Digital money transfers rise as outlook for UAE remittance industry improves
According to Rashed Al Ansari, Managing Director of Al Ansari Exchange, the digitization of the UAE’s remittance industry has continued to increase this year, with consumers increasingly relying on the convenience of mobile apps to send money at home amid the Covid-19 pandemic.
The money changer saw a 212% increase in its digital money transfer transactions from January to December of last year after it introduced a mobile app before the outbreak of the pandemic, Al Ansari said.
He did not disclose how much money was transferred using his app, or the company’s revenue, but said that Al Ansari Exchange had a 26% market share in total sendings from. funds in the United Arab Emirates, up from 22% at the start of 2020.
“In our case, we had a digital channel before the pandemic and the numbers have increased dramatically,” Al Ansari said. The National. “Now he contributes 14% of all remittances. I remember two years ago we were below 2%.
“The public was basically ready and they just needed some kind of push to have a reason to go digital. “
United Arab Emirates personal remittances fell 5%, or 8.3 billion Dh ($ 2.26 billion), year-on-year in 2020, according to the annual report of the Central Bank of the United Arab Emirates. Transfers via foreign exchange bureaus fell by Dh18.1 billion or 13.8%, while remittances by banks increased by Dh9.8 billion or 28.8%, the report adds.
Meanwhile, remittances to low- and middle-income countries fell 1.6% to $ 540 billion in 2020, but are expected to increase as the global economy recovers, the World Bank said on last month.
Despite the impact of Covd-19, the drop in remittances in 2020 was smaller than the 4.8% drop recorded during the 2009 global financial crisis, the Washington-based lender said in its memo on the migration and development.
“While Covid-19 still devastates families around the world, remittances continue to provide a vital lifeline to the poor and vulnerable,” said Michal Rutkowski, global director of global social protection and welfare practice. employment at the World Bank, in the report. “Supportive policy responses, as well as national social protection systems, must continue to include all communities, including migrants. “
The outlook for the UAE’s remittances sector is positive for the rest of the year and 2022, said Mr. Al Ansari.
While the World Bank predicts an increase in global remittance flows of 1.5% this year, Al Ansari Exchange expects its money transfer flows to increase by 2.6%, Mr. Al Ansari said. .
The UAE’s remittance industry in 2021 and 2022 will be boosted by events such as the upcoming Dubai 2020 exhibition and regulatory changes by the UAE government, including the new law that allows full foreign ownership of onshore businesses and offering citizenship to talented residents, he added. .
“We have the Expo coming up and that means a lot of tourism which will definitely add value to the economy,” Al Ansari said.
“[But] don’t forget that there is also the recently implemented law that foreign investors can own 100% of their businesses onshore – this is unprecedented for the UAE.
“I also think it will attract a lot of FDI [foreign direct investment] and new SMEs to establish themselves here in the United Arab Emirates. It will also have a direct impact on the recruitment of talent outside the UAE. So I think 2.6% growth… is the minimum we’re going to see. “
Foreign direct investment in the UAE jumped 44 percent to nearly $ 20 billion (73.45 billion dirhams) in 2020, the government said in May. The large flows to the United Arab Emirates come as part of the country’s plans to double the size of its economy to reach 3 trillion dirhams over the next decade.
“Traditionally, the second half [of the year] this is better, “Al Ansari said.” We have Eid [Al Adha], we have the Christmas holidays where there is a big pipe of remittances. These will therefore continue, in addition to all the initiatives that the government is putting in place to put the wheel of the economy back into operation better than before.
“I think the signs are positive as long as vaccinations in the UAE continue at this rate and also around the world. There will also be pent-up demand. I think 2022 and beyond will be a time of growth.”
Meanwhile, Al Ansari Exchange continues to experiment with blockchain technology with the aim of streamlining the money transfer process and reducing fees, the managing director said.
By using a blockchain-powered network, money transfer operators can offer users a much faster, cheaper, and more transparent service, technology research consultancy Juniper Research said in a 2019 report.
“This is an opportunity for traditional money transfer operators to change the way they operate; reorient their business models around the benefits of blockchain, ”said Juniper Research.
The use of blockchain “will make the trip [of money transfers] more efficient, ”said Mr. Al Ansari.
Al Ansari Exchange completed its first blockchain transaction in early 2020.
“We always find problems, rejections of transactions, which we are essentially in the process of fine-tuning. It has great potential for the future, ”said Mr. Al Ansari.
“Not all banks are part of blockchain technology. It’s still limited. Even if you are part of the blockchain, you have to have a separate bilateral agreement with this bank to comply with local regulations, so it’s not as easy as you might think – there are complications. “