Future Opportunities

This fintech founder wants to make sending money as easy as making toast

Toast's headquarters is situated in Lucky Plaza on Singapore's famed Orchard Road. It is also a notable meet-up location for many foreign workers in Singapore.
Lonely Planet | Getty Images

Financial technology or -fintech- has already shaken up conventional banking and asset management. Aaron Siwoku reckons remittances could be next.

The market for serving the financial needs of foreign workers is big.

The World Bank estimated in 2015 that global remittance flows exceeded $601 billion, with developing countries receiving about $441 billion - nearly three times the amount of official development assistance. The organization also noted the true size of remittances, including unrecorded flows through formal or informal channels, was significantly larger.

"Remittance is the non-sexy end of finance," Siwoku, a 33-year-old Briton who started a cross-border money transfer app called Toast last year, told CNBC in an interview.

Siwoku got the idea for his business when he noticed long queues outside a big money transfer outlet on Singapore's famed Orchard Road, where he observed the people lining up were predominantly migrant working women and most of them were killing time in the queue on their smartphones. He created Toast to reduce the time it took to process paperwork in order for a worker to transfer money home.

"I thought how can we use technology to solve this problem?" Siwoku. "What if all of the registration could be done on the phone and we can save as much time as possible."

Users fill out their transaction details on the app, upload pictures of the necessary identification documents and arrive at Toast's physical offices with a reference number to make the payment in cash, or sometimes via top up cards and bank transfers.

Money transfer was the first basic service Toast wanted to provide migrant workers, many of whom are under-banked. In the future, Siwoku plans to move into money lending and to be able to take deposits and pay interest on those deposits.

Traditional financial institutions are hesitant to serve many migrant workers they consider not credit-worthy because they had little savings and lacked credit histories, Siwoku explained. As a result, a lot of them turn to the black market for financial assistance.

The data generated by the Toast app could help to build up credit information on these workers by documenting who had cash flow, who was sending money back consistently and how much were they sending - information that Siwoku said traditional lenders couldn't see on their own. "We can use this data to solve problems and to decide, within our database of users, who is credit-worthy and who (isn't)," he said.

Currently Toast is available in the Hong Kong-Philippines remittance corridor, where Filipino migrant workers send back as much as 7 million Hong Kong dollars ($902,370.07) a month. It also has remittance licenses for Hong Kong, Singapore and the United Kingdom.

A remittance corridor refers to a market where foreign workers transfer money from their country of employment back to their home country.

Siwoku said the app will be available for the Singapore-Philippines remittance corridor starting Jan.15, 2017, followed by Indonesia. By end of 2017, he hoped to make Toast available in as many as eight remittance corridors in Asia Pacific, including India, Pakistan, Bangladesh and China.

In 2015, the company raised $850,000 in seed round funding and in November this year, it raised $1.5 million in pre-Series A funding.

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