New delivery channels for remittances: Where do the opportunities lie? How will new technologies change the face of this rapidly expanding market?

Abstract

This paper explores one of the areas that is attracting the highest level of interest in the remittances and payments market: the potential for new technologies to change the structure of the industry, and the challenges and opportunities that this presents. The paper places the current development in context by explaining just why remittances are important and why they are attracting the interest of a variety of businesses. It progresses to focus on the needs of the consumer and compares those with the needs of businesses that wish to operate in the remittances space. A gap analysis helps to identify where technology can provide solutions. The paper then looks in some detail at three main technology offerings: online, prepaid cards and mobile. It relates current market experience and case studies against the needs of consumers and reaches a number of conclusions around each option. The paper shows that each technology option has a number of key areas that will have to be addressed before their use by consumers becomes widespread. The paper concludes that, despite the widespread attraction of new technologies to address some of the inefficiencies of the remittance market, they do not spell the end of cash-to-cash remittances, and new entrants would do well to try to understand why the existing remittance companies have managed to dominate the market at the expense of banks and other types of providers.