The latest World Bank figures reflect the upward trend shown by the remittance industry in 2017. An expert in the business, our COO, Sudhesh Giriyan was invited by Dubai Eye 103.8 on the Business Breakfast show to analyze the remittance industry’s current and future trends.
Listen to his interview or read excerpts from his interview with Malcom Taylor and Richard Dean
MT: Did you see outward money remittances from UAE rebounding last year?
SG: Yeah, UAE definitely been on a growth path. If you go by the central bank data which is published on a quarterly basis, UAE has been growing, I have kept an eye on the market and have seen that every quarter there was a jump of almost 2% to 3%. As per the data published by the UAE Central Bank last year the UAE crossed 161 billion dirhams which is about 44 billion dollars, so UAE has shown tremendous growth over the previous year.
MT: There is a report that UAE residents are not necessarily saving out of the feeling of well- being or because they have plenty of money in their pockets, but possibly the opposite; saving because of the insecurity of losing their job in the future. Would you have a sense on that?
SG: We need to look at this from 2 perspectives, the blue- collar segment and the white-collar segment. The blue-collar segment has their family living back home and their livelihood depends on the remittances that the people send from here so they necessarily need to send money home and when it comes to the white-collar they know that one day they will go back to their home countries so they always save to ensure that they have enough back home when they get back.
MT: What are the up and coming remittance currencies where is the money going, increasingly?
SG: Basically, in the last few years if you really see there’s been a surge in remittances going to Africa, countries like Kenya, Uganda, Ghana, Nigeria are really, really picking up. We have also have seen an increase to South Africa and obviously the European markets.
MT: I have come across many expats from Kenya, East Africa and South Africa here but according to reports most remittances are going to Nigeria, Senegal and Ghana. Are those remittance relating to trade more than actual residents sending money home?
SG: No, I wouldn’t believe so. These are all person to person remittances, sent primarily to families that we are talking about. It has nothing to do with trade remittances. These figure that World Bank has announced and even the UAE Central Bank numbers that I quoted earlier are all person to person remittances.
MT: Why is a blockchain set to transforms the industry? Convince me that blockchain is not just a trendy buzzword, but it is actually meaningful?
SG: There is a lot of talk about blockchain in the last couple of years, but if you really at look at statistics there is nothing significant that has happened so far especially in the remittance industry. We have heard of many instances where some of the operators in the blockchain space have spoken about great partnerships but when it comes to numbers, the numbers are not really great so far. But I wouldn’t say that Blockchain isn’t exciting, it is a very exciting technology and could have a great future going forward but will take a few years before we see a major attraction.
MT: Give us example that something it could be better than an existing technology that it going to make a difference to those people remitting money?
SG: The advantage of blockchain is that it will make sure that remittances are instant irrespective of the mode of transfer and it is also said that the cost of remittance would come down drastically with the adoption of blockchain.
MT: What about mobile phones and mobile phones based remittances it is a big thing in East Africa and Africa entirely. How has it been fairing in this region, is it increasing and is that a threat to your business?
SG: We haven’t seen any major traction in that space in this region as yet. All the great examples of mobile money that people quote are to do it on African markets like Kenya where m-Pesa is a household name today and market like Tanzania, Uganda, Ghana, Nigeria they are all markets on the termination side where money goes. The technology it has really taken off there where remittances land into mobile wallet but on an origination side, be it North America or Europe or the Middle East it has not really seen success.
MT: How do you look at Fintech start ups? The ones that are developing apps to do remittances, one example here in UAE Now money. So, how seriously do you take these fintech start-ups, What approach do you take? How do you look at them? Are they a threat to your business?
SG: We have never looked at Fintech companies as a threat or competition. I can quote an example, about a year and a half ago we partner with World Remit which is a very well-known online remittance player in the world. We joined hands with World Remit then and today they use more than 3 dozen countries in our network. We have partnered with them, we have never looked at them as a threat or competition, we joined hands with them so that World Remit can originate transactions and we can pay out in 3 dozen countries. So for fintech companies, we are looking at partnerships rather than looking at them as a threat, though they have an app, at the end of the day they still require a partner who can payout across the global markets.