The market for remittances has significantly picked up and the last quarter may see some interesting trends Image Credit: Shutterstock

Thanks to the country’s sizeable expatriate population, remittance outflows from the UAE have always been substantial. According to UAE Central Bank figures, Dh165 billion was remitted from the Emirates in 2019, second only to the US, which sent out Dh250 billion. While India has always accounted for the lion’s share of UAE remittances, pandemic-induced job losses saw the amount of money being remitted there from the Gulf state decline by 15.6 per cent over 2020.

However, remittances are set to play a key role in India’s economic recovery. “Remittances have always been vital to India’s economy, with it being the world’s top recipient of remittances as per the World Bank,” says Rashed A Al Ansari, CEO of Al Ansari Exchange.

Economic recovery

“The remittance sector will play an essential role in the nation’s recovery from the pandemic. This is because the money being sent to the country from its nationals living abroad is mainly used by families to improve their standard of living and access essential services such as education, healthcare and housing.”

A spokesperson for LuLu Exchange says, “While it is true that the numbers have decreased due to the pandemic, high-value transactions have picked up on account of the rupee weakening significantly. This means the general reduction in volume is primarily due to drop of remittance transactions of small amounts, and the higher value transactions have largely managed to balance the sector. We estimate an overall drop of 10-12 per cent for the sector in 2021.

“On the bright side, the market has significantly picked up and the last quarter may see some interesting trends, with Expo 2020 and other aspects of the UAE economy further strengthening. We are confident that between our extensive branch network and our upgraded mobile app LuLu Money, we will be able to record positive growth in the second half, which will prop up our overall performance in 2021.”

Remittances have always been vital to India’s economy, with it being the world’s top recipient of remittances as per the World Bank.

- Rashed A Al Ansari, CEO of Al Ansari Exchange

Al Ansari says the UAE government has a strategic plan in place to drive economic growth across the country, while helping the resurgence of remittance sector.

“With Expo 2020 Dubai approaching and the amendments to the commercial companies’ law, which now allows 100 per cent foreign ownership onshore, the local remittance and money exchange sector is expected to witness an estimated 2.4 per cent increase this year. This projection is based on the positive national indicators and developments, including the easing of travel restrictions, rise in the number of vaccinated people, an increase in consumer spending alongside the resumption of key domestic projects and investment initiatives.”

He adds that the industry is in talks with UAE regulatory to introduce a national programme that aims to make cashless payments more seamless, cost-effective and accessible to all sectors of the economy, especially to those with thin margins such as the remittance industry.

Tech-driven growth

For Al Ansari, technology and ongoing investment into digital tools will be crucial means of not only meeting and exceeding the requirements of tomorrow’s customers but also a key differentiator for becoming a market leader as a younger, more tech-savvy generation enters the workforce.

“With the impact of the pandemic proving this assertion, we expect to see increased digital transformation activities within the industry in 2021 and beyond. Over the years, even before the pandemic, we have always spoken about the advantages to be gained from digitalisation. It is a well-known fact that revenue growth in the coming years will depend on digital offerings and operations, meaning early adopters will have a competitive edge.”

It’s a similar story at LuLu. “The number of users on our app has been consistently recording double digit growth figures, and we remain committed to our vision to increase the volume of transactions through the app and increasing our market share through a hybrid approach.”