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Physical remittance network remains important despite rise in online channels

THE PHYSICAL remittance network will continue to be relevant even as digital channels grow amid habits and some gaps that still make online transactions difficult, according to Western Union.

“In future-proofing your business, you need to have a digital strategy. But we’re not saying that retail will just be left behind,” Jeffrey D. Navarro Western Union’s head for the Philippines, Malaysia, Brunei & Indochina, said in an online interview.

“Our long-term view is that it (retail network) will continue to be substantial — it can also continue to grow. We don’t think that the growth may be as fast compared to digital, but retail will continue to be significant in terms of performance,” he added.

The central bank wants 50% of all transactions done online by 2023.

Mr. Navarro said 30-35% of their transactions are sent through digital channels, while 65% continue to be coursed through retail.

He said sender side economies like North America, Australia and Singapore are becoming more reliant on digital transactions. Meanwhile, he said retail remains huge in the Middle East and most of ASEAN.

“What we saw year on year is the percentage contribution of digital is growing and it really accelerated in the last few years because of the pandemic, but retail remains to be significant in the portfolio,” Mr. Navarro said.

He added that ensuring migrant workers have access to the “nakasanayan” or what they’re used to is also important, especially for Filipinos.

“When we go abroad, even though some of these [digital] facilities may be available, there’s nothing wrong if I’m using this certain service the same way. And sometimes, until something really inconvenient happens, we never shift,” he said.

The need to keep both retail and digital channels is also significant in a country where financial inclusion is still an issue. Mr. Navarro noted that while account accessibility in the Philippines has been increasing, it is still far from 100%.

“There is still the portion of the population that still needs it in cash, while there is also a growing percentage of the population who can also facilitate and get it via digital channels or bank accounts,” he added.

Western Union earlier this year teamed up with UnionBank of the Philippines, Inc. and Pera Hub to allow remittance recipients with the option to claim their cash in real time through UnionBank’s online app.

Mr. Navarro said they also have working partnerships with GCash, PayMaya Philippines and Coins.ph to let receivers transfer the money sent to them straight to their e-wallets.

He said they are keen to build more partnerships to expand Western Union’s offerings, taking advantage of its strength as a cross-border platform.

“We’re always monitoring the different players in the fintech space, including the top banks, because we want to also ensure that we partner with them in putting these services in their digital offering. So that’s going to be the strategy short to medium term,” he said. — Luz Wendy T. Noble

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