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According to Blom Invest Bank, since 2009, “remittances in MENA have constituted the largest source of external resource flows for developing MENA, accounting for 60% of total inflows in 2022”. It is clear that remittance flows play a critical role in the growth of the economy in MENA.
However, it also facilitates additional income streams for families of the sender to increase spending on essential goods and services, as well as, allowing the recipient family to invest in healthcare, education and build their assets.
Furthermore, Gulf countries’ total outgoing remittances are now higher than those of the US, with most of them going to some of the fastest-growing mobile money markets in the world: India, Pakistan, the Philippines, Bangladesh and Indonesia.
There is a clear need for remittances to not only be cheaper and faster but more practical and efficient for both the sender and receiver.
85% of fintechs in MENA operate in the payments, transfer and remittances sectors.
Main challenges of remittance flows
The traditional remittance channels have been slow, expensive, and inefficient. Before alternative remittance platforms came into play, it would involve the sender going to the bank, filling out paperwork, paying high fees, and waiting for extended periods of time for the money to be transferred. The recipient would then have to visit the bank branch to collect the funds, which would often take several days or even weeks.
Today, most modern platforms in the market take a more blended digital approach to remittances, however, the current deposit and ramp-on options available to customers hinder the usability and cost-effectiveness of the overall service.
Manual and traditional remittance processes slow down the money flow and contribute to a lethargic and lengthy process with various middlemen, which leads to delays and errors in transfers.
Moreover, international transfers are costly and are often the most significant barrier when it comes to remittances with high FX rates and transfer fees.
Simply put, it is a headache for all parties involved, but it doesn't have to be this way. This is where Open Banking comes in to offer a new way to transfer money across borders in the MENA region.
Remittances: Open Banking applied
Open Banking payments have enormous potential to revamp the remittance industry and revolutionize how money is sent and received in the region. HubPay is one of the companies spearheading innovation in the remittance industry via their partnership with Lean Technologies.
Hubpay customers no longer need to deal with numerous intermediaries, visit bank branches or add multiple beneficiaries when sending or receiving money. Users simply log in to the Hubpay app, connect their bank account and start topping up their wallet instantly, and send their funds across borders all, without ever leaving the app.
