Remittance FinTechs and the UAE
The growth of FinTechs, or technology enabled financial services, has skyrocketed in an attempt to eliminate the confines of traditional banking. According to The World Economic Forum,
“Two and a half billion people around the world are un- or underbanked.”
This is where FinTechs have come in, making financial services more accessible than ever before, especially to those who may be turned away by traditional banks.
A critical function served by Fintechs is micro-financing and remittance payment transactions. At present, the UAE’s 9 million population consists of 90% expatriates, making for a large international remittance market. According to Ken Research, the country employs much of its labor force from: India, Bangladesh, The Philipines, Pakistan, Indonesia, and more. Further, according to the Middle East Remittance Market Outlook Research Report:
“Inward remittance in UAE is expected to reach around $1,648 million in 2019; whereas outward remittance from UAE is expected to touch $28,207 million.”
Silicon Valley based FinTech Startup Ripple is gaining more traction in the realm of speedy cross-border remittance payments, and, according to Arabian Business, UAE Exchange, a major UAE remittance house, is seeking to close a deal with Ripple to help introduce real-time remittance payments utilizing blockchain technology.
“Blockchain is an electronic transactions-processing and archive system that allows parties to track information in a secure network with no need for third-party verification.”
In early February 2017, The National Bank of Abu Dhabi (“NBAD”), the largest bank of the Emirates, introduced real-time cross-border payments on the blockchain via Ripple, stating that Ripple would allow for near-instant delivery times, cutting of costs and transparency in the transaction process. The NBAD has significant presence in the Middle East and Asia and conducts transactions with: Malaysia, China, South Korea, Hong Kong and India, as mentioned by CryptoCoins News.
Jameel Ahmad, a Dubai-based VP for FXTM stated:
“Adopting bitcoin for remittance and forex business is where the industry is heading.”
Further, Ahmad stated that:
“The typical international money transfer requires a lot of steps for facilitation, and bitcoin streamlines that process.”
Due to such high volumes of remittance transactions in the region, a scalable solution for global payments consisting of low costs and reliability is critical. Perhaps Ripple’s services may just be that.