International Day of Family Remittances – comment from 7 leading money transfer experts
Now in its second year, the 16th of June has been proclaimed by the UN as the International Day of Family Remittances (IDFR). The objective of the IDFR is “to recognise and raise global awareness of the fundamental contribution made by migrant workers to the wellbeing of their families and communities back home, and to the sustainable development of their countries of origin.”
According to figures from the World Bank, more than £400bn is transferred between family members overseas each year, many of which are in urgent need. With humanitarian crises affecting many parts of the developing world, and greater access to wealth and technology elsewhere, this figure is only likely to increase in 2016. As a key date in the remittance industry, UK payments company, Secure Trading, recently gathered some of the most influential figures in money transfer to share their perspectives on the most important industry developments and trends, with the following also available for interview.
Jens Bader, Secure Trading CCO
“For many people who regularly send payments to family members abroad, it is the most important thing they do each week. Small payments can quite literally be the difference between life and death – buying food, shelter and medicine for family members in less fortunate or desperate situations. Unfortunately, for something as important as family remittance, many people would just as rather send money through illegal and unregulated means as opposed to the proper channels. Others still send money by post, which is quite remarkable in this day and age.
“Things are changing quickly though. Technology always disrupts laborious incumbents, just as Uber took on the taxi industry. There’s a huge opportunity for companies to break into remittance and make the experience much better for users, for the benefit of many developing economies and billions of people.”
Dominic Thorncroft, Chairman of the Association of UK Payments Institutions
“When people can’t send money home, to where it’s needed most, the results can be tragic. Whether there are transfer delays due to technical issues, or corruption within unregulated firms, the results are the same. Real people suffer when things goes wrong.
“Payments are inherently personal and none more so than family remittance. Perhaps this is why the industry is has changed so little within the last 15 years. Many customers are unwilling or unable to switch to digital platforms, preferring to stick to what they know, which is likely cash-to-cash transfers.”
Leon Isaacs, Developing Markets Associates CEO
“Posting money is fine for £5 in a birthday card, not so much for larger international transfers. It’s only good value for money if the cash gets where it’s intended, which is rarely the case. That said, regulated money remittance companies, which offer far more security, also have their flaws.
“95 percent of international transfers today are still cash to cash, and the costs of managing agents remain the biggest to the end user. In an age where nearly all of us have a smartphone, access to the internet and a bank account, you would expect technology to be able to streamline the process and cut costs. If there is to be a digital revolution, the big questions revolve around how can we put the customer experience at the heart of the industry. How we can educate them to alternative payment methods and change existing, longstanding behaviours.
Dora Ziambra, Head of Business Development at Azimo
“Digital money transfer is the new kid on the block, designed for an age where we do almost everything by mobile and web.
“The act of sending money home is an emotional journey which relies on trust. This is a challenge for digital transfers as people inherently trust what they can see and feel. Giving and receiving cash in hand instils this trust immediately, whereas digital alternatives are having to work hard to earn it.
“There is no doubt that tech is changing remittance and, in next five years, transfers will be more digital, social and mobile, giving the consumer and much better user experience.”
Mustafa Al Bassam, Secure Trading security advisor
“Blockchain technology is widely expected to have a huge impact on financial services. Indeed, the concept of a secure, decentralised system of payments with no central bank sounds tailor-made for money remittance. It would make the entire process of sending money abroad much simpler. There would be no red tape, users wouldn’t need to trust a manging agent, or even a banking system, and the transparent nature of blockchain would put an end to fraud in an industry renowned for cowboys.
“Blockchain may not impact the remittance industry for another five to ten years but, once it does, it may change the landscape forever.”
Marcel Roelants, BitPay EMEA General Manager
“When it comes to remittance, banks are snoozing. They are slow and expensive, they don’t understand local markets, can’t connect the pieces involved, and don’t offer a good service. The train has left the station and I don’t think they will be able to get on board in time, unlike many other digital services.
“Bitcoin, for example, should be able to turn the world of remittance upside down. The beauty of bitcoin is that it’s a traceable transaction at a much lower cost. It could make sending money as simple as sending an email. It’s just a case of how we get here from the red tape world of banks.”
Aamer Abedi, Chief Marketing Officer, RemitONE
“Every company in money transfer is moving online and to mobile, away from cash. The sky is the limit from a tech perspective. Even in its earliest stages, remittance is already a trillion dollar industry, which just needs to be better regulated. I believe that will happen sooner rather than later, perhaps with the formation of an alliance similar to the star alliance for airlines, the ‘money transfer alliance’. It’s needed soon because, in the next five years, we will see countless new entrants, disruptive tech, and better solutions.”