- Amount of cash from the UAE sent home through personal remittances goes up by 4.8bn UAE dirham
- Several major economies, such as India and the US, are popular destinations, according to central bank report
- “There will be tough competition between exchange houses and banks… the personal interaction with the customer will be a thing of the past”, argues analyst
The amount of cash sent from a major Middle Eastern economy to other countries has risen substantially, recent figures show.
Personal remittances from the United Arab Emirates (UAE) saw a rise of 3% in 2018 when compared to the previous year.
This represented a rise of 4.8bn dirham, which is the UAE’s currency. In total, this means remittances had an overall value of Dh169.2bn last year.
In a report released by the central bank of the UAE, it was also revealed that there was a country-by-country split in the amount of cash transferred.
India was the most popular destination for UAE-based remittances, with 38.1% of overall payments made to the country.
A number of reasons were offered for this, including the high presence of Indian citizens living in the UAE for work.
The Indian rupee has also gone down in value again the UAE’s dirham in recent months, which may have accounted for the development in part.
Other popular nations for UAE-based cross-border payments included Pakistan, Bangladesh and Egypt, suggesting that there is an Asian and North African focus to the expat workforce in the country.
Western nations which made the list included the US, which accounted for 3.9% of outward personal payments, and the UK, which took 3.7%.
The report also pointed out that the traditional facilitator of remittances, the bank, was now losing ground.
While banks were responsible for Dh42.7bn of outward remittances in 2016, they were only responsible for Dh40.3bn last year – leaving exchange houses to service the remaining demand.
The UAE is beginning to see a spike in the number of digital service providers who are helping to enable payments and transfers to happen more effectively.
Noor Bank, for example, has capitalised on the clear demand for India-friendly remittance services by partnering with the ICICI Bank in India.
Now, Noor Bank clients will be able to make internet or smartphone-based banking transactions which are fast and effective.
Market watchers said that this trend was a significant part of the remittance services scene in the country.
Rajiv Raipancholia, who serves as Treasurer of the Foreign Exchange & Remittance Group – a not for profit which works to bring together firms on the UAE’s remittances scene – said that the arrival of technologies like these will also be a problem for banks.
“Such technologies have increased the market share of exchange houses versus banks”, he said.
“There will be tough competition between exchange houses and banks… the personal interaction with the customer will be a thing of the past”, he added.
Learn more about the state of the remittances industry across the world by checking out our magazine page.
