A look at how digital technology is transforming the remittance industry
The United Nations observes June 16 as the International Day of Family Remittances. This year, the observance recognizes the more than 200 million migrant workers, women and men, who send money home to over 800 million family members.
Jamaican families, historically and culturally, have been the beneficiaries of the kindness and support of Jamaicans living overseas, through increasing remittance inflows.
Michael Howard, CEO of Victoria Mutual Building Society Money Transfer Services (VMTS), has shared how remittances have impacted our local economy, even during a pandemic, and how VMTS is working to improve convenience and access in the industry.
WHAT ARE REMITTANCES?
The International Monetary Fund defines remittances as any transfer of earnings, in the form of cash or goods, by migrant workers to support families in their home country. According to the IMF, remittances, which have been rapidly growing in recent years, represent the largest source of foreign income for many developing economies.
These funds unusually support a range of basic household needs, as well as provide opportunities for skills, education and entrepreneurship for families, leading to the development of communities and economies.
JAMAICAN ECONOMY STRENGTHENED BY REMITTANCES
Howard said that as the Diaspora population has increased in recent years, Jamaican migrants send back on average US$225 twice per week to subsidize low income and middle-income households.
“There are Jamaicans sending money home from across the world, to help families and loved ones. The money received is used for everyday uses that in turn builds the economy. The act of going to the grocery store, paying bills, going to the pharmacy, all contribute to the growth of our economy,” he said.
Howard added that culturally Jamaicans have always maintained a strong focus on ‘taking care of’ family members, particularly parents, grandparents, and children, which is reflected in the continued flow of remittances from migrants, even after living overseas for many years.
DRAMATIC INCREASE IN REMITTANCES DURING PANDEMIC
The World Bank predicted that remittances would decrease by 21 per cent in 2020 due to the COVID-19 pandemic; however, it subsequently recorded the exact opposite, noting a dramatic increase in remittances last year.
In 2020, the Bank reported a US$540 billion inflow of remittance to low-income and middle-income families around the world. Jamaica recorded US$2,459.44 billion, with the United States of America, United Kingdom, Canada and the Cayman Islands being the primary source countries with shares of 68.6 per cent, 11.0 per cent, 10.5 per cent and 5.9 per cent, respectively. Remittance inflows in Jamaica grew by 25 per cent between April and September 2020.
DIGITAL TECHNOLOGY TRANFORMING THE REMITTANCE INDUSTRY
In an article published about International Day of Family Remittances, the UN said one of the greatest catalysts for formal remittances during 2020 was the accelerated adoption of digital technology by migrant workers and their families.
The article said online and mobile digitalization have buoyed remittance flows during this period, hastened by lockdowns and social distancing rules that encouraged the move from informal channels and the use of cash for senders and recipients.
VMTS SEES 100% INCREASE IN DIRECT TO BANK TRANSACTIONS
VMTS’ Direct to Bank service, through collaboration with several remittance partners, offers customers easy access to funds, allowing them to make ATM withdrawals, shop online or to make purchases using a point-of-sale facility. In 2020, VMTS saw over 100 per cent increase in Direct to Bank transactions.
“We take this increase to mean that our customers trust us to deliver their funds safely and conveniently to their accounts,” Howard said.
He said VMTS is focused on continuing to drive efficiency through technology.
“VMTS will be focusing on increasing our presence through various channels and strengthening our services by building new relationships with new partners. While we expand locally and regionally, we will be ensuring that we have the right technology to facilitate new services and products, by keeping our members needs at the forefront,” Howard said.