To fully digitize remittances, we need to build and educate

This blog post are our CEO’s, Leon Isaacs, speaking notes from the 16th June, 2020 International Day of Family Remittances event ‘Building Resilience in Times of Crisis‘ organized by IFAD. Leon spoke during the session on ‘Digitalization of remittance: Towards the full coverage of the last mile.’

It is great to be on this webinar to celebrate the sacrifices and achievements of people who migrate.

I must say that, like many, I have been saying for years that digital is the only way to go to achieve SDG 10.c. The current manual remittance processes are inefficient and expensive, but they are often the only choice that people have available.

The crisis has done a lot of things to shift usage towards digital which is encouraging, but:

1. The way that digital is measured by the traditional companies is that digital only has to be at one end of the transaction – that is not truly digital.
2. In many receive markets we simply do not yet have sufficient infrastructure to offer digital remittances. We need to be able to offer more options for terminating remittances digitally but to do that we need physical infrastructure to be in place and a strong domestic digital payment system.

In some cases financial support will be needed to put mobile and internet where it currently is not. In others, it will require regulatory changes – there are a significant number of countries where MNOs are not allowed to offer mobile money for international remittance transactions.

Even where it is allowed, help will be required to encourage businesses to go to the remote and sparsely populated rural areas that need the most help.

In any case, more products and services are required to help link remittances to financial inclusion. Products, such as insurance or savings, that do more than transfer money would really help.

Above all, we need to understand why between a half and three-quarters of all remittances are not in any way digital. We need to better understand what can be done to overcome the fears of digital for those who could but do not send/receive digitally. We know, from previous DMAG research, that people are frightened of on-line scams, have a lack of access to digital services (through being unbanked) and have a lack of awareness about digital services. But we need more research on users of remittances and more demand-side research in general.

Above all though, right now we need education for users and receivers.  This can be made using a number of tools including both online and offline, which can be developed and shared as a partnership between diaspora groups, RSPs and governments. If we can help people to understand how digital services work, how to mitigate risks and the advantages these services bring then we will exponentially increase their use.

Many things need to happen but a focus on building and educating will help to leverage the progress that has been made so far on digitalisation.

We have an opportunity – let’s seize it.