Dubai: Banks in the UAE want a bigger piece of the outward remittance action, which in the first six months of last year saw an outflow of Dh80.96 billion.
“Traditionally, banks were not large players in the individual remittance market - which was largely controlled by exchange houses,” said Rohit Garg, Head of Business Banking, FX & Remittances, Mashreq Bank. “That was the time when you went to queue up physically with cash in hand to send money.
“[But] the innovation in money transfer in UAE has been driven by banks who have played the role of “challengers” in the past five years or so.”
Quick to credit
Mashreq on Wednesday said it has become the first bank in the UAE to offer “same-day credit facility” to more than 30 countries, including the Philippines, the UK, Australia and Canada. This is done through an alliance with NIUM, which specializes in cross-border digital payments.
Remittances to India and Pakistan have had instant credit facility since 2017.
According to data from UAE Central Bank, the outward remittance market was at Dh164.4 billion in 2017 and then shot up to Dh169.2 billion in 2018. During the first-half of 2019, outward remittances were at Dh80.96 billion. Banks have been pushing hard with direct remit facilities for expats, and thus trying to narrow the lead currency exchange houses have built up over the years.
But that shouldn’t be the sole priority for banks.
They need to be on their guard against “fintech” businesses, some of whom promise instant transfers and without charging as much as banks and exchange houses.
“New technology in the financial sector is helping improve customer experience and driving efficiencies through innovation… which in turn is reducing costs,” said Garg. “These are being passed on to consumers who are benefitting from this change in terms of reduced fees.
“This positive change in the personal remittance space is being driven by banks and fintech companies, individually and in a collaborative manner through partnerships.
“I would therefore agree that the fintech is driving costs down - and Mashreq is leveraging the digital technology to the benefit of our consumers. Of course, fintechs are doing the same.
“Today, thanks to innovation driven by banks, you can send money instantly, on your mobile device, at good exchange rates and a very small fee – or even no fee. The customer experience, convenience, and cost is at a completely different place now.”