"I haven't seen enough traction."
One year after we resolved to set an annual debate, MoneyGram's Peter Ohser remains right, the bitcoin blockchain hasn't disrupted global remittances.
Rather than take off through the power of the Internet, mobile and the price appreciation of a new currency, regulation, last-mile challenges and usability issues continue to keep the traditional powers that be in place.
As for the numbers that have been released (Digital Currency Group asserts that at least $40m in remittances is now going through four of its startups), Ohser isn't exactly impressed given that it's a $600bn market. At Money2020, he echoes many of his critiques from last year. A new, non-governmental currency, he suggests, is still an idea that's a poor fit for cross-border commerce.
To Ohser, bitcoin and digital currencies remain a Napster, a technology that's too-hot-to-touch and likely to remain so for regulated institutions that don't want to deal with something that carries high risk and little upside for their operations.
"There's definitely money being moved, but for our purpose, for the ability to work with global banks, you can't touch bitcoin, you lose your global banking relationships," Ohser said.
But, he sees this perhaps not as something that MoneyGram necessarily agrees should be the case, but something that's inherent in a financial climate where derisking is on the minds of many major banks.
Ohser told CoinDesk:
"Banks have a hard enough problem with cash, and we're experts in cash. Banks don't like cash, that's clear, but they hate bitcoin even more. That's a real limit for folks like us."
The conversation isn't exactly a repeat, though.
Rather, Ohser said that MoneyGram remains intrigued by the many blockchain proof-of-concepts (even if he notes they're small in size for the noise they're making), and that he believes it's here where the technology is likely to have an impact.
But unlike the trade finance process, where he sees substantial savings to be had in business-to-business transactions across borders, Ohser characterizes the remittance process as one that's already efficient.
Even with a digital currency, he argues the model isn't going to adjust. It's the back-end of the financial system that he believes is ripe with inefficiencies for the solving.
Cross-border without the middlemen
Interestingly, Ohser's comments on distributed ledger applications mirror what many digital currency supporters have said about their preferred brand of the technology.
For example, Ohser sees the current correspondent banking model (in which financial institutions provide services on behalf of others in trades) as both "antiquated" and contributing to financial exclusion.
"If you're a bank in Africa and you have to trade dollars, they have to trade through France and New York, and everyone wants a piece of the action along the way," Ohser argued.
In this light, he sees the wider use of permissioned blockchains as a better way for banks to become better integrated for cross-border commerce, he just doesn't see the banks going away.
Ohser doesn't buy the Internet argument either. While the various web protocols were eventually weaved together into a common consumer platform, Ohser believes blockchain will be different.
"Because of the regulations, of all the other infrastructure. It's not going to be an open thing," he said, adding:
"There's no one blockchain, it's going to be 6,000 small blockchains."
Stuck in the middle
Ohser isn't exactly high on the benefits these blockchains could provide for its market.
The reason? He doesn't think paper currency will be removed from the equation, meaning he believes blockchain won't particularly impact the consumer-facing part of his business.
After all, he said, MoneyGram still works with banks (moving data and guaranteeing funds), but ultimately, it's trying to deliver value to end users in physical currency.
"You have to manage multiple currencies, 120 currencies. For us that's still a complicated business," he said.
While he admits there's "beauty" in how bitcoin seeks to unite the exchange of data and the exchange of value, he still said it's "not the right solution" for MoneyGram.
As for cross-border distributed ledger services, like Ripple Connect, he said they remain an option, but that perhaps the network effect isn't there yet for it to be valuable.
"You can bring a lot more efficiency in correspondent banking. We still have to move through those chains, but I think that's a huge opportunity to put more cash in our customer pockets," he continued.
Here, notably, his comments contrast from last year's, where he said systems like Ripple were perhaps unlikely to change or impact MoneyGram's cost structure.
But while Ohser is interested in the big vision, he said from a company perspective, it's unlikely that MoneyGram would seek to "push the envelope" with blockchain.
That's not to say that Ohser doesn't see value in the ideas, just that they don't quite make sense for a major remittance firm to pursue given how he believes that the inefficiencies are on the back-end of the financial system.
"There's a lot of stuff that's way out there about identity and compliance, practical use cases that are too far out for us today," he said. "[But] if I'm moving millions across borders, and I can save money on BPS, there's going to be movement, but that doesn't happen on the customer side."
Unlike an increasing number of banks and stock exchanges, Ohser sees the MoneyGram business model as relatively safe given onramps and offramps remain expensive. (As he said last year, his customers need cash, often immediately).
Today, he still argues that with consumers unlikely to change their habits, MoneyGram is in a position to wait and see just what happens when blockchain adoption increases.
"There's not a lot of upside for being first to market, if it goes wrong you have more to lose. That's where you see our strategy is on the fast follower side," he said, concluding:
"But you pay attention, and you have to be a part of the conversation."
MoneyGram image via Shutterstock