By Art Samaniego and MB Technews Team
The sector of Overseas Filipino Workers (OFWs) is still a major source of foreign exchange for the Philippines. Philippine Statistics Authority (PSA) revealed in May this year that there are 2.3 million Filipinos who are working overseas from the period of April to September 2017. Cash remittances from OFWs reached USD 31.29 billion last year, 5.3 percent higher than the USD 29.7 billion record in 2016. With approximately 10 percent contribution to the Philippines's gross domestic product (GDP), OFWs are, without a doubt, valuable in driving the country's economic growth and keeping it stable amid regional and global pressures, making them worthy of the “bagongbayani” epithet.
The price of remittance
In spite of the improving economic conditions, the availability of employment opportunities with adequate pay is still a challenge in the countryside, forcing people to work overseas. Meanwhile, families left by OFWs, especially those living in far-flung areas, have limited access to banking and other financial services that are concentrated in key cities. This predicament can make the process of remittance difficult and costly for both OFWs and their beneficiaries. Imagine resources spent on traveling from a distant barrio to the city just to claim the hard-earned money from a relative working abroad.
Apart from the challenges of working abroad and being away from their loved ones, OFWs are also paying the high price of remittance. Tim Ying, CEO and co-founder of Global Overseas Worker (GOW) Technologies shared: "The cost of remittance was very high. For example, in places like Dubai and the Middle East, it could be close to 10 to 15 percent. For overseas workers who are sending money to their families back home for education and healthcare, that remittance cost is a lot. That remittance cost could already provide for living expenses."
Solutions through financial inclusion
Thankfully, with today's innovations like smartphones and Internet connectivity, digitally-driven financial inclusion in the country is now given more attention, making processes such as remittance easier and more affordable than before. One factor that helps in activating the financial inclusion machinery in the country is the presence of sari-sari stores in rural areas. By 2020, International Data Corporation (IDC) sees that 30 percent of sari-sari stores will evolve into remittance centers.
Some companies in the Philippines are already utilizing sari-sari stores as remittance centers. Smart Padala now has a network of more than 26,000 remittance agents, many of which are sari-sari store owners. GCash, a service provided by Globe Telecom's subsidiary Mynt, has a mobile wallet that allows for free, fast, convenient, and accessible way to transfer money, which can be claimed by the receiver through any of over 15,000 GCash Partner Outlets nationwide, which include sari-sari stores.
Exploring emerging technologies
Anchoring on its long history of serving OFWs, GOW is now looking at emerging technologies such as blockchain to make foreign remittances more affordable. "In the core of our DNA, we find ways on how to be able to lower the cost of remittance. In order to do that, we provide financial services to different customer groups. That is where GOW is all about. We use emerging technologies such as blockchain and cryptocurrency to be able to achieve that," Ying added.
Licensed as Virtual Currency Exchange
(VCE) by the BSP through its subsidiary ETranss and registered at the Securities and Exchange Commission, GOW, which is launching in the Philippines this Q4 2018, provides exchange services between legal fiat and digital currencies. GOW aims to become the first major bridge between traditional banking and digital currency industries.