Outbound remittance – The medium, the biases, and the near future
by Kaustuv Ghosh, Senior Vice President and Product Evangelist Matchmove Pay
Transferring money across borders is an act of social significance. This author would like to propose that remittance itself is a communications medium with the characteristics of network, dissemination, content, transport and influence. There are two principal actors- the remitter and the beneficiary. The beneficiary has been at the center of most conventional narratives(Ratha and Mohapatra; Acosta, Fajnzylber and Lopez; Gupta, Pattillo, and Wagh. 2007.). While outbound remittance communities are analyzed too, they have been studied within a developmental framework. It may be easy to place these individuals as anonymous workers surrounded by affluence. Their role is seen to be to send money, inasmuch as the role of the beneficiary is to receive money. The choices of consumerism may apply to them within limits. This tends to bias the medium of remittance along both space and time, hard-won privileges for many. Space-time bias(see Menahem, 2004) in this case does not create monopolies (Innis, initially in 1964, quoted in the new edition in 2008) but does tend to restrict the role of and choice available to the remitting individual in the entire process. This is outmoded in an age of open communications and global transactions; it also tends to prevent the kind of exponential growth in financial inclusion that would benefit all stakeholders of cross-border money movement.
“There is a sense of separation in the roles they play while performing outbound remittance, even while remittance has all the characteristics of a medium”
Why do people remit? Tan (2006) points to five non-exclusive motivations specifically in the case of Filipino migrants, who make up a large percentage of the migrant workforce in Singapore. These reinforce long-understood notions of motivations to remit. These are namely, altruism, payment of an obligation, investment or portfolio choice, risk aversion and returns to remittance. (Tan, 2006). However, there is a clear difference between what one might refer to as conventional consumer needs and the above-mentioned motivations for outbound remittance. Like most other literature in this matter, the remitters are not seen in the same frame as, say, consumers of electronic media, social media, and traditional consumer packaged goods. There is a sense of separation in the roles they play while performing outbound remittance, even while remittance has all the characteristics of a medium. Yet it is not impossible to consider that increasing wages and time spent in developed, urban ecosystems may have already changed the way they look at themselves and their participatory place in a consumerist society. There is an opportunity here to conduct more in-depth research and that may be the subject of a future paper. The twin factors of income and location provide foreign workers access to technology, most often mobile technology. Perhaps this aspect has yet to be considered in scholarly work in some detail if so, that is understandable as mobile remittances are a recent phenomenon. It is the argument of this author that as consumers of mobile technology, the space-time bias applied to remitting foreign workers will change and that will fundamentally disrupt the industry.
“they have to face a narrow time window, restricted physical space, and limitations in forex rates”
Foreign workers, as those who carry out conventionally regarded blue-collar work are called, are constrained by very limited choices today. They have to find their way to crowded remittance counters in a handful of malls far away from their places of work. The only time such an opportunity is available to them is a weekend when forex markets are closed. Thus they have to face a narrow time window, restricted physical space, and limitations in forex rates. (One might draw parallels with tightly controlled television monopolies from a few decades ago). Observational research shows that there is some incentivisation based competition-mostly around fees, limited differentiation in forex rates(albeit when markets are closed) and culturally familiar cues(such as the name of a particular region in the Philippines may be associated with some shops). The material used to advertise to and incentivize remitting individuals is quite straightforward. There is some cultural appeal through the names of the outbound remittance outlets; there is familiarity with the brand names of recipient country banks; promoters “work the crowd” by handing out leaflets and carrying placards through the crowded corridors of Lucky Plaza announcing offers and better exchange rates. Foreign workers seem to move in groups in these surroundings and enter a remittance shop together. Whether there are group or bulk discounts, is unclear. But while this is a very personal, high touch interaction, the remitters are engaging with the industry under a severe lack of flexibility. At the same time, there is enough anecdotal and visual evidence to demonstrate widespread use of smartphones among migrant workers. This is further supported by the very recent increase in the number of mobile remittance companies. In a visit to a well-known weekend remittance hub, the author witnessed a significant number of visitors signing for a mobile remittance service. It is reasonable to argue that there is a visible, albeit very early, an indication of a shift in bias. The migrant workers who sign on to such services, no longer need to visit hubs specifically to remit. With outbound remittance services accessible anywhere and anytime during the week, the effectiveness of in-store offers, as well as store location advantage, is reduced. At the same time, it is possible to create a different benefit set based on ubiquity and the convenience of live forex rates. In other words, remittance as a medium is undergoing change and it’s embedded biases are subject to change as well.
Logically, as the time and space bias towards the remitter shifts, individual brands with consumer empathy may emerge. They will have a greater advantage compared to traditional players. The user engagement process, appeal to subcultural traits, use of societal influencers, cross-selling other migrant-centric services would assume great importance. Foregoing fees or subsidizing costs can work as interim or seasonal measures. It is possible to predict a vigorous competition among mobile remittance brands on the same lines as the contest between broadcast media and Internet brands in various markets. Given the speed at which new technologies are deployed today, it is inevitable that obsolescence will overcome some early movers while others will exit this area. Those who will dominate outbound remittance in the long-term are likely to treat remitters as consumers, complete with all the privileges and choices of customers of a networked enterprise. For example, it will be possible for individuals sending money to retain some control over how the money is used. They will be able to add on other benefits in addition to money. Better customer care practices including multi-lingual and cultural empathy will come in. The medium will evolve and the biases will shift. Then, as today, enlightened regulators and policymakers will continue to protect the interests of the consumer while enabling healthy competition.
- Innis, Harold A . “The Bias of Communication:with a new introduction by Alexander John Watson”. University of Toronto Pres, 2008.
- Blondheim, Menahem. 2004. “Discovering The Significance of Communication”: Harold Adams Innis as Social Constructivist”. Canadian Journal Of Communication. Volume 29, Number 2.
- Sanket. November 26, 2007. “Increasing the Macro-economic impact of remittances on development” Development Prospects Group, The World Bank, Washington D.C.
- Acosta, Pablo; Fajnzylber, Pablo; Lopez, J. Humberto. 2007. “The Impact of Remittances on Poverty and Human Capital : Evidence from Latin American Household Surveys”. Policy Research Working Paper; No. 4247. World Bank, Washington, DC.
- Gupta, Sanjeev; Pattillo, Catherine; Wagh, Smita. February 2007. “Impact of Remittances on Development and Poverty in sub-Saharan Africa”. IMF Working Paper
- Tan, Edita. July 2006. “Overseas Filipino’s Remittance Behaviour”. University of Philippines School of Economics. Published as UPSE Discussion Paper No. 2006-03, July 2006.