Participants at GFR2013 declared it a success on Tuesday, saying it was the first time such a diverse mix of remittance industry players had sat down face to face to discuss what should be everyone’s ultimate goal – making migrant workers’ money go as far as possible.

Central bankers, micro-finance experts, diaspora organizations and even the world’s biggest money transfer company, called the quality of the discussions unprecedented.

“The forum that’s happening right here in Bangkok is the first time in years that we have actually seen some real solutions being discussed, real practical solutions,” said Barbara Span, Vice-President of Global Affairs at Western Union.

Span said that despite its size, Western Union shared many of the concerns voiced by smaller industry players during plenary sessions and panels in Bangkok.

“We are impacted as much if not more by the regulatory restrictions, the prohibitions against being able to work with microfinance institutions and getting the money the last mile to the receivers,” she said.
A wide range of topics had already been covered by the end of day two – including the impact of regulatory practices, the role of the G20 in bringing down prices and the impact of mobile transfers.
In Tuesday’s morning panel on market trends, innovations and opportunities, private sector players looked to the future – even mulling how they might make money if remittance-sending costs ever reached 0 percent.

In an afternoon panel on rural access, participants agreed it was all very well bringing new innovations to the countryside, but you had to make sure they fit clients’ needs, then market them properly and teach people how to use them.

For new players in upcoming areas like postal remittances, the forum has been a chance to see how they fit into the wider global remittances market.

Siritra Limruangrong, manager of Thailand Post’s Financial Market Division, said it was the first time that she had attended an international forum and that she had learned most from listening to private sector participants and bankers.

“I think that this forum deepened my understanding of remittances in the corporate world,” she said.
Veterans, meanwhile, described the GFR 2013 as a breath of fresh air.

Norbert Bielefeld from the World Savings’ Banks Institute said he stopped going to large remittances forums because they were, frankly, “boring, stuffed with providers repeating how good they were.”
“Here you have the opportunity to hear something different,” he said. “You can exchange ideas with other people and people listen to each other.”

GFR organizer and manager of IFAD’s Financing Facility for Remittances, Pedro de Vasconcelos, said he also believed the forum to be a success that would be shared by the most important people in the industry – migrant workers and their families.

'Whether we came from money transfer organizations, NGO's or central banks, what brought us all here was in essence money, but it’s really about people,” he said.

"Whether we're bringing down prices, getting remittances into the banking system or finding new ways to get them to rural areas, we owe it to migrants and their families back home to make every dollar count."

---

Sri Lanka rides post-war remittance boom

Remittances are pouring into Sri Lanka following the end of its civil war as migrant workers living abroad take a longer investment view on a homeland once wracked by violence, the country’s central bank chief said on Tuesday.

Annual remittance flows have jumped from $3.5 billion to more than $6 billion since the Tamil Tigers conceded defeat in the country’s 25-year civil war in 2009, Central Bank Governor Ajith Cabraal told GFR Update.

During the conflict, which claimed more than 70,000 lives and devastated Sri Lanka’s economy, migrants living abroad tended to send back just enough to cover their families’ living expenses, he said.
“Before, they thought: “Why should I send money to build a house when there are bombs going off all over?’” he said. “Now they think the opposite.”

By the end of the war, Sri Lanka's economy was buckling under a lack of foreign reserves, plummeting exports and a declining rupee. Now it’s bouncing back. Especially for more affluent Sri Lankans living abroad, that changes everything.

“These are people who have rekindled their interest in our country,” Cabraal said. “They would like to come back.” “I myself have two brothers in Australia who are waiting for their children to be big enough so that they can come back,” he said. “Because conditions are changing we are seeing a ‘brain gain’ taking place.”

Nearly 2 million Tamils are thought to live outside the island nation, equivalent to about a tenth of Sri Lanka’s population. While many are poor migrant workers, many are also educated Tamils working abroad in fields like technology.

Sri Lanka now taps international bond markets for financing, and has a total of about $3.5 billion of its outstanding debt in circulation as sovereign paper. In a global environment of low interest rates, foreign investors desperate for higher-yielding securities have even been buying the country’s local currency-denominated bonds, Cabraal said.

But Cabraal said that remittance flows from Sri Lankans investing back home were a preferable source of funds. “It’s foreign savings coming into the country, it’s promoting investment in the country,” he said. “It’s going to remain in the country, it’s the best type of investment that could take place.”

---

Western Union bets on digital

Western Union, the world’s biggest Money Transfer Operator, is betting on remittances increasingly going online and mobile and is already seeing the dividends, said the man charged with prepping WU for a day when cash may not be the undisputed king.

“A couple of years ago we realized the potential of online and decided to invest heavily as it would be getting much bigger,” Senior Vice President and General Manager for Western Union Digital, Khalid Fellahi, told GFR Update on Tuesday.

Unlike Western Union’s bread and butter cash transfers, digital transfers involve using tools like the internet and mobile phones and usually at least originate in a bank account. Western Union’s headquarters are in the U.S. state of Colorado. But San Francisco -- the global heartland of technology innovation -- was chosen for the location of Fellahi’s division.

After barely growing at first, digital transactions jumped 30 percent in 2011 and 40 percent in 2012. In the last quarter of 2012 they climbed 46 percent and in the first quarter of this year, a whopping 60 percent, Fellahi said.

In 2012, digital transfers brought in $150 million in revenues. That is peanuts compared to Western Union’s $5.7 billion dollars total revenue. But Fellahi said that it was crucial investors knew Western Union was keeping ahead of the curve.

“We were known as a cash to cash business,” said Fellahi. “A lot of people were wondering whether Western Union was going to be able to (prevail) in this area,” he said, adding: “ We are the fastest growing company in the (digital) market.”

---

The GFR2013 Family Album

---

Interview: The ‘Don’ of remittance finance

Donald F. Terry knows a thing or two about remittances -- He’s been living and breathing the subject for 20 years and has helped place a once obscure corner of economics on the global agenda. A consultant for Boston University on financial inclusion, remittances and microfinance, he was previously head of the Inter-American Development Bank’s private sector arm, the Multilateral Investment Fund, for 15 years. Before that he held senior posts in the U.S. Treasury Department and Congress. He spoke to GFR Update in Bangkok.

When and how did you become involved in the subject of remittances?
The Multilateral Investment Fund began operations in 1993, and our role was to support demonstration projects to help poor people become more productive -- micro finance, job training, etc ... I kept hearing the word remesas in Spanish, and finally asked some people what it meant. The answer came back that it was money from migrant workers, but it was "dirty", and we should avoid it.

What, or who made you first truly realize the importance of remittances?
I asked for a search of data, and was told there was none --remittances were left in the " errors and omissions" columns of Central Bank tables. There was only one person really doing any research --- Manuel Orozco, now at the Washington think-tank The Inter-American Dialogue. After talking with him, we decided to commission surveys in Latin America to get some idea of the amounts and costs of what was being sent home. The answers were astonishing.

What fascinates you most about this subject?
The people. Behind the enormous numbers are the people who send and receive -- remittance families -- the human face of globalization. Their dedication to their families transcends everything. Their willingness to work hard under difficult conditions underscores the lack of opportunity in their homeland, which drives their migration.

What is the best thing that's happened to the remittance market in the last 20 years?
It was ‘discovered’ hiding in plain view. It is great that remittances are now the subject of attention after so many years of being in the shadows. There is of course a problem -- the migrants themselves are often still in the shadows.

What are the single biggest obstacles to a better functioning remittance market?
Fear and ignorance. Technically, it is lack of competition as well as regulatory limits on the best use of mobile and digital technology to reach the last mile. But at the core, it is ignorance, because most financial institutions do not consider the poor to be worthwhile potential customers. Fear also, that somehow these $200 transfers might be terrorist finance or money laundering in disguise. The resulting government regulations are totally out of proportion to any realistic risk.

Will money ever flow freely across borders?
Yes. Money will someday flow freely because the technology to do so already exists and it will happen over the next decade. Regulators will have to adapt or become irrelevant.