The number of migrant workers is increasing on a global scale. Although the average amount of money these workers send back home to their families and communities is small, the volume of international remittances amounts to approximately $260 billion per year. For some countries this exceeds the amount of international development aid.
Today most of these remittances are however characterized by high costs and high risks for both the originator and beneficiary. This is mainly due to the fact that it has not been possible until now to integrate remittances flows into the formal financial system.
In order to maximize the benefits from remittances, private and public initiatives need to be better aligned. The challenge for policymakers and the financial sector is to encourage flows via the formal financial system thereby fostering economic development and bringing access to a larger number of people to complementary banking services.
Proximity banks - embodied by savings, retail and postal savings banks – are committed to fostering financial access with geographical and product outreach. They are retail, regional and responsible and pursue a commitment to financial outreach both geographically – with broad distribution networks and in terms of products, which they tailor to local needs. In short, they are ideally placed to mobilise remittances payments and by doing so, transform the capital into other products such as loans for re-investment in the economy.