According to United Nations figures, there are more than 200 million foreign workers worldwide who collectively send billions of dollars back to their home countries (1). These remittances support close to I billion families, many of whom live in in low- and middle-income countries (LMICs).
Remittances stimulating economic growth
This year, remittance inflows to LMIC economies are on track to overtake foreign direct investments as the largest source of foreign financing. World Bank data reveals that remittances to LMICs reached USD$529 billion in 2018, and this amount is projected to increase to $550 billion this year (2). These unprecedented figures have become hard to ignore and have caught the attention of governments and policy-makers due to the positive economic impact of remittances in LMICs.
The influence of remittances is huge and has the potential to improve the well-being of millions of people around the world by reducing poverty and raising standards of living. Migrant workers, on average, transfer $200 to $300 to their home countries each month, and in some instances these figures represent 65 percent3 of the sending household's income.
Many developing countries have come to rely on these inward flows for a significant portion of their foreign exchange earnings, stimulating domestic consumption, which in turn boosts GDP. Remittance flows can provide an important offset to wider external liabilities like trade deficits, and because remittances are increasingly viewed as a stable source of financing, this translates into lower borrowing costs for governments.
Leveraging identity verification technology to reshape the world economy
While it's clear that remittances play a significant role in LMIC economies, the challenge lies in leveraging modern infrastructure to create the best possible environment and, in turn, maximise the value of remittances for LMICs.
An estimated $8.5 trillion will be transferred to households in LMICs over the next 15 years. However, connecting people and helping the flow of money into more LMIC economies is made difficult by the rigorous security measures put in place to curb nefarious activities such as money laundering, fraud and terrorist financing.
Thus, the responsibility shifts to banks and money transfer operators to introduce technologies that ensure low-income recipients can both afford and trust the service. Digital identity verification technologies are quickly making their way into...