Remittances: The Evolving Competitive Environment

MicroSave's Policy Brief 3 examines the various facets of remittance product offerings, different remittance models, agent economics, client protection, and the way forward. It reviews the progress of the business correspondent model in the context of urban environments and increasing competition. Consumer pull and economics have led to remittance products becoming a prime focus for an increasing number of business correspondence network managers (BCNMs) and agents. Banks and BCNMs have developed three approaches to remittances, namely Direct to Core, Account to Account Transfer, and interbank transfers. The Brief discusses emerging trends in remittance market dynamics such as entry of new players, increasing competition and pricing differentials, entry barriers for agents, agent commissions, and technology. It highlights the need for financial education and marketing at national and operational levels. Recommendations include:

• Banks should encourage product diversification to create a viable business case for agents and a substantially improved customer value proposition;
• Banks should ensure transparency and fairness in pricing of products and services offered through their business correspondent networks;
• BCNMs should measure and manage the satisfaction of their agents to ensure loyalty and reduce churn.