Remittance business enters new frontier

Financial institutions may be drawn to the low-risk, fee-generating nature of remittances, but must change the way they approach the business in order to capture market share.

Never regarded as the most glamorous banking activity, the appeal of the remittance business has grown in the post-Lehman environment, thanks in part to the sector’s resilient capital flows and steady revenues. The resulting heady mix of local banks, postal services, telcos and money transfer operators MTOs are jostling for business in Asia-Pacific, sometimes competing, sometimes cooperating. New technology, strategies and alliances are unfolding as companies look for new ways to tap into the large migrant capital flows.

Crucially for banks still smarting from the credit crunch, remittances also generate relatively risk-free fee income, hence the interest from international banks. The stability and size of remittance flows are also...

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