Banks finally are developing standards and collaborating to capitalize on the $15 billion revenue opportunity presented by the growing workers’ remittances market.
By Orla O'Sullivan
Bank Systems & Technology
August 22, 2008
See related sidebar: ICICI Captures Top Share of Remittance Market by Catering to Migrant Workers' Diverse Requirements
It's a $430 billion market, and banks have finally decided they want a real part of it. About 40 percent of the global funds transmitted annually by migrant workers to their home countries emanate from the U.S., yet banks here process only about 3 percent of world remittances, according to SWIFT estimates. That's poor even compared with banks' overall poor share (30 percent or less) of the global remittance pie.
And the pie is growing -- by various estimates ranging from 8 percent to 30 percent a year -- as business goes ever more global. Today's 200 million migrant workers represent $15 billion in annual remittance revenue, SWIFT estimates.
That's an opportunity largely conceded to money transfer operators (MTOs), such as Englewood, Colo.-based Western Union (whose business actually is facilitated by banks, which allow their branches to be used as a distribution network for Western Union's profits). Telcos, credit card companies and PayPal are also said to be eyeing the remittance opportunity. [Read more]
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