Interview with Rashed A. Al Ansari, CEO at Al Ansari Exchange
- How has tech impacted the remittance sector over the past 50 years – how does it compare with today?
Over the past 50 years, technology has played a significant part in the remittance sector’s growth. We have seen new technology, which is relevant to the industry, evolving over the years. I recall the handwritten bookkeeping and the use of carbon paper to create copies before the photocopiers and computers came into the picture. I also recall when the Travelers Cheques revolutionised international money transfers which is today considered obsolete. There were days when transactions were being recorded by hand and mailed, before being sent by telex and fax. The use of manual secret random codes set in sequence between correspondent agents as a mark of authenticating a payment request which got replaced by the digital token that generates random verification codes which is in use today. We witnessed the evolution of exchange companies from being traditionally large setup branches located in trade busy areas each branch with full-fledged accountants and auditors to a hub-and-spoke model that are more spread and small in size enabling the concept of kiosks in malls giving access to the remittance and exchange services to everyone more practically and efficiently. But the industry’s drastic transformation came along with the internet, which has effectively made money transfers faster and more convenient. The internet has given rise to digital remittances, making transactions simpler, quicker and more affordable than ever before. Mobile technology has also influenced the way money is being transferred all over the world. Smartphones and other mobile devices effectively reshaped the future of the global remittance business.
From the internet to international mobile banking and net banking to fintech services, new technology continues to influence the sector. Remitters now have access to advanced services and applications offered by different financial institutions, this allows them to send money anytime, anywhere without any hassle. We expect to see significant technological shifts with a much greater impact on the global remittance community in the coming years.
- What have been the key milestones over the past 50 years for the remittance sector that led to where it is today with instant transfers, money transfer apps etc. How long did it used to take to send money home?
Technology has not only reduced the time it takes for remitting money from days to minutes, but it also helped in reducing the costs. This has helped the cost of remittances in the UAE to be at half the global average according to the World Bank. One of the key milestones is the growing investments in digital technology such as mobile apps. The United Arab Emirates is the world’s second top-remitting country after the United States of America, and we were lucky enough to have witnessed this trend. Exchange companies in the UAE are at the forefront of upgrading their digital infrastructure to meet the remittance needs of the local community. Investments in online portals and mobile apps, along with the introduction of digital wallets, instant remit, self-service kiosks and fintech services, have made a huge difference in our customers’ experience when they send money to their loved ones back home. Customers began to enjoy faster transfer time, more competitive rates and more convenient transactions, among other benefits.
Blockchain is another exciting development with a potential to have a very positive impact on the industry. By eliminating multiple intermediaries, blockchain helps reduce the time and cost of transactions, while ensuring complete transparency. This technology will not only make remittances faster, cheaper and more efficient, but will also result in broader financial inclusion, which aligns with our direction at Al Ansari Exchange. Within our organization, we are testing the technology with some of our global correspondent agents to process remittance transactions. According to the results of these tests, we will expand the integration of the technology.
- Has Covid-19 sped up the digital transformation of the remittance sector?
Yes, the pandemic acted as a catalyst for digitalization in the sector. The exponential rise in demand for contactless and digital payments led to the rapid digital transformation of the remittance sector. Digitalization is the key to ensuring business continuity and enhancing customer experience. The pandemic resulted in a paradigm shift, with more and more people turning to digital channels and away from cash transactions.
- What is the future of the remittance sector – where do you see it heading?
Customers have become more empowered as we continue our journey into the digital era. At Al Ansari Exchange, we have seen and spoken about this trend and the benefits to be gained from digitalization. We believe that revenue growth in the coming years will still depend on digital offerings and operations, giving early adopters a competitive edge. In 2021 and beyond, digital transformation will continue to dominate. Recognizing this, we will remain steadfast in our commitment to make relevant digital investments and initiatives. We are also confident that the UAE will sustain its position as a vital money services hub worldwide.
- What is the future of remittances, and will cryptocurrencies be a part of it?
In the future, remittance’ dynamics will be fundamentally altered, where increasing customer demand will serve as a catalyst for new technology to rise and new partnerships to form globally. In short, customers’ demand will shape the future of the industry and will change service providers’ expectations and focus areas.
Many customers are still wary of cryptocurrencies given the high volatility in their value and the absence of regulations, not to mention their technical and complex requirements. When it comes to transferring money, they understandably still want a trusted and reliable system. The Central Bank of the UAE has strict rules and regulations that insure full transparency, and protects the public’s best interest and this gives our customers peace of mind to know that they have a governing body to turn to if something goes wrong.
The business model of cryptocurrencies is completely different from ours. As an entity regulated by the Central Bank of the UAE, we comply with its protocols and guidelines to ensure complete transparency in every single transaction. Nonetheless, Al Ansari Exchange will continue to closely study the feasibility of cryptocurrencies and monitor related developments.