Numbers, Part Twelve: Remittances

This is the first numbers note for a while but, after an interesting day learning all about the latest in remittance markets, it's time to post one today.

I’ve often talked about the remittance markets and chaired a meeting today where SWIFT, Wells Fargo, Earthport, Citi, Western Union, ICICI Bank and more outlined the progress in this area.

The following stats give the state of the nation:

• There are around $375 billion of remittances sent around the world every year, up from $300 billion last year;

• Almost half of all remittances are sent through informal networks, including friends, family and non-electronic means such as Hawala;
  

• Banks have less than a quarter of the global remittance market movements of funds due to a lack of standards such as IBAN and BIC for account details, a lack of connectivity between bank systems cross-borders and a general opaqueness of charging structures and FX costs;

• This may be resolved through the SWIFT initiative to provide standards, where a pilot system has been running for a few months with 27 banks onboard, with plans for a full launch in April 2009;

• The main sending countries are the USA, Russia, Saudi and various European countries;

• The main receiving countries are India, China, Mexico and the Philippines;

• India is the largest receiving country for remittances, with $50 billion flowing inwards annually: 40% from the USA, 40% from the Gulf Cooperation Council (GCC) countries, 14% from Europe and only 6% from South-East Asia;

• In China, there are 25 million migrant workers according to official figures, although this is estimated to be up to 100 million workers unofficially;

• The Philippines receives around $16 billion of remittances each year, and this has been growing by over 20% year-on-year;

• The GCC accounts for much of the growth globally, but expect a 9% downturn this year due to shrinkage in the global economies;

• Although growth is slowing due to the global downturn in markets, there is still double-digit growth in remittances as workers are still ‘migrating’;

• The average cost of a US$200 transfer across borders involves fees and FX charges of 9.96% compared to only 6.21% on a remittance of US$500;

• The turnover for the remittance market is estimated to be $400 billion globally by 2011 and yet only 1% of this is forecast to be made via mobile transfers due to a lack of standards and co-ordinated response;

• The average time that Xoom measured for a remittance payment to move to a receiver’s account after leaving the clearing system from the sender’s account is 56 hours; and

• Due to increased competition and customer demand, banks are moving to faster forms of remittance payment from immediate to same day to non-urgent, and customers are happy to pay higher prices for the certainty of immediate and same day payments.

Loads more to add to this subject but I need to migrate myself now, as it is night-time here in Hong Kong and I am cream crackered as they say in my part of town ...