The Remittance Market Surges to Almost $800 Billion in 2022: Opportunities for International Banking in Asia Pacific
In today’s globalized economy and transient and dynamic international labour market, cross-border transactions have been rapidly increasing in volume, with foreign-born individuals sending almost $800 billion worldwide in 2022. This represents a more than five-fold increase compared to the amount sent in 2000.
This surge in global remittances highlights the increasing demand for international banking services and underlines the need for financial players to adapt to this changing landscape to cater to the needs of their customers. With this market showing no signs of slowing down, banks and other financial institutions have a great opportunity to capitalize on this trend.
Understanding the Nuances of Cross-Border Banking in Asia Pacific
Recent data from 14,000+ interviews with banking customers across key markets in Asia from RFI Global shows that in the markets surveyed, over 70% of cross-border banking customers send money internationally, with this figure skyrocketing to 90% in Indonesia.
The increase in cross-border transactions can be attributed to the growing number of foreign-born individuals living and working abroad, who require remittance services to support their families or invest in their home countries. Financial institutions that offer affordable and efficient remittance services are well-positioned to capture a significant share of this market.
Another crucial driver of the rise in remittances is the growing importance of overseas investments. In markets such as Malaysia and Taiwan, overseas investments are the primary reason for cross-border transactions, and in Hong Kong and India, investing funds in another country is the second most popular reason for remittances. (See here). In China, purchasing goods and services overseas tops the list.
This highlights the importance of understanding local market nuances when it comes to developing an effective international banking strategy. By recognizing these differences and adapting offerings accordingly, financial institutions can better meet the unique needs and priorities of their customers in each market.
“Another crucial driver of the rise in remittances is the growing importance of overseas investments. In markets such as Malaysia and Taiwan, overseas investments are the primary reason for cross-border transactions, and in Hong Kong and India, investing funds in another country is the second most popular reason for remittances. In China, purchasing goods and services overseas tops the list.”
Key Recommendations for Banks in Asia Pacific
For example, banks looking to gain share in the remittance market in Malaysia and Taiwan may need to focus on providing cross-border investment services, while those targeting the Chinese market may need to develop partnerships with overseas merchants to facilitate cross-border payments for goods and services.
Moreover, with the increasing popularity of digital banking, financial institutions that can offer seamless, user-friendly online remittance services will be at a significant advantage. (See here.) By investing in technology and infrastructure to support digital transactions, banks can streamline the remittance process for their customers and reduce costs associated with traditional brick-and-mortar banking.
The surge in global remittances presents a significant opportunity for banks and other financial institutions to expand their international banking services. RFI Global supports financial institutions operating in this space by leverage our datasets and financial expertise to build the right strategies and capitalize on these trends to better meet the needs and preferences of customers in different markets.