In the past , a 24-hr service delivery for Metro Manila and 48-72 hours in the provinces were acceptable. But today, customers expect online and real time services. Therefore, FASTER delivery is something to prioritize.
By Justine Castellon
Succeeding in the remittance industry is all about understanding your customers: remitters (the ones who SEND the money) and the beneficiaries (the ones who RECEIVE the remittances). You need to know what make them send their money to you, and what will make them choose you over arrays of competition. At the present time, these customers are very keen on the speed of delivery -the amount of time by which the money sent is delivered to the beneficiary in the Philippines. In the past , a 24-hr service delivery for Metro Manila and 48-72 hours in the provinces were acceptable. But today, customers expect online and real time services. Therefore, FASTER delivery is something to prioritize.
Because of customers expectations in the delivery and fulfillment of remittances, higher operating costs amidst narrowing margin can be expected. Regulators in all countries have strengthened their KYC/AML laws. This will result to your higher operating expenses which attributed to: system enhancements, increased staff expenses, and increased fees by overseas depository banks
The need for stronger, wider and diverse distribution channels is something that you should look into: enhance their acquisition and distribution channels. Identify and develop alternative acquisition channels to address the remitters/beneficiaries value for SPEED and CONVENIENCE.
Another factor is addressing the real time delivery expectations. Look closely on the strength in the information technology structure such as the:
- Online to Online (host-to-host) Services
This is mainly used to transport data files between your branches abroad (cash-in) and your fulfillment partners (cash-out) in the Philippines. The data files in an agreed format are processed and sent out again via internet or with host-to-host facilities for distribution to the your ultimate partners (through their branches), ATMs, and couriers.
- Online Transactions
Use websites where remitters can actually transact from the convenience of their homes through their PC
- Over-the-Air (OTA) or Phone-to-Phone (P2P)
Maximize the potential of the phone-to-phone transactions for the mobile savvy customers. Similar to online transactions, this will come in handy if you don’t operate 24/7 cash –in branches
MOVING FARTHER IN THE REMITTANCE BUSINESS
Consider that your customers as well as those of its partners and tie-ups as your most important stakeholders. Provision for excellent customer service is mandatory. This commitment to customer service is the foundation of your corporate culture, structure, and business processes. You should have a dedicated and highly-trained customer support team to attend to the inquiries and requirements of remitters, beneficiaries, as well as your remittance partners, tie-ups and agents. Likewise, ensure that your customer service center operates on a 24/7 mode to provide the needed assistance to remitters and their beneficiaries, anytime.
Furthermore, there are cost drivers in establishing footholds and strategic alliances in the chosen territories
- Upfront capital outlay – for software, technology, implementation/operational processes and customer service
– Build vs. buy
– In-hours vs. out-source
- Marketing costs
– As brand gets established, marketing focus shifts from customer acquisition to retention
– Loyalty and retention programs( and data-mining software)
- Variable costs
– Transaction initiation, customer ID verification, distribution costs, core FX costs
- Ongoing support costs
– Technology, data center and program management
– Product and service enhancement
- Product Cost
Pricing varies significantly by service, distribution network, type of product and destination country
- Remittance fees for sending and possibly for paying out transfer
- Exchange rate spread: difference between foreign exchange rate at which remittance provider buys currency and retail exchange rate applied to sender’s transaction
Apart from what were stated above, there are additional critical success factors that you will encounter from your front lobby to your back-end:
- International remittance should adapt the global localization: strategy formulation is globalized but execution is localized.. While it is imperative to implement consistent global brand communication, each country branch you will operate is treated on local capacity. Implement thematic brand communications across the territories: meaning communicate the same message regardless of the territory and culture. However when it comes to marketing promotions, treat these as locally depending on the market and situation.
- Capitalize on the knowledge of foreign market: transferring competitive information and new products to other market including home market)
- Implement smart marketing and outreached efforts effectively. Target marketing to the community such as the following:
– Foreign-or local language radio, television and publications important
– Participate in fairs, festivals, community events
– Utilize familiar customs, music, cuisine, etc.
– Promote special offerings for high-volume remittance times (Ex. Mother’s Day and religious holidays)
- Partner with chambers of commerce and consulates
- Co-marketing with other institutions targeting similar market
- Research migration corridors to connect both sides of the transaction
- Adapt to serve unbanked and migrant consumers’ financial service needs
- Reach out to immigrant communities to develop new customer relationships
- Offer more than one type of remittance product to meet the needs of all customers
Offering the right mix of products and services with the widest array of choices will make you win the market place. In the remittance services, there are several services which you can offer:
- Low-cost and fast crediting of remittance services
reloading to cash card which enables the recipient to receive the money real-time
- Online Transactions/Phone-In
convenience of remitting in the comfort of their home or offices
- Home delivery for older recipients
the door-to-door facility which enables you to deliver the money right at the recipients doorstep
- Cash pick up anywhere
remittance pick-up nationwide in any designated pick centers
- Deposit or credit to your bank account
bank-to-bank method where remittances can be credited to recipient own bank account
After all those considerations, you are now ready to integrate the remittance service to the environment.
- “Your Remittance corner”
- Separate space dedicated to remittance services
- No waiting in general teller line for remitters
- Efficient systems for repeat customers
- Placards advertising exchange rates
- Signage directing customers: implement visible and effective visual display to communicate your services
- Community outreach: make people aware of services offered
- Customer communication is very important in winning the global competition. You need to consider:
1. Foreign language-speaking staff for your non-Filipino remittance services. This will put immigrant customers at ease while creating customer preference and loyalty.
2. For Filipino customers, it is a plus factor if your staff can speak different dialects. Nothing beats talking to staff members who speak your native language.
3. Educate all staff on service features, what are the advantages of your remittance products and what they can offer once the customer consulted to them. Likewise, put emphasis on the studies for cultural differences
4. Offer employee incentives to increase remittance volumes. This is on top of their regular compensation, incentivize your staff once in a while specially if you are pushing a new products and service.
While you polish the front lobby, it is important to fix your backroom to ensure success in the market place. For your backroom office, you need to:
- Determine necessary payment information to collect from customers in accordance with origination and compliance practices
- Continue to invest heavily in your information technology infrastructure and telecommunication systems
- Pre-fill registration forms for front lobby to streamline required and repetitive information
- Ensures that the customer service center operates on a 24/7 mode to provide the needed assistance to remitters and their beneficiaries, anytime.
- Practice good corporate governance at all times
As you go along in this business, you will recognize and encounter challenges in the lack of documentation for targeted market. But bear in mind that the compliance issues cannot be taken for granted.
It is mandatory that you adopt the anti-money laundering/counter-terrorism financing (AML-CTF) policies and guidelines and that should part of its Compliance Program. These policies and guidelines cover areas such as the customer due diligence process (“Know Your Customer” rule), large cash transactions, record-keeping, reporting, and AML-CTF reporting. These policies and guidelines are based on the Financial Action Task Force (FATF) 40 Recommendations and 9 Special Recommendations, and were formulated to ensure compliance with the requirements of the Philippines’ Anti-Money Laundering Act of 2001 (Republic Act 9160 as amended by Republic Act 9194) and its Implementing Rules and Regulations.
It is a requirement to establish and record the identities of clients based on official documents. You should maintain accurate and meaningful originator information on funds transferred or remitted by requiring the sender or remitter to fill-out and sign an application form, which shall contain certain minimum data and information needed. You are required to maintain records for five (5) years from the date of a transaction.
Likewise, you are also required to report “covered” transactions involving a single transaction in excess of PHP 500,000 within one banking day. Reporting of suspicious transactions when there is reason to believe that such transactions have the purpose of laundering proceeds of criminal or other illegal activities is mandatory.
A remittance company is required to comply with the anti-money laundering regulations of their host countries as well, and should register with the various financial intelligence units and central monetary authorities globally
There’s more to the remittance business than meets the eye. With the potential for growth comes the challenges that lie ahead. Providing good rates is only the beginning. Systemizing processes, using a feedback and analysis mechanism, a customer relationship management system plus a highly professional trained staff, can help you stand out from the other remittance providers.