How is the market for international remittance services in the Philippines split between commercial banks as a whole and international remittance service providers (Western Union, MoneyGram, Xoom, TransferWise, SCI and BitWire-- all of which are collectively known as financial technology, or FinTech companies)?
Hello! Thank you for your Wonder request on how the market for International Remittance Services in the Philippines is split between Commercial Banks and International Remittance Service Providers. The short answer is Commercial Banks and International Remittance Service Providers process 91.7% and 8.3% of total International Remittance respectively. This report will also include emerging trends and market predictions pertaining to Philippines' International Remittance Services. All values are in USD. Below, you will find a deep dive to my findings.
International Remittance in November 2016 amounted to $2.4 billion, bringing the Total International Remittance for 2016 to $28.5 billion. This is a significant amount that constitutes to a tenth of the nation's GDP. Commercial Banks manage 91.7% of International Remittance, processing $2.2 billion out of the market's monthly $2.4 billion. On the other hand, International Remittance Service Providers process 9.3% of total overseas remittance, providing a monthly $0.2 billion.
GROWTH OF INTERNATIONAL REMITTANCE
International Remittance is expected to grow to $36 billion by 2019. This growth is attributed to the increase in the total number of overseas Filippino workers and their respective disposable incomes. Another contributing factor is improved financial connectivity of people through both online sources and brick and mortar remittance centers. Remittance from the US, Saudi Arabia, UAE, Singapore, UK, Japan, Qatar, Kuwait, Hong Kong and Germany are strong contributors, with the total remittance sent from these respective countries amounting to 80% of International Remittance, bolstered by incomes of overseas workers in the US and the Middle East.
Although most International Remittance Services still utilize Commercial Institutions, the FinTech industry in this regard is expected to grow in the coming years. The FinTech Transaction Value currently amounts to $5,495m in 2017, with Digital Payments holding a total transaction value of $5,486m. FinTech Transaction Value expected to show an annual growth rate (CAGR 2017-2021) of 19.0 %, resulting in the total amount of US$11,020m in 2021. With the rise of FinTech and Digital Payments, some platforms can directly substitute Commercial Banks in providing International Remittance Services in the Philippines. Cryptocurrency may also hold some relevance for International Remittance Services in the long run.
In conclusion, Commercial Banks and International Remittance Service Providers process 91.7% and 8.3% of total International Remittance respectively. With more Filippinos venturing overseas for better work opportunities, as well as FinTech advances in Digital Payments, we can expect transactions and investments in Overseas Remittance technology to rise in future years.
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