Index Launch: Remittances Play a Powerful Role in Consumers’ Financial Planning
By : Nata Kesuma | Thursday, March 23 2023 - 19:28 IWST
The Western Union Company
INDUSTRY.co.id - Dubai, United Arab Emirates & Singapore & Casablanca, Morocco - As global populations navigate macroeconomic headwinds, consumers expect remittances to play an even stronger role in their current and future financial planning.
According to Western Union’s inaugural Global Money Transfer Index launched today, 64% of money transfer consumers send and/or receive money once a month or more. Over the next 12 months, 75% expect these remittances to increase.
The Global Money Transfer Index asks consumers how, when and why they use international money transfer capabilities today, as well as their expectations for tomorrow. Surveying 30,600 consumers in 20 countries across the Middle East, Africa and Asia Pacific, it is the largest consumer research published by a money transfer operator. The results bolster Western Union’s ‘Evolve 25’ strategy to combine high-value, accessible retail and digital financial services for all.
The Index shows that economic challenges such as higher global cost of living mean 79% of receiving consumers must ask for more money. For the same reason, 71% of senders agree they are transferring more than previously. This may contribute to why consumers state frequency and volume of remittances are primarily influenced by family requirements, despite common perception that remittances are driven by when salaries are received.
While family support is identified as the main purpose for remitting, consumers say transfers also play a strong role in future financial planning. Paying for education costs ranks second highest as a reason consumers remit money. Supporting business interests at home and saving for the future are cited by consumers as critical reasons too.
"We all felt a strong sense of relief as global economies went into post-pandemic recovery,” said Jean Claude Farah, President of Middle East and Asia Pacific at Western Union.
“However, macroeconomic conditions have since made the daily lives of people more challenging. Remittances are typically resilient because of their purpose. This makes it even more incumbent on money transfer providers to stay agile, supporting consumers on their journey. That is why today we have launched the Global Money Transfer Index – to share the voice of the consumer, how they view money movement today and, come tomorrow, what they will need.”
Maximizing opportunity during times of instability
Together with cost-of-living, consumers demonstrate that they keep a sharp eye on how their local currency performs back home. In a bid to maximise on opportunity, 68% send more money when the currency value falls in their receiving country. Sixty-seven percent of receivers agree that when currency values fall, they receive more money.
Currency fluctuations are front-of-mind for consumers. When asked about the future, 79% want money transfer brands to offer an additional service notifying them when relevant currency values begin to shift so they can plan transfers accordingly. Achieving better service and greater value also reflects in how consumers determine which money transfer brands to use. Criteria such as achieving the best exchange rate, ensuring lowest or no charges paid by receivers and speed of transfers sit in the top three.
Digital today, choice tomorrow.
Industry research shows that there are over five billion internet users in the world today, growing at an annual rate of 1.9%. This growth rate is even higher in developing economies.1 In sync with this, the Index highlights that over half of consumers (56%) want to use digital-only solutions for their money movement needs.
However, three billion people remain unconnected, so there is much more to do to achieve true digital equity. Of those who choose not to use digital transfer services at all, trust and customer experience are identified as top barriers—along with a preference to seek face-to-face interaction - among both senders and receivers.
When consumers look to the future, however, the picture changes. A much greater proportion (52%) want a choice in platforms when transferring or collecting. Bridging the digital with in-person experiences will significantly broaden the consumer financial ecosystem.
“Combining digital and physical experiences is the power behind Western Union’s strategy,” says Mohamed Touhami El Ouazzani, Head of Africa at Western Union.
“If we want to maximise financial inclusion, we must offer consumers diverse options when moving money. This is vital if we want to create long-lasting relationships with consumers and make meaningful impact in communities.”
Innovation sits high on consumers' agenda.
Consumer preferences will continue to spur innovation within the financial services industry. When asked how they would like remittances to evolve, the focus is on advances that will enable even greater convenience, better planning and inclusivity.
Senders and receivers are frustrated with repetitive and time-consuming paperwork (72%). In fact, 79% would prefer facial recognition/biometric technology for instant and reliable registration. Receivers also want their funds to be disbursed on a prepaid card or e-wallet that does not require a bank account (76%), as well as the option of receiving in different currencies (83%). Eighty-one percent are eager for integrated ‘super’ apps, allowing them to manage remittances alongside other financial products with ease.
“The progress of innovations within financial services has been astonishing,” Farah says.
“Whether in countries such as the Philippines, Australia, the UAE, Singapore or Saudi Arabia, central bank investments have created a vast array of safe and reliable choices for consumers. We all have a role to play in ensuring consumers are able to look after themselves, their families and their future with confidence and ease. By sharing what we have learnt in the Global Money Transfer Index and working in continuous collaboration with the financial services industry, we believe we can meet and serve people wherever they need us to be.” (ANTARA)