Market Research Reports - Ken Research Remittance Business Review

Business Finance: Can Cryptocurrency Be the Future of Remittance: Ken Research
Introduction: There has been an increasing trend by migrant workers in foreign mature
economies like North America and Europe to send money back to their families in their home
country in the form of Remittance. Research predicts that by 2030 there will be an inflow of
USD 6 Trillion with about half being sent to Asia. The biggest recipients of this fortune would be
to developing countries with high rural population – India was the largest remittance market in
the world in 2017 with USD 69 Billion being sent back to India alone. India was followed by
China with a remittance amount of USD 64 Billion and Philippines with USD 33 Billion being the
three largest remittance markets in the world. Aside from these three, more Asian countries
like Pakistan and Vietnam were also on the list with remittance amounts of USD 20 Billion and
USD 14 Billion with all of the mentioned countries being in the top 10. This helps explain why
the Asian remittance market for 2017 was at USD 256 Billion.
The Issue: Although there is a significant amount of money being sent to these economies, a
major portion is lost through transaction and service fees. In many developing economies,
every penny counts as most families receiving remittance money use about 70% of the money
received to cover their basic expenses. Transaction costs eat away a major chunk of the money
with margins ranging from 2% to over 15% in developing markets. Although the global average
is around 7% the number is majorly skewed with far higher rates in lower economic countries.
This loss of funds as the cost of sending money home is causing a major dent in the role
remittance can play towards the development of the global economy.
Opportunity: The implementation and growth of the peer to peer network for financial
transactions and the growing need for a decentralized currency has led to the explosive
increase in demand for crypto currency, mainly Bit coin. Although Bit coin is the most
prominent there are other crypto currencies that exist which are gaining popularity and
increasing value like Ethereum, Litecoin, Ripple, etc. The major growth, while positive for the
future outlook of the economy and for crypto currency has had a large portion owing to people
buying crypto currency without fully understanding the concept and its application. The second
roadblock has been the level of adoption by vendors and companies owing to the skeptical
nature of crypto currency. These factors have led to Bitcoins being worth USD 0.09 per bitcoin
in July 2010 to USD 17,549.67 by Dec 2017. Although the volatility of the currency has yet to be
addressed due to the lack of a law regime for regulation and due to a waving market sentiment.
The security and validation offered allow for bitcoin or any solid crypto currency to be the most
stable medium for the future of finance. Having all transactions done using crypto currency
would result in a completely decentralized and open financial system which would completely
be controlled by the network using it ensuring no one party gains through an unfavorable or
unsavory method. Given these advantages, there are major applications for remittance through