The global remittance market started garnering significance when traders started travelling across continents. What began as an in-person delivery system called the ‘Hawala system’ has today evolved into a digital platform where the money is generated and transferred with or without any regulatory supervision. However, the most preferred and legal form of transferring money across the seven seas is still the banking network.
As per a report, the global remittance market accounted for USD 49.49 million in 2020. While another report predicts that the market size is expected to reach USD 42.46 billion in 2028. As per the World Bank, the remittance flow to some of the developing nations surpassed the sum of FDI and overseas development assistance. The World Bank has also observed that the remittance inflows rose in Latin America, the Caribbean, South Asia, the Middle East, and North Africa. Whereas the remittance flow fell for East Asia, the Pacific, Europe, Central Asia, and Sub-Saharan Africa.
The growth of the remittance market is attributed to the increasing number of talents migrating to developed or high GDP nations, the rising acceptance of digital transfer networks, ease of usability, reduced bureaucratic complexities and lower transaction fees. An increase in cross-border transactions through mobile-based payment platforms has further boosted the popularity of the international money transfer market. “The resilience of remittance flows is remarkable. Remittances are helping to meet families’ increased need for livelihood support,” said Dilip Ratha, lead author of the report on migration and remittances and head of KNOMAD.
Numerous banks across Asia have improved their remittance services to meet the rising demand. In fact, the World Bank has stated that inward remittance flow to South Asia has risen by about 5.2 percent in 2020 to USD 147 billion. It was further noted that the average cost of sending USD 200 to the South Asian region stood at 4.9 percent in the fourth quarter of 2020, the lowest among all the regions. Some of the lowest-cost corridors, originating in the GCC countries and Singapore, had costs below the SDG (Sustainable Development Goal) target of 3 percent owing to high volumes, competitive markets, and deployment of technology. But costs are well over 10 percent in the highest-cost corridors. In a 2020 report, it was estimated that remittances to Ho Chi Minh City, Vietnam, will reach about 5.5 billion USD, up 8% compared to 2019. Nguyen Minh Tam, Deputy General Director of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), said that remittances remitted through the Sacombank system in 2020 are expected to increase twice as much as in 2019. He attributed it to the incorporation of an API online payment system that created favorable conditions for customers to transfer the smallest amount multiple times.
A Vietnam-based remittance service provider called ‘Saigon Thuong Tin Bank Remittance Company Limited (Sacombank–SBR)’ has earned quite a notability for its premium services across Asia. Established in 2016 with an initial charter capital of 1 billion VND, Sacombank-SBR is linked with many remittance partners across continents and currently registers a charter capital of over 15 billion VND.
Sacombank-SBR is a 100% owned subsidiary of Sacombank – one of the 4 largest banks in Vietnam. During the Annual General Meeting of Shareholders for the fiscal year 2020 in Ho Chi Minh City, Nguyen Duc Thach Diem, General Director of Sacombank, announced that its total assets increased by 9 percent reaching VND 492,516 billion. The shareholder report has reported a 75.4 percent profit from Sacombank-SBR in FY2020. Sacombank-SBR bagged the ‘Excellence in Remittance Vietnam 2021’ and ‘Customer Satisfaction in Remittance Service Vietnam 2021’ awards from International Business Magazine, a Dubai-based business magazine publishing company.
International Business Magazine had an exclusive interaction with Tran Minh Khoa (pictured above), Chairman and General Director, Sacombank-SBR to understand the potential of the remittance market in Vietnam. Excerpts of the interview are below –
What are your views on the rise of remittance services among the citizens of Vietnam?
We believe that remittances are increasingly making very important contributions to the prosperity and development of the Vietnamese people. Due to this, there has been rising competition in remittance services every day. In the past, this service was simply seen as overseas Vietnamese transferring money to help relatives in Vietnam as gifts. However, today it expands to many purposes, such as supporting relatives for economic development, foreign workers sending money to their families to accumulate and stabilize their lives, and many more. The youth accounts for a major portion of the Vietnamese population. Many have moved abroad for study and work-related purposes. This large chunk of the population holds great potential for Vietnam’s remittance service. The remittance service is keeping pace with the rapidly changing demands and has moved on to the digitization trend of the financial and banking market.
Earlier, it used to take a few days to send money to Vietnam but now it only takes less than a minute. Relatives can transfer money to Vietnam via technology with full censorship, accuracy and safety.
What are the benefits enjoyed by the customers through your various remittance services?
We supply our customers with multiple choices of service with the highest quality. Beneficiaries can easily receive money, quickly – accurately – securely – at the most reasonable fees and with the highest quality of service. Therefore, when customers use our services, we believe they have experienced our above qualities and advantages. The above characteristics are also our commitments to partners and customers from senders – agents – recipients in a complete money transfer process. We strictly comply with international standards and adhere to Vietnam’s legal frame works.
– For remittance service to bank account: Customers will enjoy the experience of remittance sending transactions from abroad to Vietnam within 60 seconds/ one transaction. We have showcased the prowess of our system where the money gets transferred into the beneficiaries’ account in Vietnam in just 30 seconds after the sender hits the send button abroad.
– For over-the-counter remittance service: Sacombank is one of the four largest banks in Vietnam with respect to the network size. Beneficiaries go to any transaction points in Sacombank’s network or Vietnamese banks and they just provide the given code to receive money at the transaction points in the most convenient way. In addition, beneficiaries can receive money at any time through Sacombank’s ATMs via SMS codes from mobile phones without going to the bank offices.
– For home delivery service: Home delivery staffs are professional, dedicated, and much experienced in the home delivery service. Every year, we regularly organize training for home delivery staff on customer care skills, risk safety, prevention of money laundering, and others. Therefore, customers who receive money will often feel attentive, enthusiastic, and safe with the staff.
Kindly list out a few initiatives taken for the employees as well as the customers during the Covid-19 pandemic.
The steady growth of all of our financial indicators is a feat in itself during the Covid-19 pandemic. Sales, revenues and profits have grown to an all-time high with a marked improvement in our productivity. With timely vaccinations and technological innovations, we have safeguarded our employees. Even during the peak of the Covid-19 outbreak, Sacombank-SBR continued to make improvements and investments in technological solutions. Employees were able to handle their daily responsibilities while working from home. The work from home culture has not hampered our work efficiency or service quality. Our customers have conveyed their satisfaction and gratitude for the smooth business operations and the automation of the money transfer process at Sacombank-SBR.
Article by Ujal Nair
