How fintech start-ups are disrupting the remittances space in India

Remittances to India will grow 2.5% this year, up from 0.6% in 2014, reports Tech in Asia

India gains the most from its diaspora among all countries. The World Bank estimates that Indians abroad will send $72 billion home this year. China comes second with $64 billion in remittances, and the Philippines is third at $30 billion. Pakistan and Bangladesh also figure in the top 10.

Remittances to India will grow 2.5% this year, up from 0.6% in 2014. This is expected to rise further next year and contribute significantly to economic development.
 

But the cost of sending money home remains high, averaging 7.7% globally, according to the World Bank. The hidden costs in FX spread – the difference between an inter-bank currency conversion rate and the rate quoted to you by a bank or money transfer company – will thus eat away more than five billion dollars from the remittance money coming to India this year.

 

A number of start-ups are out to disrupt this space in different ways. Some are seeing quick traction too on the back of rising remittances to India and the Philippines.
 

Instarem, which got a licence to do remittances from Australia in November last year, saw its transfers to India cross a monthly volume of A$2 million ($1.43 million) in September. Last month it opened up new corridors from Australia to the Philippines, Indonesia, Sri Lanka, and Singapore. It aims to be in Vietnam and Bangladesh by the end of the year.
 

The main challenge such start-ups face is resistance from the incumbents – mainly the banks and big operators like Western Union and MoneyGram. Licences can be hard to get for the newbies.

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This is an excerpt from Tech in Asia. You can read the full article here.