The opportunities of engaging FinTech companies into the system of cross-border money transfers in Ukraine

Abstract

Despite the increasing role of cross-border payments within the globalization processes and rapid growth of venture sector, an issue of its implementation remains to be a debatable point for many countries. The paper identifies disruptive challenges for financial institutions need to adapt. The research investigates the value and the investment flows structure as most obvious indicators of FinTech and describes types of payments relationships there. The paper considers relationships between enterprises, financial institutions and individuals, which are formed in digital payments. To understand the difference between regular cross-border money transfers and P2P cross-border money transfers with TransferWise, both mechanisms were researched and the benefits underlined. For Ukraine, the improvement of existing cross-border payments system with FinTech is a crucial challenge. That is why it is important to focus on providing knowledge for people, supporting start-ups in the sector and learning the best implementation practices. A great example of cross-border payments of FinTech in Ukraine is TransferWise. The difference between regular cross-border money transfers and peer-to-peer (P2P) money transfers appears in its benefits, such as lower and more expectable transfer fee, mid-market exchange rate, less transaction period. By transforming existing cost structures and mitigating market imperfections, they provide innovative services that meet the users’ needs for speed, trust, low cost, usability, security and transparency. The results show high potential of FinTech for cross-border payment processing.

A review of FinTech research

“…Dorfleitner et al (2017) introduce a small business lending function that uses an online invoice platform. Petrushenko et al (2018) point out that the transparent fee structures, quick account opening, and real-time updating of account information that FinTech companies provide are important for improving the quality of international money transfer services.…”

Impact of digitalization and the COVID-19 pandemic on the AML scenario: Data mining analysis for good governance

“…Thus, ICT effects on economic issues were developed in the following research. Tiutiunyk et al (2021b) cross-country and macroeconomic analysis on the assessment of the impact of digital transformation on macroeconomic stability for EU countries; Petroye et al (2020) effects of information security on the country's image; Małkowska et al (2021) -on the digitalization of society, digitalization of economy and business digitalization; Petrushenko et al (2018) the research, related with business activity regarding the role of FinTech companies in the system of crossborder money transfers in Ukraine. Danarahmanto et al (2020) consider developing the digital start-up company based on customer participation and innovations; Gallo et al (2019) -peculiarities of innovative trends in human resources management of the companies.…”

Illegal activities of financial intermediaries: A burden of trust crisis

“…Illegal activities of financial intermediaries, by their very nature, are sheltered from sight and therefore hard to identify, and indeed to measure and aggregate. Nevertheless, some attempts in the economics literature have been made to develop methods to measure informal activities (Boyko et al, 2014, Medina et al, 2018, Petrushenko et al, 2018, Levchenko et al, 2019, Yarovenko, 2020. Different authors have measured illicit financial flows in a variety of ways.…”