Germany sent €22.3 billion in remittances in 2024, making it the fourth-largest sending country in the world behind the US, Saudi Arabia, and Switzerland. Almost none of that volume runs through the banks that German senders hold their primary accounts with. A new Thunes report puts the annual gross revenue captured by non-bank money transfer operators at roughly €1 billion, and frames the gap as an infrastructure problem rather than a demand problem. The report and a recent fireside chat with Abigail Slater at EFR Event #10 in Frankfurt are what got me thinking about this. You can read the full report here. The question worth asking: where is the value leaking, and what would it take to redirect it?
Where German banks lose the remittance customer
A typical sender opens their German banking app to send €200 to family in Kenya or the Philippines. Sending directly to an M-Pesa or GCash wallet is not an option. Even sending to a recipient's bank account in Turkey or Vietnam is slow and expensive through traditional correspondent rails. So the sender leaves the app, opens Wise or Remitly, and funds the transfer from the same German account they just closed out of. From that point on the bank is just the funding source. Everything that makes the transaction valuable, the FX margin, the fees, the data, the recurring customer relationship, sits with the MTO. Banks are still by far the most expensive option for international transfers, while digital MTOs operate at a fraction of that cost.
Mobile wallets and the new remittance corridor
The structural reason banks struggle to compete is that the receiving end of the market has moved. Account ownership in developing economies rose from 54% in 2011 to 71% in 2021, but most of that growth came through mobile wallets rather than bank accounts. bKash in Bangladesh, M-Pesa in Kenya, and GCash in the Philippines now function as the primary financial account for hundreds of millions of people. A German bank's correspondent rails are built for IBAN-to-IBAN transfers, not for wallet payouts. Each wallet ecosystem comes with its own API, compliance setup, and local regulatory profile, and settlement on traditional correspondent chains still runs two to three days. Maintaining bilateral relationships across the 140-plus markets where German diaspora communities send money is operationally unfeasible for any single bank. The corridors where demand is highest, including Turkey, the Balkans, and Southeast Asia, are also the corridors where bank infrastructure is least competitive.
Account-to-wallet payments, explained
The technical challenge has a name: account-to-wallet, or A2W. It sits next to the more familiar account-to-account (A2A) model that underpins SEPA and most domestic European payments. A2W means a payment originates from a bank account in one country and lands directly in a mobile wallet in another, without the sender or recipient needing to touch an MTO in the middle. To make A2W work at scale, three things have to come together. The first is reach into the wallet networks themselves, which requires a separate integration and licensing setup for each one. The second is FX and liquidity management, since the sender's bank holds euros and the recipient's wallet needs to credit Kenyan shillings or Philippine pesos at a transparent rate. The third is compliance, since AML and counter-terrorism financing requirements differ in every market. None of these are individually new problems. The shift is that they now have to work together inside a single transaction flow that a retail customer expects to complete in under a minute, on a phone, from inside their existing banking app.
