The world is moving at breakneck speed, and it’s time our money is kept up. The positive benefits of instituting a sophisticated, robust, secure, and global system of digital remittances are obvious and the demand is great.
From 1990 to 2015, the global rate of extreme poverty dropped an average of one full percentage point a year, from 36% to 10%. A key factor in the decline was the $4.7 trillion in remittances to low and middle-income countries. In 2019, the total value of remittances sent by about 200 million migrant workers to their home countries was a record $706 million. Even through the pandemic, the rate held steady, which is a huge testament to the resilience and fortitude of the migrant workforce.
But how much money was extracted in these exchanges? How much was sifted off the top to the detriment of the recipient families and countries? How much more social impact could these monies have if they weren’t so depleted in the legacy system? And more, does the legacy system understand the cultures and behaviors of how other countries access monies?
It’s estimated that, globally, 800 million people receive remittances to pay for things like food, utilities, and education, and yet the methods for doing so have not been made easy. The answer to the question, “How do I send money back home?” is different in every country you ask it. With the preponderance of smartphones in the hands of both the middle and lower classes, it’s time for a change to a more unified way of utilizing mobile wallets as a way of accepting digital remittances.
MONEY MUST BE INCLUSIVE
The positive social impact of digital remittances are:
- Promotes financial inclusion by allowing people without access to traditional banking to participate in the global economy
- Facilitates international trade and commerce, boosting economic growth and job creation
- Increases access to basic goods and services, particularly in developing countries
- Improves quality of life through access to remittances from family members abroad
These positive factors alone create an almost inarguable position in promoting the evolution and utilization of digital remittances. It’s a technology whose time has come, and its implementation is way overdue. What must happen with all stakeholders in cross-border payments is to deliver on one of its greatest promises: lower costs for transactions and more money received. Currently, an intricate web of regulatory requirements both slows the transaction and increases the cost. This must be remedied as it is an influence of the legacy systems, perhaps as they fend off the threat of obsolescence. New fintech companies are looking at workarounds, but nobody wants to diminish secure transfers.
This why all stakeholders must be motivated by the great promise of the reward of digital remittances: the positive social impact it will have on middle and lower-income earners, increased trade, and potentially, political stability.
The gatekeepers must also understand the pandemic shifts in populations from urban cities to rural communities, where access to traditional exchangers of currencies is less existent. To not be unaware of this dynamic is to be a fly in the ointment to the health of the global economy.
CONNECTIVITY IS PROSPERITY
Connectivity is the currency of the day, and digital remittances thrive in the connected world. Most importantly, in this connected world, the power goes to the consumer, not the provider, and there are plenty of fintech companies willing and able to step up and deliver to the power of the consumer. It would be wise for all players to engage and create a truly global and equitable system that increases transparency and security while reducing costs. A system that is uniform, easy to use, access, and benefit from. It must also be a system that insulates itself against fraud and cybercrime and promotes financial opportunity via access to digital financial services.
But the promise is great. And we need to keep our eyes on the prize: Greater social prosperity, diminished economic inequality, and even a shot at that illusive concept of world peace.
Howard Davidson is the CMO at AlmondFinTech.
Almond FinTech is a blockchain-based funds transfer network connecting financial institutions globally. Almond’s infrastructure is built for speed, security, and accessibility, enabling users worldwide to send money across borders using their existing financial institutions. Additionally, Almond uses a combination of psychometric and financial data to provide fast, low-risk, ethical loans to communities with unconventional or limited credit histories.
Howard Davidson is the CMO at AlmondFinTech.
Almond FinTech is a blockchain-based funds transfer network connecting financial institutions globally. Almond’s infrastructure is built for speed, security, and accessibility, enabling users worldwide to send money across borders using their existing financial institutions. Additionally, Almond uses a combination of psychometric and financial data to provide fast, low-risk, ethical loans to communities with unconventional or limited credit histories.
