Today in the rapidly evolving remittance industry, banks and MTOs are using technology platforms from money transfer software system providers such as RemitONE to empower their customers to send money when, where and how they want at highly competitive prices.

Several banks and MTOs are using RemitONE solutions to run their daily remittance operations efficiently; offer their customers the ability to execute transactions from branches, over the Internet, via SMS on mobile phones and by using prepaid card systems; and significantly cut costs.

The World Bank’s Payment Systems Development Group (PSDG) is using its experience and role in the international payment system community to lead an effort to address the G-8 request to enhance the efficiency of remittance markets and reduce costs.

In many cases, the cost to remittance senders is expensive relative to the often low incomes of the migrant workers, the amounts sent, and the income of the remittance receivers. Therefore, any reduction in remittance transfer prices would result in more money remaining with the migrants and their families, and would have a significant effect on the income levels of remittance families. The World Bank states that if the cost of sending remittances could be reduced by 5 percentage points relative to the value sent, remittance recipients in developing countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.

Reasons for the high remittance transfer fees are due to various factors including migrant difficulty in obtaining the required identification documents, lack of access to banking services, limited competition, regulations and underdeveloped financial infrastructure in some countries.

According to the World Bank, the average global cost for sending remittances through commercial banks was 12.4 percent in the first quarter of 2010 for a $200 transfer, making them the costliest channel, while the average cost at post offices and MTOs was the cheapest at 6.72 percent and 7.1 percent respectively.

The mean total cost of sending remittances to nations in Central Asia, Europe, Latin America and South Asia was lower than the average global cost. In parallel, the mean total cost of sending remittances to East Asia and the Pacific, Sub Saharan Africa and the MENA was higher than the global mean. On the other hand, transferring remittances to South Asia and Latin America was the least costly among all regions.

The World Bank notes that the costliest corridor for remittances was from Australia to Papua New Guinea at 43.32 percent for a $200 transfer, followed by Tanzania to Rwanda at 40 percent, while the cheapest corridor was from Singapore to Bangladesh at 4.48 percent followed by the UAE to Pakistan at 4.87 percent.

The latest data from the World Bank is testimony to the fact that leading Bangladeshi financial organisations such as Agrani Bank and Prime Bank operating in the Singapore-Bangladesh corridor are able to utilise money transfer technologies such as those provided by RemitONE to reduce their operational costs and generate profits and pass the savings on to their customers. Technology is making it possible for these banks to offer a variety of cash delivery services, including spot cash, to both the banked and the unbanked segments of the population, thereby ensuring customer loyalty and generating increased revenues due to customer experience. For example, Ali Hussain Prodhania, CEO of Agrani Exchange Singapore, says

“…We have witnessed a 25% increase in revenues within three months of adopting the (RemitONE) system…”

A key advantage of using these technology platforms is that these banks’ employees at the source, head-office and delivery branches are all empowered with instant access to business critical information to serve a multitude of customers within a short time-span, thereby ensuring enhanced customer experience.

The remittance industry is in the growth phase of the industry life-cycle and initiatives by the World Bank, awareness by International Association of Money Transfer Networks (IAMTN) and technology by RemitONE and others together are making it possible for remittance businesses to offer cheap money transfer rates to senders and receivers across the globe. Hopefully, the World Bank’s goal of helping remittance receivers worldwide receive an extra $16 billion a year will be realised soon.