Bangladesh has seen a significant increase in the value of inward remittances over the last year with over US$8 billion flowing into the country between July 2009 and March 2010. This represents an increase of nearly 18% over the corresponding 2008-9 period, a sign that the global economy is gradually beginning to recover turmoil.
For countries such as Bangladesh, remittances from its expatriate communities are a valuable source of income to many residents, especially those living in rural areas and this increase in remittance flows will be gladly welcomed by many communities. However Bangladeshis living overseas may still be put off by the often high charges that Banks and Money Transfer Operators place on money transfers which means that not all of their money makes it to Bangladesh. Furthermore, many of their family members and loved ones may not have access to a bank account which creates an additional difficulty in them actually receiving the money.
However there is a new hope in sight in the form of mobile phone money transfers. Under this system funds can be transferred to the beneficiary’s mobile phone and the money can be collected or used in a variety of different ways.
International money transfer comparison website www.sendmoneyhome.org has collaborated with money transfer software systems provider RemitONE to investigate the scope and the potential of the mobile money market and to find out how increasing numbers of money transfer businesses are opting to develop these channels. RemitONE is the world’s leading provider of software systems for the money transfer markets, providing companies access to the latest cutting edge remittance platforms. SendMoneyHome has been hailed as the ‘benchmark’ money transfer comparison site by Martin Lewis and allows its 50,000 monthly visitors to compare costs, and ultimately save money, when sending money overseas.
The mobile phone platform has already seen phenomenal success in the African market, particularly in Kenya, and is now gaining increasing providence in Bangladesh and the rest of the Indian subcontinent. It is estimated that over 1 million Bangladeshis live and work abroad and the vast majority of these will regularly send money back to their loved ones in Bangladesh.
According to Bangladesh’s Expatriate Welfare Minister Mr. Khondker Mosharraf Hossain, the World Bank is supporting Bangladesh’s effort to introduce remittance transfer through mobile phones in order to make the delivery faster and cheaper. In order to help reduce the high remittance transfer costs that leading Money Transfer Organisations (MTOs) and banks charge the struggling migrant workers who send money back home to families, the World Bank has agreed to provide financial assistance to Bangladesh in setting up a mobile remittance system whereby the recipient can be sent an SMS on their mobile phone which they can then cash at specially designed Automated Teller Machines.
RemitONE has recently launched its Mobile Remittance Module (MRM) which allows banks, MTOs, Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs) to offer their customers mobile based money transfer services. It is hoped that Money Transfer Operators that service the Bangladeshi market will strive to make these services available to their users to enable a lower cost, more efficient remittance service.
If remittances flows to Bangladesh continue to grow in the same vein then within 2 years they should account for well over US$10 billion of revenue for the country. It has become increasingly important for both the sender and recipient to be able to maximise the value of their remittance both in terms of cost and speed, which is something that mobile phone technology, such as the platform provided by RemitONE, is able to do.
It has been estimated that there are close to 55 million mobile phone users in Bangladesh which is nearly one third of the population. Comparatively only around 19 million people, or 13%, of the population have access to a bank account which could make receiving remittance payments very difficult. Therefore by being able to utilise their mobile phones to receive remittance payments from loved ones working overseas remittance flows into Bangladesh could be dramatically increased which would provide a huge number of benefits to the local population, particularly in rural regions. With more money available to them spending and investment can increase and communities developed solely through having a mobile phone.
It has been proven that Microfinance has incredible success in helping communities and their residents thrive, mobile phone based remittance has the potential to be an additional tool in which microfinance can be delivered to the population and ensure that affected Bangladeshis can use their remittance to spend money in local stores, start business, develop social infrastructure projects and co-operate with each other to deliver the best for their community.
ADAM CREED, Director of Sendmoneyhome is our guest blogger.