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  • Khalid Chami

The Ultimate Guide to Understanding How Technology is Changing Money Transfer Industry


With the unprecedented increase occurring in the remittance sector, the global organizations are looking forward to the technologies that will improve the efficiency, safety and ultimately would leave a positive impact of the cross-border payments.

This peer-to-peer money transfers across the cross-borders are known as remittances. These are an integral part of all communities across the globe, especially in developing countries where receiving funds matters a lot.

Remittances cross national boundaries, they cross currencies, and they also cross the financial institutions. And all of these barriers add up to an inefficient and expensive transaction for everyone.

Now, as we are aware that the movement of money from one country to another is slow and inefficient - the core cause being, the high fees for its remittances. Transferring money is an expensive task because there are limited connections between financial institutions and systems. Currently, we need to have a robust network to tie our dissimilar and isolated institutions, so that free flow of money can occur with ease from one country to the other. So this article will help you in understanding the importance of technology in the remittances.

Understanding remittances

A remittance usually refers to the transfer of money to a friend or family member residing in another country. Millions of people across the globe depend on this money. This peer-to-peer transfer of funds across the borders have proved to be the major contributing source towards the economy of many countries. The remittances constitute as the largest source of foreign exchange in developing countries since 2000, which is more than international aid.

Until now, the remittance meant waiting in line for long hours just to get money wired to pay bills, including the hefty fees charges.

UAE Remittance Industry Trends

The Emirates are set to drive future growth in the remittance industry. The latest World Bank Report clearly indicates that the UAE has climbed its way up, being included in the top 3 remittance sending nations in the world.

In the year 2014, the global remittance market was estimated at $582 billion.

The following figures clearly indicate how UAE is growing its contribution towards the development of the remittance industry :

· 13% of the global remittance was contributed by countries in the Middle East including both inward and outward remittance.

· Saudi Arabia and UAE hold 2nd and 6th place respectively among the top 10 remittance-sending countries in the world.

· 70% of the total remittance that is sent and received in the region is from the Kingdom of Saudi Arabia, and the United Arab Emirates (UAE).

· Gulf countries in the Middle East region have around 15 million foreign workers.

Thus this region stands as the third largest hub of migration in the world.


UAE Remittance Industry Outlook


According to the reports which were released by the UAE Market Research, this region has habitat the majority of emigrants and consequently, it has savored a rapid economic growth over the years. The reason behind this is due to its strong labor force, mainly being composed of emigrants. UAE Remittance market continues to flow with the international as well as the domestic remittances, which are usually constituted by the worker’s remittance outflow, business to business and personal remittances. Over the years expatriates in this country have played a significant role, thus placing it amongst the nations which are holding the key position while contributing towards the international remittance market. Wherein it has achieved an astounding growth rate if considered from 2011 to 2016.

In accordance with the UAE Remittance Industry Research Report, this industry has showcased a healthy growth till now, majorly owing to optimistic factors like:

Increasing number of foreign residents in the country.Amplifying infrastructure and developmental activities.And mushrooming of business sectors in this region.

Altogether the technological evolution resulting in an electronic mode of transfer to overrode the market has accounted for a major share in the worker's remittance outflow. Thus, during 2016, direct credit to bank account along with the introduction of online services became prominent in this market.

As per the UAE, Remittance Market Research Reports the international remittance market has long been a highly competitive market where the exchange houses often compete on the basis of the number of transactions, the volume of transactions, number of branches, services offered and many other associated factors. Currently, the most prominent exchange houses in UAE are UAE Exchange, Al Ansari Exchange, Al Fardan Exchange, and Sharaf Exchange.

Also, the introduction of crypto-currencies such as Bitcoin and Ethereum has resulted in a huge impact on the remittance industry worldwide. These currencies possess the potential to promote the rise of decentralization of money issuing and financial services. This ultimately leads to the creation of a tech-savvy industry that will concurrently move with the upcoming technological innovations. Considering UAE, these crypto-currencies need to be introduced with proper planning to overcome the uncertainties such as competing against banking and exchange house remittances. Now even though if these offers expensive and inconvenient services, they still delight the consumers as they handle the transfer of their money to bank accounts, to m-wallets or to beneficiaries for cash pick-up.

Therefore, the entrepreneurs addressing this market via crypto-currencies will have to overcome the following barriers which are given below :

· Enabling financial inclusion

· Internet access

· Technological literacy to spread the awareness of user-friendly ecosystem

· Liquidity issues

· The AML and CFT control so that a reliable system is generated to identify money laundering and terrorist financing cases.

As per the reports by the UAE Remittance Industry Research, various firms in UAE have already started replacing their current money remitters with the cryptocurrencies - thus surpassing the traditional way of carrying out remittances. This new currency is less complicated, real-time, less expensive, and user-friendly. It has also been analyzed that in spite of possessing the required assets, the market share, as well as the knowledge about the built-in ecosystem - the money remitters and exchange houses involved in this industry will lose the battle if re-designing of their businesses do not take place in the coming years. Thus, the firms which will cope up with these changes without any hesitation are expected to enjoy better chances towards a holistic progress. As a result, both the UAE remittance as well as the bill payment markets will witness a considerable growth in the near future and are anticipated to grow at a decent compound annual growth rate (CAGR) by 2021.

Considering the future insights for UAE Remittances Market, the overall market is envisaged to grow rapidly and account for massive revenue generation in the future. The following factors mentioned below have a prominent role to play in promoting the UAE Remittances Market :

· Amplification of employment opportunities due to infrastructure developmental activities linked to the World Expo to take place in 2020 in Dubai.

· Expansion of airports, the Etihad rail, air, and marine transportation systems, road networks in the country.

· Increase in internal migration.

· Booming of non-oil private sector businesses, and rising utility prices.

Emerging trends in the Remittance Market

We can not deny the fact that technology has been changing the workflow and all the procedures involved in the international money transfer industry. Nowadays systems are becoming more open which allows the integrations through API sections of technology to – automate, speed up as well as it enables safe, less risky and more efficient internal systems. The operations which were once handled with physical bills, bulky computer tasks, and human interventions are now being completed and replaced by the digital interfaces. And that is where fintech is making entry into the traditional international money transfer operations.

The Dh10 billion (US$2.72bn) per month remittance business is flourishing in the Emirates, and this offering the latest technology for workers is something that is becoming prominent in the firms that are battling for achieving the market dominance.

The Ministry of Labour's introduction of the wage protection system has made it mandatory that the foreign workers constituting 4 million population in UAE - to get paid on time and preferably through reliable electronic means rather than cash or cheques. This has driven the companies to innovate their products and services. One of the areas of focus on which the companies are working is - enabling cards to promote cashless remittances so that the employees can send the money with an ease to their loved ones back home. Firms and the UAE government has already started working on this and this would implement sooner.

To account to its exemplary growth Mr. Mohamed al Ansari, the chairman of the UAE's Foreign Exchange & Remittance Group said that - every month expatriates send about Dh10bn to their homes which accounts for an increase of 10 to 15 percent from last year and ultimately an increase of Dh1.5bn more per month.


The industry's move to include more than just basic offerings is occurring as more and more companies in the region are trying to capitalize on the growing demand for financial services from foreign workers. Previously, the workers used to often withdraw their money from the ATM and then wait in long queues at a financial firm like an exchange house until the teller could transfer their payments. In a bid to lessen all of these issues, the various organizations within the region are also taking initiatives. One such example is the Workers' Equity Holding and the money exchange house Al-Bader Exchange. They announced that they would be offering prepaid payroll cards to 50,000 migrant workers to ease the process for remitting money.

While similar sort of cards has been stirring out in recent years for employees. These cards enable them to link their salaries and make cash withdrawals or check account balances. Additionally, the upcoming cards over the next few months will also carry extra features such as the ability to top up accounts via mobile phone and automatically send money back to your near ones in abroad.

In order to chase the changing scenario, partnerships among various exchange houses and payment companies have been announced. One such similar partnership is between the Network International and the Al Fardan Exchange, which is one of the oldest exchange houses in the Emirates. They came up with card entitled as "e-money" which allows the workers to use an ATM network to remit money to more than 110 corresponding banks worldwide.

Furthermore, Emirates NBD without being left behind joined the fray and became the first bank in the UAE to offer the card on its network of ATMs which enabled the withdrawal of salary, balance inquiries, and money transfers.

With more innovation rolling in these prepaid salary cards it would also enhance the bill-paying option. Although the feature might not sound too novel, it is still relatively a new term for many workers in the Emirates who do not have or qualify for a bank account or a credit card. Organizations have been constantly working on these newer features and no doubt the sole objective behind all these still remains to be the increasing avenues through the revenues added by Mr.Imran Saeed, the vice president of business development for the Middle East and North Africa at TPS. It is the company which provides electronic payment services on more than 400,000 cards for workers.

Organizations such as TPS earn their business by providing technology and back-end support for salary cards which they provide to the likes of payroll firms and exchange houses. These companies then lease the cards out to the employers for a fee, which can add up in costs but they still require less labor and time required to distribute cash or cheques every month in worker camps.

The banks in UAE have already started offering the automated services and investing in technology to provide convenience, speed and lower charges to customers.

Going on to the extensiveness, the size of the remittance market is huge in UAE. According to an article in the Khaleej Times, the data provided by the Central bank, in Q4 of 2017 alone, the foreign workers remitted Dh43.2 billion out of UAE. Out of these India's share compromised of Dh14.8 billion or 34% of the total outflows. The emergence of Digital Banking has enabled the consumers to remit money in the most convenient and simpler way. As using online or mobile banking requires minimal fee or charges along with the easier application. The Quick Remit from Mashreq Platform is another great example of a technology which has been involved in the remittance. It ensures the customer's immediate account transfers at attractive exchange rates for those who wish to send money across borders with the more predictability and information backflow.

The future


The future of this industry is brightly illuminated on UAE, as the nation is leaving no stone unturned. It’s initiatives like hosting global events and projects are setting a milestone. Expo 2020, Etihad Rail and numerous other infrastructure development projects are also likely to give rise to abundant job opportunities and further attracting talent from across the globe. The Expo 2020, itself is held responsible to generate 2,77,000 jobs, over the next coming five years, which will directly influence the remittance industry. Additionally, the UAE government has been very keen over its advancements in technology and heading towards innovations. It has been giving affirmations to new mobile and electronic channels which are going to further, positively boost the industry. Moreover, the attractive tourism sector also majorly contributes to this mushrooming remittance industry and will continue to do so. Thus the Remittances Market in UAE, will burgeon and register massive revenues in the future.

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