The remittance market in the United Kingdom is undergoing gradual but significant transformation. Traditionally dominated by links with the Indian subcontinent, the focus is broadening to include several African countries as key destinations for funds. The shift reflects broader economic trends and the increasing influence of digital technology.
Consistent Growth in Demand for Remittance Services.
Analysis from sources like Market Watch and Research and Markets indicates the UK’s outbound remittance market is growing steadily. Estimates are for an increase in value from approximately US$ 11 or 11.5 billion in 2024, to US$ 12.5 billion by 2028, or from about £9 billion to £10 billion. An important part of this is from Africa. While figures from other sources will vary, the trend is clear. The UK remittance market, 90% of which is outbound, continues to expand.
There are several contributory factors. Despite, or perhaps because of, instability in global markets, migrant workers continue to contribute significantly to many developed economies, including the UK. Meanwhile, digital payment systems makes transactions easier, faster and cheaper. Additionally, smartphone banking apps are having a profound impact on regions with limited banking infrastructure but growing mobile connectivity, including in many African countries.
Africa, Connected
In the UK, the assumption has been that most remittances go to India and its neighbours. That is still true, but the UK’s African diasporas — from countries like South Africa, Nigeria, Ghana, Egypt, Ethiopia, Somalia, and Kenya — are reshaping this narrative. The African Development Bank notes that in the past two decades about 20 million Africans have migrated from the continent. Approximately half have settled in Europe, including the UK. Nigeria, in particular, is amongst the top recipients of remittances globally, receiving $19.3 billion in 2022.
As remittances grow more affordable and accessible, the demand for these services will continue to rise. In turn, Money Transfer Businesses (MTBs) have both opportunities and challenges, particularly in streamlining operations to demanding financial regulatory standards. For many MTBs, the cost of developing compliance systems independently is prohibitively expensive. The pragmatic solution lies in accessing fintech expertise through specialist third-party services. These should offer identity verification, comprehensive ‘Know Your Customer’ (KYC) checks, and continuous transaction monitoring.
MTBs, Choose Your Compliance Partner Carefully
There are many potential service providers, so it’s worth seeking out the right one. It should not only be effective but should also be customizable to the specific needs of the client MTB. Compli, from fintech and foreign currency services specialist Essiell, ensures thoroughness in compliance, with features designed to detect stolen or reused information, monitor transactions against individual global profiles, and identify unusual or suspicious activities.
In an era where remittance services can inadvertently become conduits for sophisticated financial crimes, including money laundering and terrorism financing, the importance of a robust compliance service cannot be overstated.
Compliance Underpins Secure growth
The UK remittance market is changing quietly but significantly. The inclusion of more African countries, and the rise of startup remittance businesses to service them should be welcomed. To succeed, however, new MTBs require a keen understanding of market dynamics, consumer needs, and the role of compliance in the UK remittance market to safeguard operations and customer trust. As the market continues to develop, the partnership between MTBs and fintech innovators like Compli will be crucial in shaping a future where remittances are not only more accessible, but also secure and compliant.
By Declan Morton, staff writer at Essiell.
For Reference: United Kingdom International Remittance Business Report 2024, Market Watch, 12th April 2024; United Kingdom International Remittance Business Report 2024, Research and Markets, 10th April 2024; Key takeaways from the 2023 Remittances Africa Conference, FXC Intelligence, May 2023.
