Indians love to travel abroad, but only when flight and hotel aggregators such as MakeMyTrip, Ixigo, Yatra and Cleartrip arrived in the early 2000s that the Indian travel industry got its big impetus. The online travel market in India has now become a $13.61 Bn opportunity. By sheer logic, this growth should have impacted the growth of international remittance and foreign currency exchange (forex) industry in a direct proportion. However, it didn’t.
“While all travel-related services such as ticketing, hotel booking, car rental service etc. were available online, the money that bought everything was offline. Everything in the travel space was disrupted and saturated while the forex market was still working in a traditional mode,” said Sudarshan Motwani, cofounder of BookMyForex, a marketplace for foreign currency exchange and international remittances.
Having 30+ years of experience in the banking industry while introducing many travel-related foreign exchange services for the Bank of Punjab, Centurion Bank of Punjab, HDFC Bank, ING Vysya among others, Motwani thought of bringing tech into the equation and changing the status quo. In November 2012, along with cofounder Nitin Motwani (not related), he launched BookMyForex with angel funding of INR 25 Lakh, where customers could transparently view live forex rates through the day, compare exchange rates and service quality standards, book their orders and get the foreign currency delivered at home.
At the time of initial launch, BookMyForex was not a marketplace and was tied up with a single partner — Axis Bank — for fulfilling its customer requirements. BookMyForex became a marketplace in September 2014. It now has a channel partner network of over 5K branches across India, BookMyForex is able to offer pickup and delivery of forex products in 650+ Indian cities and towns, and has its own delivery centres in 30 cities.
“The applications now sifts through the rates provided by all vendors in all cities in real-time to find the best vendor for each currency in each city,” added Sudarshan. travel insurance, international SIMs and tours and activities booking are the other services offered by the platform.
Retail Customers Pain Points And How BookMyForex Solves It
As Sudarshan explained, there were several customer pain points that they wanted to solve with BookMyForex. Here’s a glimpse of it.
The founders have streamlined most of the processes on the platform. This includes:
Vendor comparison and selection – A rate comparison engine that compares parameters such as vendor rates, distance from customer and previous vendor track record to match each customer with the most appropriate vendor.
Market intelligence – BMF extracts rates of several sites and uses offline market intelligence to figure out the best rates being offered and uses that information to dynamically set pricing
Order tracking – Ability to automatically send reminders or escalations to channel partners, customers and internal staff to take action when a service-level agreement is breached.
SLA monitoring and last-mile fulfilment – A rule engine to identify which orders are at risk of breaching agreements and proactively alerts the appropriate stakeholders to take action to reduce complaints and improve customer experience.
Payment routing – Advanced payment capturing and routing logic to route customer payments to the correct partners to enable them to complete their orders.
The monetisation is also simple. The vendors give BMF their rates and an algorithm figures out which vendor to select, and then the platform automatically adds a small margin on the rate provided by the vendor. The additional mark-up added by the bidding engine is the money that BookMyForex makes.
From First Mover To Innovator
As Sudarshan describes it, they had to face a few first-mover challenges. “We were not just the first mover in online forex space in India but the world’s first online foreign currency exchange and remittance marketplace. BookMyForex is not a replica of any startup worldwide and is an original idea,” he claimed.
Having simplified foreign exchange for the Indian market, BMF is now focussing on creating products for B2B2C and B2B models, where referral businesses such as OTAs, travel agents, immigration, visa, educational consultants and corporates can start offering forex under their branding and earn additional revenue or offer extremely competitive rates to their own clientele. This would greatly improve the access to foreign exchange in areas and touchpoints where BookMyForex cannot yet reach customers.
Other early challenges included the task of training the staff at Axis Bank branches to handle BookMyForex transactions. “While it was a big setback at that time, we kept our focus on solving customer’s pain points and finally arrived at the marketplace model which is working successfully,” he added.
Going ahead, Sudarshan believes that the next set of challenges will come with product portfolio expansion and scaling further in next 20 – 30 Indian cities. It has launched its first multi-currency forex card and will soon be launching next-generation forex cards that customers will be able to manage via the BookMyForex app.
The customers can also get real-time notification alerts and view the INR equivalent of all spending amounts. They will also be able to track their currency wise balances, locate surcharge-free ATMs nearby and reload their travel cards while on the go. Additionally, in case of suspicious transactions, the card can be easily locked or blocked by the cardholder without assistance from customer service.
The Unexplored Opportunity In Online Forex
While BookMyForex may claim to have been the first mover in 2012, today it is not the only player. The segment has evolved and has become a breeding ground for online foreign currency exchange and international remittance players such as ExTravelMoney, UniMoni, BuyForexOnline, SignatureForex, BookMyCurrencies, Nafex and the new entrant Paytm among others.
However, the hard truth still remains the same. Even today, less than one percent of all forex transactions happen online in India. But analysts believe that the trend is changing quickly. Elsewhere in the world, large fintech startups have been able to capture a much larger share of the market. For example in the UK, Transferwise, a fintech unicorn has managed to acquire almost 10% of the UK’s international remittance market.
With the growing millennial population adopting internet increasingly and using fintech solutions and ecommerce with great appetite, the market conditions are right to boost adoption of online forex in the coming years. It’s clear that the overall forex market size in India is huge — pegged at $54 Bn currently and growing 20% YoY — and is expected to grow exponentially as the number of Indians going overseas is set to increase from 20 Mn to 50 Mn in the next 3-5 years.