Western Union’s ‘Global Money Transfer Index’ surveyed 30,600 consumers in 20 countries across the Middle East, Africa, and Asia Pacific to better understand consumers’ international money transfer preferences currently, and in the future, as they navigate global headwinds.
The Money Transfer Index revealed that 64 per cent of global money transfer consumers send or receive money at least once per month. Across the next 12 months, 75 per cent expect these types of remittances to increase. The research also took a focus of Africa to understand remittance trends on the continent, and how it is expected to continue rising.
Remittances across Africa
The index surveyed five key markets in Africa: South Africa, Kenya, Nigeria, Senegal and Morocco. The research found that 62 per cent of Africa’s consumers receive money transfers at least once a month or more.
Fifty-nine per cent send funds across borders at the same rate. For the upcoming year, more than three-quarters of Africa’s receivers (78 per cent) expect remittances to increase.
The Global Money Transfer Index shows that economic challenges such as higher global cost of living mean 81 per cent of receiving consumers (compared to 79 per cent globally) across the African continent are asking senders for more money.
For the same reason, 72 per cent of African senders (71 per cent globally) agree they are sending more than previously. This may contribute to why consumers state frequency and volume of remittances are primarily influenced by family requirements, despite the common perception that remittances are driven by when salaries are received.
Mohamed Touhami el Ouazzani, head of Africa at Western Union, explained his view from the findings. He said: “The Index tells us that the cost-of-living squeeze across Africa means consumers are relying on money transfers as their daily lives have become more challenging. As consumers tell us that the remittances they receive will need to increase, it is imperative for money transfer providers to stay agile, and support consumers on their journey.”
Currency values fall, remittances rise
Consumers also demonstrated that they pay attention to how their local currency performs back home. In a bid to maximise opportunity, 67 per cent of consumers in Africa (compared to 68 per cent globally) send more money when the currency value falls in their receiving country. Sixty-five per cent of receivers across the region agree that when currency values fall, they receive more money.
Currency fluctuations are front-of-mind for consumers. When asked about the future, 84 per cent (79 per cent globally) of senders 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 the lowest or no charges paid by receivers and speed of transfers make up the top three.
Digital today, choice tomorrow
There are over five billion internet users in the world today, growing at an annual rate of 1.9 per cent. This growth rate is also higher in developing economies. The Index highlights that over half (58 per cent) of Africa’s consumers want to use digital-only solutions for their money movement needs.
Despite these facts, three billion people remain unconnected, showing there is more to do to achieve digital equity. Of those who choose not to use digital transfer services at all, trust and customer experience were identified as top barriers among both senders and receivers.
When looking into the future, almost half 49 per cent of consumers in Africa (52 per cent globally), want a choice in platforms when transferring or collecting. Bridging the digital with in-person experiences will significantly broaden the consumer finance ecosystem.
Ouazzani said: “Combining digital and physical experiences is the power behind Western Union’s strategy. If we want to maximise financial inclusion, we must offer consumers diverse options when moving money. This is vital if we want to create long-lasting relationships with consumers and make meaningful impact in communities.”
This Week’s Market Commentary from David Jones, Chief Market Strategist at Capital.com