With a rapid rate of innovation in the fintech, blockchain and related spaces, the global remittance industry saw a flurry of events in 2018. The industry will see even more activities in 2019. Here are the developments of 2018 that we found interesting at Xpress Money.
The World Bank, in its Migration and Development Brief, released on Dec. 8, 2018, projected that remittances to low-income and middle-income countries grew sharply in 2018 to reach $528 billion, nearly 11 percent higher than the figure recorded in 2017. The estimates showed that Europe and Central Asia showed the strongest growth, with both regions recording a growth of 20 percent. Remittances to low-income and middle-income countries had grown by nearly 8 percent in 2017. The World Bank estimated that global remittances, which includes outflows to high-income countries, was $689 billion in 2018.
For 2019, expectations are for moderate growth. Remittances to low-income and middle-income countries are expected to grow at a slower pace of 4 percent to $549 billion, while global remittances are expected to grow by 3.7 percent to $715 billion in 2019.
Remittance fees saw a slight drop in 2018. The World Bank’s global average remittance fee dropped from 7.13 percent in the first quarter of the year to 7.01 percent in the fourth quarter of 2018. The average fee was 6.99 percent in the second quarter and 6.94 percent in the third quarter. This meant that the global average fee continued to remain under the 8 percent mark since the third quarter of 2014.
According to data from the World Bank, South Asia, with an average fee of 5.25 percent throughout the year, was the lowest cost receiving region, while Sub-Saharan Africa, with an average fee of 9.11 percent throughout the year, was the most costly receiving region.
At Xpress Money, we continue to maintain a global average cost of 2 percent, which is below the United Nations’ SDG goal of 3 percent.
Fintech continues to transform the international remittance industry
According to Business Insider Intelligence, the digital remittance space will be worth $387 billion in 2023, up from $225 billion in 2018. The researchers say the projected growth here will be supported by “young, digital-savvy” customers, a group of consumer whose needs, Business Insider Intelligence say, will spark transformational change in the remittance industry.
Xpress Money sees the transformational opportunities presented by digital remittances and as such, has been innovating and forging partnerships to make it easier for the said young and digitally-savvy customers to access money transfer services.
Remittance Outlook for 2019
The Migration and Development Brief released by the World Bank expects moderate global growth owing to a slowdown in manufacturing activity and trade deceleration. This trend is likely to mirror across the remittance industry too. Remittances, by their very nature, are sensitive to external risks like fall in oil prices, restrictive migration policies, geopolitical risks and trade restrictions. The remittance industry can work towards mitigating potential risks but only time will tell what 2019 has in store for the remittance industry.
This post first appeared on the Xpress Money blog.