December 30, 2014
The global remittance business is $500+ billion strong. Numerous stakeholders are involved in this business including banks, money transfer operators and even third party players such as mobile operators. A current trend that is being witnessed in this space is lowering of remittance costs for the end consumer. The remittance cost has seen reduction from 15% to 8%. The Group of 20 leading economies has already come up with plans to cut the cost of remittance to around 5%. Countries such as Saudi Arabia have already lowered it to 3%. Established players like Western Union are facing new challenges from new players which are further disrupting the space. For example, Azimo is a new startup in this space which is providing services at lowest costs possible. Another example is of LINE app which is using its messaging platform to bring remittance services in new model.
Vietnam retained 9th position among top 10 remittance-earning countries in the world.
Vietnam is one of the largest remittance recipients in the world. Remittance plays a very significant role to the economic growth of Vietnam. Remittance in Vietnam has two groups: Remittances to support relatives in Vietnam and remittances to pays debts, build houses or buy property in Vietnam. Remittance market in Vietnam is growing at a steady pace.
Vietnam’s banking essentially started in 1990. From a mono banking system, it has grown tremendously to become a crowded network of banks and non-bank institutions in just 23 years. Currently, there are five state-owned commercial banks (SOCBs), 34 joint-stock commercial banks (JSCBs), four joint-venture banks (JVBs), five 100% foreign owned banks, 100 foreign bank branches and representative office, 18 finance companies, 12 financial lease companies, and almost 1,100 cooperative credit funds. Banks play a major role in remittance industry.
Remittance market in Vietnam is driven by large banking players. The market is quite competitive with many players co-existing in the market. Post the economic recession – Vietnam has been quite severe when it comes to cross border remittance. Restrictions around Inward remittance have been eased recently allowing people to remit money into the country easily, however outward remittance from Vietnam is still fairly restrictive. Although Vietnam allows Banks and Credit institutions to participate in the remittance business, still banks dominate the inward remittance distribution market in Vietnam.
Critical Success Factors for Remittance business in Vietnam:
Availability of Multiple Currencies for delivery - As of today, most remittance receivers preferred US$. However off late preference for currencies such as Euro’s, Vietnamese Dong, and Yen have also picked up. With differential savings rate for currencies and with strong exhibition of control by the government on US$ usage is driving people to opt for other currencies. Going forward –currencies available at the receiving end and the conversion rate is expected to drive the choice of players for remittance.
Agent Network (Reach) - Majority of the remittance in Vietnam is distributed towards people living in rural areas where banks have little reach. Development of large network of agents by trying up with a NBFI through banks acts as a key success factor for remittance.
Let’s Talk Payments recently released a report on the payments landscape in Vietnam:
Table of Contents
1.0 Executive Summary
2.0 Macroeconomic Overview
2.1 Remittance in Vietnam
2.2 Use of remittance by category
3.0 Labour Migration to Vietnam
3.1 Category wise overseas employment of Vietnamese
3.2 Year-wise Overseas employments from 2009 to 2013
3.3 Reasons for migration from Vietnam
3.4 Labour Migration –Way Ahead
4.0 Overview of remittance market
4.1 Remittance Regulations
4.2 Regulations around E-Money
4.3 Minimum Requirements
4.4 Characteristics of remittance industry in the country
4.5 Channels of remitting in Vietnam
4.6 Key players’ profile
4.7 Drivers and inhibitors of remittances
5.0 Remittance in Vietnam
5.1 Remittance Market Size –Vietnam (Formal and Informal, Inward and Outward)
5.2 Remittance projections from 2014 to 2019
5.3 Formal inward and outward remittance by countries
5.4 Formal Remittance -Market Share by Players
5.5 Formal Remittance -Market Share by Channels
5.6 Cost of sending remittance to Vietnam from least costly corridors
5.7 Emerging trends in remittance business