Putting Personality in Personal Finances

Adding Personality to International Remittances

Why more needs to be done to explore the personal side of international transactions 

Marco Abele, co-CEO, OneFor

By Marco Abele, co-CEO of OneFor, developer of fast and affordable international payment solutions

In 2018, the United Kingdom saw almost £8 billion sent outside its economic borders via personal remittances. Yet despite leaps forward in smart fintech solutions, making international transfers is still often a costly, complex, and laborious task – not to mention a highly impersonal experience. But it doesn’t have to be. 

Recent estimations have stated that approximately 9.5 million people residing in the UK were born abroad, and many of those people still have close family overseas, including parents, partners, and children. These patterns are mirrored in Western Europe too, with millions of migrants working to put food on the table for family members separated by great distances and international borders. 

Of the £8 billion that left the UK in 2018, a staggering £3 billion of that sum was received by India. Other popular recipient nations included Kenya, Nigeria, and Zimbabwe, where remittance transactions from the UK make up a significant part of local GDP figures. There are several European nations that also rely heavily on these international transfers, with countries including Kosovo, Bosnia and Herzegovina all making up over 10% of their total GDP through remittances. 

With such a clear demand in the market for smooth and seamless international payments, why are most providers still significantly lacking in services? 

The gap

This makes it all the more troubling that, according to the UN, an average of 7% of international transfers are skimmed off by the service provider. Incumbent banks charge up to £40 minimum on international transfers – and then it takes another 48 hours before an individual’s family can access the money. This causes twice as many people to choose to physically transport money to its destination, despite all the disadvantages and risks that entails. 

Around 50% of people do use specialised services, such as border exchange offices to send money abroad. But even then, a shipment costs at least £5 and takes around six hours on average for families to receive. And once it arrives, the recipient still has to go to a counter to collect the funds, usually located in bigger cities, posing more accessibility issues for people based out in more rural locations. Hardly an instantaneous option.

What’s it worth? 

Research conducted by the United Nations shows that financial streams going into economically developing countries are worth a total as much as three times the value of all official development assistance and foreign direct investment combined. For context to that staggering claim, in 2018 alone, over 200 million migrant workers sent $689 billion back home to remittance reliant countries, of which $529 billion went to developing countries.

And we shouldn’t shy away from the human impact felt by these enormous economic forces. According to the President of the International Fund for Agricultural Development, Gilbert F. Houngbo, the relatively small amount of money that each migrant will send home accounts for an average of 60% of the household income in their home nation. Around three quarters of this money is used for essentials, such as food, medicine, education, and shelter. In tandem, approximately 85% of the money that migrants earn is spent in the country of work and residence. So why is there such hesitation from major banks, that ultimately hinder the process? 

Ethical economics 

What the statistics don’t show you, is the very real human impact of these remittance transactions; people caring for loved ones from afar, supporting children and relatives, paying for education, healthcare, food and more. These transactions, when using traditional banking solutions, are often slow, clinical and get hung up on bureaucratic processes. 

Whilst many native residents are accustomed to instant payments and the ability to split a bill after coffee or a dinner out with any number of mobile apps, the same luxuries aren’t afforded by people wanting to send money abroad – with transactions often having to be planned in advance and at a negative fiscal impact to the sender. 

But many of us can relate to situations where caring for others has needed to be instant. Time to plan hasn’t been afforded to us and urgent action has been required. This is where the system falls short. If your dependents, separated by thousands of kilometres, suddenly need financial support, you can often to stuck, held up by red tape. If your mother in Istanbul has a debt collector on her doorstep, you want to be able to pay immediately, and reassure her that everything will work out. And too often this simply wouldn’t be an option. But the situation doesn’t even have to be that dramatic – say a relative has run out of money paying at a café or petrol station – you want to be able to step in at a moment’s notice. 

As if caring from a great distance isn’t difficult enough already, the slow and strict nature of these transactions only worsen the emotional impacts to the people on both ends. 

Invest in change 

Migrant workers who continue to sacrifice personal luxuries to give their families a better life shouldn’t be penalised by outdated systems and practices. Too often, banking services capitalise on the fragile nature of such personal setups, or they become an afterthought. These people deserve better. 

The way we look at personal finances needs to change. With an ever-increasing technological prowess at our disposal, the world has become a much smaller and more fluid place, and it’s time for international financial services to catch up. Continued support for your family and community shouldn’t be a difficult thing, regardless of where you reside in the world. After all, money is about more than just a means of payment, it’s about a human connection; bonding, caring for others. 

It doesn’t take much imagination to conjure potential solutions that are faster, more affordable, and more efficient for all parties involved. With innovative and creative new attitudes towards money and the platforms of which it’s traded, we could make it just as easy to help your grandma get groceries in Barcelona as it is to get your round in at the pub. We just need the will to create and make the change.