B, with multiple pain points, especially in developing countries, that still exist, such as exorbitant, and at times hidden, fees (5-10%), unreasonable exchange rates or lag in fund transfer (typically 1-3 days), it presents a service that could be disrupted, especially through technology.

At present, the sector is dominated by traditional banks (e.g. DBS, OCBC, etc.) and Money Transfer Operators (MTOs) (e.g. Western Union, MoneyGram). In recent years, tech-enabled disruptors have emerged, for example, UK-based P2P MTOs TransferWise and WorldRemit, as well as SG-based B2B and B2C MTO Instarem and Singtel (Singapore telecommunications company)-linked Dash. Beyond that, the interest in using cryptocurrencies and blockchain for remittance has increased, an example being (Go-Jek investment) which started off as a blockchain P2P service and branched into conventional remittance, particularly through a partnership with Western Union in April 2019.

To help remitters with lower and more transparent cost, in a more convenient and faster way, is the ethos on which SingX was formed, with the aim of disrupting the Global Payments market with a peer-to-peer remittance platform which will, over time, eliminate the need to convert one currency to another and further reduce transaction costs.

Who are they?

Launched in January 2017 and headquartered in Singapore, SingX was founded by Atul Garg (CEO), who has over 25 years of experience in banking and payments.

SingX’s goal is to offer transparent, best-in-class fees for remittance, through a seamless online experience for the customer (both individuals and businesses). It claims that it offers customers rates inter-bank exchange rates, which, unlike banks, have no hidden charges (cable fees and commissions, which can go up to ~8%).

They achieve this by the following: When a customer remits, a local transfer is first made to SingX’s bank account, and then they make a local transfer to the receiver’s bank account. It is unclear if there is a need to wait for a book-build of orders from customers that want to do the opposite trade for a match, or that they independently maintain a company account of balances of various currencies in various countries.

They do mention that the “Peer-to-Peer (P2P) Foreign Exchange will bring consumers together on a shared platform. It will match a Singaporean consumer wanting to convert Singapore Dollars to Ringgit with a Malaysian consumer wishing to convert Ringgit to Singapore Dollars. This eliminates the need to convert one currency to another.” Should they hold it on their balance sheet, then there might be foreign exchange arbitrage to be yielded, otherwise, they are mostly a match-making service with fees as their revenue stream.

To add, they claim that because they are tech-enabled and provide an online service, overheads costs are lower than traditional remittance houses, that are usually passed on to customers.

The potential customer base could be split into (i) blue-collared migrant communities with a relatively higher proportion of contract-based employment, who usually remit via agents or older-school avenues such as Western Union and iRemit, and (ii) white-collar and/or skilled workers that remit, or receive payments for their work, via banks and digital MTOs. SingX’s value proposition could apply to both. On (i), Atul mentioned on a LinkedIn comment that “since this consumer segment is semi-educated and lacks confidence in digital solutions, SingX is implementing detailed education plans to help these customers move to a digital solution” – this is something that could be very helpful to increase adoption.

SingX is registered in Singapore, and in Singapore, it works with group company SingX Singapore Pte Ltd, which is regulated as a remittance business by the Monetary Authority of Singapore (MAS). In other countries, they work with licensed remittance operators.

singx fee

SingX fees explained. Source: SingX website

What is the team and who are the investors?

SingX was founded and is led by Atul Garg, with co-founders Kula Kulendaran and Vineet Nagrani, all with long careers in finance.

  • Atul Garg (CEO, Principal Founder) – formerly Vice President and Group General Manager of the Global Network Services (GNS) at American Express, for markets including Korea, Hong Kong, Indonesia, Vietnam and Cambodia, with an M.B.A. from Indian Institute of Management Ahmedabad and B.E. Mechanical Engineering from Birla Institute of Technology and Science, Pilani
  • Kula Kulendaran (Co-founder) – formerly Backend/Big Data software engineer at Agoda in Thailand, pausing his M.S. Computer Science at Georgia Institute of Technology and holds a B.S. Computer Science from Mahidol University International College (Thailand)
  • Radha Gupta (Head of Operations, Compliance & Customer Service) – 3 years in the role, formerly COO, Global Client Group, and VP of Business Management, Asia at Deutsche Asset and Wealth, with a Masters in International Business, Finance & Marketing at Symbiosis Institute of International Business
  • Simon Lee (Director, Country Head of Sales) – 2 years in the role, formerly Director, Direct and Internal Sales at ANZ and various business development and sales positions at OCBC and Citibank

SingX’s latest, and second, round of funding (pre-Series A) was in August 2017, when it raised $4.5M to expand into Malaysia and Hong Kong, as well as to scale up customer acquisitions in Singapore, increase the number of payment corridors (which it definitely has) and ramp up on platform development. At the time, they had S$8M of remittance volume from their Singapore-India corridor across 4,250 customers and projected to reach S$100M worth of transactions by 2017 year-end.

Its initial round of funding was $2.5M and backed by former DBS managing directors Rajan Raju and Edwin Khoo, who serve as SingX’s advisors

What is their value proposition?

Some of the potential customer value propositions (CVP) of a disruptive remittance company are (bolded what I feel SingX addresses):

  1. Cost of transfer – competitive and transparent fees and FX rates
  2. Speed of transfer – preferably instant
  3. Brand and presence (and hence trust) – partnerships with trusted names, or is one itself
  4. Convenience (for both the sender and receiver) – fast and smooth KYC process, preferably fully digital and/or with multiple cash-in-and-out channels, multiple country corridors
  5. Added value propositions (e.g. financial services such as lending and insurance, or other adjacent services such as eCommerce) – simple to understand and accessible

One consideration a tech-enabled remittance company should have is that a reason for the inertia of consumers switching away from banks or MTOs is the sense of security that they have when transacting with a company that has a physical presence (e.g. agent or kiosk). Despite this, the convenience that technology brings by removing the need to be in line for hours to visit an agent (in the case of an MTO) might prove to outweigh the pro and tip them towards adopting a mobile/online-enabled solution. SingX addresses 1,2 and 4 above.

On 1), cost of transfer, the image below (which Atul calls a “fair exchange calculator”) shows the exchange rate of S$1,000 to PHP on 30 July 2019, with SingX on the top left, the (close-to) spot exchange rate on google on bottom right, and a table of comparison on TransferWise’s website on the right. While SingX offered a sticker exchange rate just below World Remit and TransferWise, it’s fees of $6/3.75 (different rates on 2 different pages on its website) is comparable to them. Net of fees, it would come second in the list, after WorldRemit. A quick search online showed that its rates ranked middle-of-the-pack among a few popular choices. All options look competitive in terms of the exchange rate. Atul mentioned in an interview that “Asian foreign exchange involves a dual conversion with the US dollar as settlement, further driving the rates up for consumers”, hence the opportunity to disrupt on prices.

singx exchange

Comparison of exchange rates. Source: SingX, TransferWise website, Google

In sum, on cost, the avenues and cost (all-in price) are:

  1. Banks: DBS, OCBC etc. (1-6%)
  2. Traditional MTOs: Western Union and MoneyGram (3-6%)
  3. Digital-only MTOs and wallets include TransferWise, WorldRemit, Instarem, WeChat Pay and XOOM (0.5-2%)

On 2), speed of transfer, SingX lists the estimated time for receipt of money, given different parameters. Taking Singapore-India as an example, a transaction made before 5:00pm on a weekday will be credited to the receiver within the same day, while one made on the weekend or public holiday (both in Singapore and India) will be made available on the following working day.

For the Philippines, the transfer time is a little longer. For the receiver to be credited on the same weekday, the transfer has to be made before 10:00am, while for Indonesia, it has to be made before 2:00pm.

On 4), SingX offers convenience in two ways – the number of remittance corridors that are made available, and the mobile platform that, likely more applicable to blue-collared workers, saves a trip to the remittance house, which might be very inconvenient during the weekday and not a good use of precious time on the weekends.

The SingX website avails 33 Singapore (SGD) outward transfer options, including popular corridors in the region, such as Indonesia, the Philippines, Malaysia, and India, as well as countries further west like the U.K., U.S., and many European countries. The latest was launched in July 2019, for Sri Lanka. Notably, China is not included. It also allows users to transfer from Singapore in USD out to India, Malaysia and within Singapore. One added feature is that a customer can also set rate alerts to be sent to their mobile phones.

Signing up is simple. If you have a MyInfo account (a government service that enables citizens and residents to manage the use of their personal data for simpler online transactions), then you can use it straight to create an account. Otherwise, you will need to set up a profile that requires verification of documents either online (mobile bill, ID) or face-to-face verification (upload documents and fix an appointment with their agent). I filled up the online form and left my profile unverified, and got a call from the company just a few hours later asking if an agent could come to my address to complete the verification. I believe this removes some friction from the setting up process, although I wonder if they can continue to do so at scale, and if they target based on certain information I provided during signup (e.g. occupation).


SingX identity verification page. Source: SingX website

What could the company branch out into and what similar companies are there?

The highest value remittance corridors in Southeast Asia are MY-ID, MY-TH, SG-PH, and SG-MY.

Expansion into any other country hinges significantly on regulation. For example, in Malaysia, many (~40) licenses already given out and BNM is hesitant about issuing more given that the bulk of them have not been effectively used. Instarem has a license in MY and the country is saturated from a licensing standpoint, in terms of remittance and licenses.

Besides geographical expansion, they could also strengthen their current offerings by focusing on key customer decision factors. For example, FX rates are important when choosing a remittance provider and they could bulk purchase currencies from bank partners. This requires a dedicated team for demand forecasting and treasury resources to manage FX exposure, as well as monitoring of potential FX swings.

They could also expand into other financial services such as lending and insurance. Building a product organically could be challenging both in terms of human and monetary capital required, as well as regulatory adherence. Hence, they could take a marketplace approach, partnering lenders or underwriters to offer their products on their platform.

Tranglo is a white label remittance provider, for both personal money transfer and business payments worldwide, to banks, mobile operators and money service businesses, with a focus on intra-Southeast Asia. They claim to have a network of 230 mobile operators across 82 countries, with prominent partners like Airtel (India telecoms), Axiata (Malaysia telecoms), Mandiri (largest Indonesian bank), etc. and have processed >$1B of cross-border transactions. They also claim that the Tranglo group of companies (Tranglo Sdn Bhd, Tranglo Europe Ltd, PT Tranglo Indonesia, Tik Fx Singapore Pte Ltd) is authorized Approved Payment Institution in the United Kingdom, Money Service Business in Malaysia, Remittance Licensee in Singapore and Fund Transfer Licensee in Indonesia.

Similarly, Thunes (previously TransferTo) provides payment solutions (P2P remittance processing, corporate mass payouts, and digital payment services) and connects diverse payments systems to enable fund movements. It claims to have a network spanning 16/34/21/13 countries in the Americas, Europe, Africa & Middle East, and APAC, respectively, connecting >200M mobile wallets.

Platform players like Alibaba/Ant Financial, Grab, as well as Go-Jek ( as mentioned above) are also eyeing a slice of the pie.

Alipay is an expert in cross-border payments but not necessarily remittance, where they are only testing out HK-PH. Tencent, on the other hand, seems to have a better footing with a partnership with EMQ on remittance.

Grab has already announced its intention to launch a remittance product and given their relative ubiquity in Southeast Asia, using them as a receiving wallet is a low-hanging fruit as it easy to build up with partnerships. But it could be a huge reputation risk should the relationship with regulators/licensing bodies or communication to the public not be managed properly.

One successful case study of a B2C remittance operation in Southeast Asia is PayPal, which is extremely popular in the Philippines for the rapidly growing group of freelancers to receive overseas business-related payments. Funds from countries like the U.S. can be transmitted to PayPal’s multi-currency wallet in Singapore and then to PayPal’s accounts in the Philippines, and then routed locally to the accounts of freelance workers there. PayPal monetizes through transaction, FX and withdrawal fees. However, this is a grey area to operate in, as their operations in India and Turkey were shut down.

In conclusion…

While there are indeed many inefficiencies in the remittance industry now that makes it a target for disruption, ultimately it is a space that has legacy systems and requires a change in habit that might be hard to induce, if not through an avenue that is already adopted (e.g. everyday platform app concept that started off with an extremely strong and frequent use case).

Taking into account the thin revenue margins (0.5%) and stiffening competition with money exchangers that are going online, like thinmargin, cashchanger or moolahgo, that could take away non-urgent currency exchange volume, it remains to be seen whether a standalone one-service remittance technology company will see through its path-to-profitability, or is best left to be one of many features on a superapp that proves as a potential gateway for other financial services to be cross-sold, especially for the individual. Unless SingX can prove to be a compelling service for SMEs where hopefully the remittance volumes are larger (how much more are they really?), to become the Airbnb of cross-border global payments will be challenging.

Further reading