This bank is boosting financial inclusion by rethinking how money moves internationally

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Michael van den Berg, ACT Fund Investment Director, Common Fund for Commodities

• Transferring money around the world can take time and be costly. With a growing number of migrants globally, Bhairav Trivedi decided to rethink remittances.
• As CEO of Crown Agents Bank (CAB), Trivedi is helping to boost financial inclusion in hard-to-reach regions by reducing friction and cost in the process.
• In an interview with the World Economic Forum, he explains how CAB is having an important social impact by strengthening local economies and supporting small and medium businesses.

Transferring money to some hard-to-reach regions can take days. Often several intermediaries are involved – and a small mistake can cause a whole chain of transactions to collapse. It can also be expensive – which is problematic when it is only comparatively small amounts being transferred.

Crown Agents Bank, based in the United Kingdom, decided to tackle the issue by building a simple, affordable way to send money home. For many developing economies, these remittances are the largest source of foreign income.

Alongside this, there also needed to be better and more efficient ways of funnelling finance to regions in need without holding up the often urgent work of humanitarian agencies.

As CEO of Crown Agents Bank, Bhairav Trivedi is bringing to market an automated solution for cross-border payments in more than 100 currencies. The bank specializes in hard-to-reach markets, allowing payments to both banks and mobile wallets.

It aims to reduce friction throughout the process and ensures that transactions are transparent at all stages of the process. By connecting these hard-to-reach markets with the global financial system, the bank is also bolstering financial inclusion.

As part of the World Economic Forum’s New Champions Community, Trivedi highlights the social impact his bank is having.

Below is an edited transcript of that conversation.

$83 billion of remittances were sent to India in 2020. Image: UN Migration

What problem is Crown Agents Bank trying to solve?

The biggest problem we solve is, if you look at how money was moved traditionally, it is moving across many geographies. For example, say I’m in Florida, in the US, and I want to send money to Senegal. I could go to my local bank; they would then send a Swift message to their partner bank. The partner bank would then send a message to their global clearing bank. The global clearing bank would then send it to their partner bank in Africa. The African partner bank would then send it to their regional bank in Western Africa, which would then send it to a bank in Senegal to deliver.

So now that transaction has really taken five hops. Every time you’ve got issues with data getting lost, or you’ve got issues with data not being transcribed correctly, there’s a certain cost at every little hop.

We have bank accounts in almost all of these geographies. So when any of these banks work with us in this example, if it’s the local bank in Florida, they would work with us and we would move it in a single hop directly to Senegal. So now what we’ve done is we’ve saved time. We’ve been completely transparent. You know at any point in time where your money is, you know exactly what the issues are. And it’s at a significantly lesser cost than most of the other systems.

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What is the social impact?

When we look at social impact, there are three primary areas that I could focus on. One is financial inclusion. The second is formalizing of financial markets. And the third is really strengthening local economies.

With regards to financial inclusion, we facilitate remittance flows, and we facilitate aid flows globally. And in communities where people are denied access to formal financial markets, we are able to create some level of financial inclusion.

Secondly, we work primarily in emerging markets where a lot of the formal financial systems are not available. So a lot of the local banks are not able to play on the global stage and we give them the ability to do so. And that makes a big difference to them because now they can provide service to their customers on the global market in any geography they choose.

Finally, our work is about strengthening global economies. Looking specifically at remittance flows, these allow people to get money in small communities. They also facilitate small or medium enterprises – it could be the corner store, it could be the local grocery, it could be a dairy farm. They also facilitate a lot of mom-and-pops to actually start running little businesses. And then finally, with these funds flowing into the local economy, a lot of people start to spend in their local economy, which then goes much further in strengthening the local economy.

High-income countries are the main sources of remittances. Image: UN Migration

How do you support the work of aid agencies?

If you think about aid agencies, what’s the objective? The objective is to maximize what they get to the individual because you’ve got people that are suffering a humanitarian crisis.

In that event, the last thing you want to do is say: ‘I’m sorry, I could only get you half the money because a whole lot of other people in between have taken it away.’ And so what we do is we facilitate those flows directly to the point where they need it, at a minimal cost.

To give you an example, there was a problem with the electric company which was not able to get adequate spares. And so in winter, they were not able to provide electric power and people were getting hypothermia. And we had governments approach us after that and ask if we could help facilitate this for them. And so we were able to do that in a fully compliant manner which allowed people to survive.

How has technology shaped what you do?

We realized that the business has to be immensely scalable. So, to that end, the first step we took was to bring robotic process automation to our back-office operations. We have a lot of repetitive tasks. The bots do the tasks and prepare everything so that if there’s a decision to be made, it can be made by a human element.

We also did a lot of work on artificial intelligence and machine learning. So, today, if you think about a typical transaction, the regulation requires us to screen these transactions to make sure none of the bad guys are using the system.

Whenever you’re trying to screen through people, you’re always going to end up with what we call false positives. But once you clear that, the system should be unable to keep throwing that out. So that’s why we use a lot of artificial intelligence and machine learning to screen out the false positives so that we can then really put our efforts into manual reviews on people that matter.

What’s your leadership style?

I find what works the best is a collaborative style because it allows everyone to participate. Yet you need a clear leadership angle on that piece. So, it’s great to keep everybody involved, but at some point, the decision has to be made.

The other style, which is really important and which works really well given the kind of work environment we work in and live in today, especially with fintech and technology, is transformative. That is when you actually enable or empower people to make decisions on their own and really bank on the fact that they are really going to do the right thing and come in at the right point to provide guidance.

What’s the next step to make more social impact?

Everything we do at CAB is about social impact – from the kind of work we do, to the kind of payments we facilitate, all the way to the fact that most of our employees are hugely motivated by social impact. And we find the more we can make a difference in all of the societies and communities in which we operate, the more our employees enjoy working in this organization and feel truly motivated.

What for you are the advantages of being part of the Forum’s New Champions community?

We’ve always known that this community is one of those that deals primarily with social issues. It talks about making the world a better place. And so, to that end, we felt our organization has completely aligned goals with this.

We also want to hear from others that are making an impact. So that if there are things we can do differently or should do differently, we should absolutely do that.