This is the first numbers note for a while but, after an interesting day learning all about the latest in remittance markets, it's time to post one today.
I’ve often talked about the remittance markets and chaired a meeting today where SWIFT, Wells Fargo, Earthport, Citi, Western Union, ICICI Bank and more outlined the progress in this area.
The following stats give the state of the nation:
- There are around $375 billion of remittances sent around the world every year, up from $300 billion last year;
- Almost half of all remittances are sent through informal networks, including friends, family and non-electronic means such as Hawala;
- Banks have less than a quarter of the global remittance market movements of funds due to a lack of standards such as IBAN and BIC for account details, a lack of connectivity between bank systems cross-borders and a general opaqueness of charging structures and FX costs;
- This may be resolved through the SWIFT initiative to provide standards, where a pilot system has been running for a few months with 27 banks onboard, with plans for a full launch in April 2009;
- The main sending countries are the USA, Russia, Saudi and various European countries;
- The main receiving countries are India, China, Mexico and the Philippines;
- India is the largest receiving country for remittances, with $50 billion flowing inwards annually: 40% from the USA, 40% from the Gulf Cooperation Council (GCC) countries, 14% from Europe and only 6% from South-East Asia;
- In China, there are 25 million migrant workers according to official figures, although this is estimated to be up to 100 million workers unofficially;
- The Philippines receives around $16 billion of remittances each year, and this has been growing by over 20% year-on-year;
- The GCC accounts for much of the growth globally, but expect a 9% downturn this year due to shrinkage in the global economies;
- Although growth is slowing due to the global downturn in markets, there is still double-digit growth in remittances as workers are still ‘migrating’;
- The average cost of a US$200 transfer across borders involves fees and FX charges of 9.96% compared to only 6.21% on a remittance of US$500;
- The turnover for the remittance market is estimated to be $400 billion globally by 2011 and yet only 1% of this is forecast to be made via mobile transfers due to a lack of standards and co-ordinated response;
- The average time that Xoom measured for a remittance payment to move to a receiver’s account after leaving the clearing system from the sender’s account is 56 hours; and
- Due to increased competition and customer demand, banks are moving to faster forms of remittance payment from immediate to same day to non-urgent, and customers are happy to pay higher prices for the certainty of immediate and same day payments.
Loads more to add to this subject but I need to migrate myself now, as it is night-time here in Hong Kong and I am cream crackered as they say in my part of town ...
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...