Money-transfer companies still operate in their traditional, agent-based, cash-based channels. Everything is done in-house, with their own teams developing the necessary software. When they’re faced with moving to online and mobile channels, they’re confronted with problems they’ve never encountered before.

As a result, they need to partner with software companies, mobile companies, and payment companies that are able to process their digital payments. Money-transfer companies have a tendency to move more slowly than they might, or they may tell themselves that they have time to adapt to the online world. But digital payments are happening now. To delay is to miss opportunities.

Most traditional money transfer companies originated with a focus on a specific ethnicity. That means that they develop in just a few “corridors,” or specific routes (such as between the United States and Mexico). They may grow within their original corridors, but must move to other corridors if they wish to diversify.

For example, the Asian and African corridors are growing much faster than the Latin American market, which is very developed, with little growth potential and low margins. When a money-transfer company that started with a Latin American corridor wants to move to a new, growing corridor, they may falter. The company feels it must grow in this direction, it wants to do it, but in many cases it will fail to develop in this new direction that is not in its comfort zone.

There is currently a great deal of mergers-and-acquisition activity in the money-transfer industry. Investors in the United States are buying traditional money-transfer companies because they see a great deal of growth and opportunity in the market.

However, very few acquisitions in this industry are successful, especially when it involves a merger. The cultural differences between an Asian company and a Latin American-centered company are huge. 

Investors often fail to understand the business and cultural differences between international corridors. They assume that if something has been successful in one market, it is going to be successful everywhere. This is almost never the case.

When money-transfer companies look at a new market, they consider whether they can grow toward the market, or get a license and enter the market. In many cases, lawyers have convinced the company’s management that local regulations create such a mess that it's impossible to enter the market. They don't consider partnering with another company already licensed in the market.

Regulations are a challenge, but they’re also an opportunity. Regulations change as government bodies try to keep pace with technology, which is changing rapidly. A company may decide to bypass key opportunities because of the regulatory climate. It is rarely black and white. Companies should focus on the business opportunity instead.

Suppose a European company wants to do business in the United States, or a U.S. company wants to enter Asia or Europe. The company always wants to try to do business the way it does it at home. It sends a U.S. person to Europe and installs them in an office in London or in Paris for one or two years, and the business does little.

Understanding globalization requires an open mind. It requires different partners and different ways of doing business. It also means finding the right people who have the right mindset.