In addition to reducing costs, enhancing the customer experience involves two other crucial
aspects: providing clear visibility into the progress of a remittance payment and expediting
settlement times. One significant challenge customers face is the need for more visibility
regarding the status of their remittance when sending money across borders, which often
requires a long chain of intermediaries. Despite efforts by modern systems to address such
complexities, instances of unnecessary flagging, payment reversals, and system glitches still
arise, greatly affecting the payment experience. Furthermore, in the case of telegraphic
transfers, representing a small percentage of overall remittances today, settlement times can
take up to two days.
Another area of friction for customers relates to limited access to financial services. Globally,
approximately 1.4 billion people remain unbanked. As of 2021, an estimated 5.9 million
American households were “unbanked,” meaning no household member had a checking or
savings account. Another 18.7 million Americans were “underbanked,” meaning that while
they had a checking or savings account with a bank, they relied heavily on products used by
unbanked households, such as check cashing, rent-to-own services, and international
remittances. Individuals may be unbanked for many reasons, including a lack of official proof
of identity, a lack of access to banking services in their region, or simply a function of
personal preference. For example, the number of correspondent banks, which play a critical
role in facilitating cross-border payments, fell by 22% between 2011 and 2019, even though
the value of payments increased. This gradual decline inevitably reduces overall accessibility
to regulated financial services for customers worldwide. In fact, the BIS warned of an
increase in the use of "shadow payments" (e.g., cryptocurrencies) for cross-border payments
due to this decline in correspondent banking. MTOs allow those without a bank account to
access an international network of banks and agents for global money transfers.
Moreover, there is a need for more trust in digital money transfer services among customers.
Approximately 23% of regular money recipients and 31% of senders cite this as their main
reason for not using digital transfers. To address this issue, the Philippine government is
actively promoting digital connectivity strategies as part of its broader National Strategy for
Financial Inclusion, aiming to instill consumer confidence. Bangko Sentral ng Pilipinas, the
Philippines Central Bank, aims to drive 50% of transactions to digital channels by the end of
2023. The ability to choose the money transfer method remains crucial for customers,
underscoring the importance of a digital dollar-backed model that delivers a positive
customer experience.
Official Monetary and Financial Institutions Forum, Banks' Financial Inclusion Initiatives Are Too Narrow
Federal Deposit Insurance Corporation, 2021 FDIC National Survey of Unbanked and Underbanked Households
Bank for International Settlement, New correspondent banking data - the decline continues at a slower pace
Bank for International Settlements, International banking and financial market developments
Western Union, Western Union Global Money Transfer Index: The Middle East and Asia Pacific Series Uncovering consumer
expectations of the remittance industry
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