Overseas Remittance Services in India

Introduction

Over the recent years, India has seen a massive increase in the number of people going abroad for work or study. With either of these activities requiring a series of money transfers and paperwork, sending and receiving funds across borders has always been a concern for the people going abroad. In order to make things more convenient and affordable, many international remittance firms offer services that help seamlessly transfer funds from one country to another. But what makes this task challenging for individuals is the fact that the complexities of different currencies and banking systems means that sending money from one country to another is completely different from a domestic transfer. It is neither as simple, nor as quick as its domestic counterpart, and deals with a constantly changing exchange rate, combined with other factors such as the presence of multiple banks with different policies.

The World Bank figures suggest that the total remittances sent in 2016 were above the $530 billion mark and have grown at a CAGR of 10.4% since 2000, representing a significant global services market. The average cost for senders of remittances in Q3 2017 was 7.21% of the total principal sent, which follows a trend of declining costs. This means that the average cost of international remittance has been steadily declining over the years and the service is becoming more affordable, which is a crucial factor for the customers. Costs have been falling as a result of healthier competition and due to pressure from the G20 and the UN, who are targeting an average cost to consumer of 5% and 3% respectively.

Business Situation:

• Understand the reasons for undertaking the brands services and map customer expectations
• Identify close competitors in the business landscape

Finding Facts:

• Reasons to prefer client brand over other means
• Hierarchy (based on ease) of various options available for customers to transfer money
• Triggers that support/boost customers to opt for visiting their retail to make transactions
• Understand employee interacting with customers – their profile, needs and reasons for opting for brand

Solutions Suggested:

• Pen portrait of individual needs that lead to select the client brand
• Exhaustive list of reasons to consider money transfer over banks

Outcome:

• Led to better customer understanding which lead to improvement in cross-selling
• Device triggers that would beat close competitors.

Our Understanding & Suggestions:

For a country like India, which has a large overseas population, individuals sending money to their loved ones overseas or back home is very common. And the price sensitivity of Indians makes it crucial for firms providing such services to ensure low fees and ease of use, since many labourers and workers in different world markets also use these services to send money to their families in India, and usually have just the basic education available. This is one of the reasons why bodies like the G20 and UN are pressurising firms to lower the costs of remittances for users, which is placing its main players under increased scrutiny toward their prices. Considering that banks charge the highest prices, one would expect them to feel the most pressure from this movement, but banks are diversified organizations with many other sources of revenue. International payments is not a core service for a bank, compared to a Money Transfer Operator, which is their entire raison d’être.

Given that India was the country with the largest amount of personal remittances received in the year 2018, at ? 78 billion and has been growing ever since, the money transfer market holds immense potential. The only question is whether firms are able to capitalise on it by providing competitive and affordable prices, security, ease of use, and eventually gaining the trust of their customers.