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THE
banks’ dominance as the main channels of remittance for
more than 8 million overseas Filipino workers (OFWs) is
under threat. A paper by
Moody’s Investor Service, published out of its Hong Kong
office Thursday, said the challenge comes from two of
the country’s wireless-phone providers, Globe
Telecommunications and Smart Communications. Their
wireless-phone services come with the added feature of
remittance via text messaging, or short messaging
service, where costs are definitely much lower than
those offered by the banks.
“The costs are lower than
bank wire services, particularly when the remittances
only involve small amounts, and provide a much more
convenient means of transfer, especially to
beneficiaries in rural and underdeveloped areas,”
Moody’s analysts, led by Richard Lung, said.
Launched only in 2004,
remittance through text services were seen to end the
dominant role of banks over the next 10 years, Lung
said. Besides heightened competition,
the changing demographics of immigration were also seen
as critical factors that help shape how much remittances
are actually sent home, and, by extension, “the
attractiveness and profitability of certain remittance
corridors.”
Moody’s noted the increasing influence
of technology-driven remitters as i-Remit, whose
low-cost fees are markedly below that of banks. Moody’s
said changes in host-country immigration policies impact
on OFWs deployment patterns and remittance flows.
If the host countries allow temporary
Filipino workers to become permanent residents, for
example, earnings flows meant for the purchase of
consumer durables in the Philippines end up being spent
in host countries instead, it was noted.
“These changes could make redundant the
proprietary operations of the banks in certain
remittance corridors. Those employing the more flexible,
but potentially less lucrative, strategy of linking with
overseas partners would be less affected,” the Moody’s
analysts said. The cited data
generated by the Asian Development Bank (ADB) in 2003
saying 90 percent of OFWs reported monthly income above
P15,000 or $280, and that 89 percent of them saved more
than $51. These make most OFWs
within the top 30 percent of the population by income
and savings.
ADB data also show 87 percent of
remittance recipients kept their savings in banks, and
that 70 percent of remitters maintained savings accounts
with banks in the Philippines.
However, less than 56 percent of the
working-age population had a deposit account at
end-2007, the ADB reported. J. Vallecera |
