A quiet revolution is taking place in Malaysia. It’s not necessarily making headlines, toppling regimes, or overthrowing traditional ideologies—but it is poised to change lives. Nearly 1.7 million lives, to be exact. That’s how many migrant workers are labouring in Malaysia at any given moment. Their labours represent 15% of Malaysia’s workforce and contribute to a superhighway of remittance payments to workers’ families in countries like Bangladesh, Cambodia and Indonesia.
The traditional remittance infrastructure requires these workers to travel with their cash to a bank or another brick and mortar financial agent, which for many is a hazardous and expensive journey of 30 km or more. The cost of this trip is compounded by transaction fees, foreign exchange costs, and fees owed by the recipient (who may also face a journey to claim their cash from an institution).
Herein lies the revolution: mobile technology.
A survey of migrant workers in Malaysia conducted through a partnership between Bank Negara Malaysia and the World Bank Group reveals that, as of 2017, 74% of respondents own a smartphone and 90% access the internet through it.
By offering these workers a corridor for sending money home via their devices, mobile operators can do more with their money for less, and in a fraction of the time. Their families, waiting for remittances at home, can receive that money seamlessly and instantly, sparing them the cost and time required by the traditional banking infrastructure. It’s a win-win for everyone: families on both sides of the border, mobile operators, and our global progress towards a more financially secure and sustainable population.
Spotlight on Valyou: making a difference for migrants
The Malaysian mobile money operator Valyou entered the market in 2016 with the specific aim of offering migrant workers an alternative to expensive and inconvenient remittance options.
Working with Telepin to design a custom product journey that would meet the needs of this audience (in seven languages), Valyou’s apps grew to become some of the most reliable and affordable options for sending money home. They even provide an “assisted remittance” service which allows users with limited experience navigating mobile apps to work with an agent, who sets up a recurring transaction that the user can deploy time after time with just a tap or two.
In this and other use cases, Valyou exemplifies the way forward for mobile operators who serve migrant audiences: the aim should be to understand those audiences and provide the tools they need to gain autonomy.
The potential of mobile money to impact the financial lives of migrant workers and their families is staggering. Malaysia is just one example; worldwide, about 164 million migrant workers rely on international remittances to send money home, representing about $528 billion annually. The United Nations acknowledged this volume of transactions in their 2030 Agenda for Sustainable Development, which includes this goal: “By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent.” This would result in savings of about $27 billion a year for migrant workers—a remarkable amount, accessible on the shoulders of mobile technology.
But saving on remittance fees is not the only goal of innovators like Valyou. In addition to savings, they want to offer customers something more intangible: a sense of power over how their money moves through the world. For those who have been unbanked or under-banked until recent advances in mobile money technology have offered alternatives to traditional infrastructures, this sense of power might be worth its weight in gold.