Remittance services in Philippine have evolved noticeably in past 20 years. Keeping the view of the need to send funds to home in reliable and safe way but less affordability pay high transactions cost through banks, OFWs sought more cost-effective ways to send funds home.
The fastest and most common way was the Padala where funds are sent through anyone who is coming home. This was actually based on mutual trust, Pakikisama or Pakiusap, but it actually was unreliable and unsafe. As many OFWs grew over time, door-to-door transport served and transferred those in large quantity for the charges and foreign exchange difference. This operation was largely unregulated and underground. The volume was big enough for the authorities and the host region banks not to ignore but they were also not prepared to cope with hordes the services over their teller.
New licensed regulations and partnerships occurred with banks and money vendors in host countries from banks in Philippine that operate through subsidiaries that bring remittances to the mainstream financial companies. Remittance department created by all these partnerships that gave the host nation bank a noticeable share from the business but kept hordes out from their teller.
According to BSP, Bangko Sentral Ng Pilipinas, remittance inflows have risen unabated reaching around USD 16 billion or above in year 2008 and increased by a percentage of 2.7% in the first quarter of 2009 regardless of global crisis. The large volume offers a great opportunity for banks, downstream fund transfer services and non-bank financial agencies. Fast changing trend in technology and tight regulations from Anti- Money Laundering Act (AMLA) have restricted the remittance business to enter making it highly competitive.
Technology presently exists to provide seamless connectivity from one end to the other for a remittance transaction. They have system that has the capabilities to transfer files with massive data to stream through these connectivity securely and safely from one bank to the other.
To liberate banks from problems of mass markets, technology providers are the ones who can establish and implement to run seamless connectivity to operate as a BPO or business process outsource for this.
Meanwhile, there also remains sufficient room for non-bank financial firms to offer remittance services with the right technological expertise and infrastructure. There will always be holes in the system that arise from the cultural differences in many regions, AMLA regulations and limitations, risk aversion, immigration laws, and inability of many local banks to quickly respond to changing trend in technology, just like done at Goldleaf common remitter services.