Saturday, 25 May 2024

Western Union: Asia-Pacific’s consumers plan money transfers ahead to counter rising cost of living

5 min read

 As global populations navigate macroeconomic challenges, consumers expect remittances to play an even stronger role in their current and future financial planning.

According to Western Union’s inaugural Global Money Transfer Index, 64% of global consumers send and/or receive money transfers at least once a month or more. Over the next 12 months, 75% expect these remittances to increase.

The Global Money Transfer Index asks consumers how, when and why they use international money transfer capabilities today, as well as their expectations for tomorrow. Surveying 30,600 consumers in 20 countries across the Middle East, Africa and Asia Pacific, it is the largest consumer research published by a money transfer operator. The results bolster Western Union’s ‘Evolve 25’ strategy to combine high-value, accessible retail and digital financial services for all.

In Asia-Pacific, the Index shows that economic challenges such as higher global cost of living mean 77% of receiving consumers must ask for more money. For the same reason, 71% of senders agree they are transferring more than previously. This may contribute to why consumers state frequency and volume of money transfers are primarily influenced by family requirements, despite common perception that they are aligned to when salaries are received.

While family support is identified as the main purpose for sending or receiving money, consumers say transfers also play a strong role in their future financial planning. Paying for education costs ranks second highest as a reason consumers remit money. Saving for the future and supporting business interests at home are cited by consumers as critical reasons too.

Jean Claude Farah, president of Middle East and Asia Pacific at Western Union said, "We all felt a strong sense of relief as global economies went into post-pandemic recovery”. “However, macroeconomic conditions have made our daily lives more challenging for many of us. Remittances are typically resilient because of their purpose. This makes it more incumbent on money transfer providers to agile and support consumers on their journey. That is why today we have launched the Global Money Transfer Index – to share the voice of the consumer, how they view money movement today, and come tomorrow, what they will need.”

Together with cost-of-living, consumers demonstrate that they keep a sharp eye on how their local currency performs back home. In a bid to maximise opportunity, 68% in Asia Pacific send more money when the currency value falls in their receiving country. Receivers in the region agree (69%) that when currency values fall, they receive more money.

Currency fluctuations are front-of-mind for consumers. When asked about the future, 78% want money transfer brands to offer an additional service notifying them when relevant currency values begin to shift so they can plan transfers accordingly. Achieving better service and greater value also reflects in how consumers determine which money transfer brands to use. Criteria such as achieving the best exchange rate, ensuring lowest or no charges paid by receivers and speed of transfers sit in the top three.

Industry research shows that there are over five billion internet users in the world today, growing at an annual rate of 1.9%. This growth rate is even higher in developing economies. The Index highlights that over half of Asia Pacific’s consumers (60%) currently prefer to use digital-only solutions for their money movement needs.

However, three billion people remain unconnected worldwide, so there is much more to do to achieve true digital equity. Of those who choose not to use digital transfer services at all, trust and customer experience are identified as top barriers—along with a preference to seek face-to-face interaction - among both senders and receivers.

When consumers look to the future, however, the picture changes. A much greater proportion (53%) want choice in platforms when transferring or collecting. Bridging the digital with in-person experiences will significantly broaden the consumer financial ecosystem.

Sohini Rajola, head of Asia Pacific at Western Union said, “In Asia Pacific, digital transformation is progressing quickly. Yet several industry studies estimate that over half of the region’s population remains unbanked or underbanked”. “Financial inclusion can only be achieved if we give consumers choice in digital and in-person platforms - so that everyone has an opportunity. This is pivotal. We want to help consumers with their daily finances, build long-term loyalty and make a meaningful impact across the region.”

Consumer preferences will continue to spur innovation within the financial services industry. When asked how they would like money transfers to evolve, the focus in Asia Pacific is on advances that will enable even greater convenience, better planning and inclusivity.

Senders and receivers are frustrated with repetitive and time-consuming paperwork (71%). In fact, 78% of senders would prefer facial recognition/biometric technology for instant and reliable registration. Receivers also want the ability for their funds to be disbursed on a prepaid card or e-wallet that does not require a bank account (74%), as well as the option of collecting in different currencies (80%). Consumers surveyed were also eager for integrated ‘super’ apps (79%), allowing them to manage remittances alongside other financial products with ease.

“The progress of innovations within financial services has been astonishing,” Farah said. “Whether in countries such as the Philippines, Australia or Singapore, central bank investments have created a vast array of safe and reliable choices for consumers. We all have a role to play in ensuring consumers are able to look after themselves, their families and their future with confidence and ease. By sharing what we have learnt in the Global Money Transfer Index and working in continuous collaboration with the financial services industry, we believe we can meet and serve people wherever they need us to be.”

Re-disseminated by The Asian Banker

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