[Interview] Digitalization's Impact on Remittance Services in Saudi Arabia and the MENA Region

Over the past decade, we have witnessed a remarkable evolution in the remittance services landscape in Saudi Arabia and the MENA region, primarily driven by the increasing adoption of digital platforms and fintech companies. This shift towards digitalization has resulted in significant changes and advancements in how remittances are sent and received.

Today, we have the honor of Interviewing Dharman AlDharman MSc, PMP?, PgMP?, P3O?, CLSSBB?, RMP? Al-Dharman, Deputy Chairman of Mjalis Investment | ????? ????????? , with his expertise in fintech, digital payments, digital transformation, remittances, and financial inclusion to discuss How have remittance services evolved in Saudi Arabia and the MENA region with the advent of digital platforms? What are the key technological advancements driving this transformation?

Can you describe the evolution of remittance services in Saudi Arabia and the MENA region over the past decade, especially concerning the shift toward digital platforms?

In the past, remittance services in this region were mainly conducted through physical channels such as banks, exchange houses, and money transfer companies However, with the advancement of technology and the widespread use of the internet and mobile devices, digital platforms have become a more convenient and cost-effective way for individuals to transfer money across borders. The convenience factor is one of the driving forces behind this shift. Users can now initiate remittance transactions using their smartphones anytime and anywhere, which eliminates the need to visit remittance centers or banks. This ultimately saves time and effort for both senders and recipients. Digital remittance platforms and fintech apps have also made the remittance process more affordable. They often offer competitive exchange rates and lower transaction fees compared to traditional channels and banks. This affordability has made them an attractive option for individuals seeking cost-effective remittance solutions. Additionally, fintech’s and digital platforms have improved the speed and efficiency of remittance transactions. Users can send money instantly to their intended recipients with just a few clicks, reducing the processing time compared to traditional bank and centers that may involve paperwork and manual processes, or legacy routes.

The shift towards digital platforms has also expanded access to remittance services, particularly for underserved populations. Migrant workers and individuals in remote areas now have access to affordable and convenient remittance options, promoting financial inclusion. Financial institutions, including banks and money transfer operators, have recognized the potential of digital remittances and have actively embraced technology. They have introduced their own digital platforms or partnered with fintech companies to offer innovative solutions such as mobile apps, online portals, and digital wallets. These advancements provide a seamless user experience and a wide range of remittance options.

It's worth mentioning that regulatory bodies in Saudi Arabia and the MENA region have played a crucial role in fostering the growth of digital remittance services. They have introduced supportive policies to ensure consumer protection, promote competition, and create an enabling environment for digital financial services.

How have digital platforms impacted the remittance landscape in Saudi Arabia and the MENA region? What are the key benefits they offer to customers and service providers?

The use of digital platforms for remittance has significantly impacted the landscape in Saudi Arabia and the MENA region. These platforms have revolutionized the way remittances are sent and received and offer numerous advantages to both customers and service providers. Digital platforms have brought about several key benefits for customers. The first and most significant is convenience. Users can now initiate remittance transactions at their convenience using their smartphones, anytime and anywhere. Cost-effectiveness is another significant advantage, with digital platforms often offering competitive exchange rates and lower transaction fees compared to traditional channels and banks. This affordability makes digital remittance services an attractive option for customers seeking cost-effective ways to send money to their loved ones back home. Speed and efficiency are also greatly improved with digital platforms. Transactions can be processed and completed within minutes, or even instantly, compared to traditional banks that may involve paperwork and manual processes or using SWIFT route. This quick turnaround time allows recipients to access the funds sooner, providing them with timely financial support.

Digital platforms also offer service providers opportunities for innovation and differentiation. They can introduce user-friendly interfaces, mobile apps, and additional value-added services to enhance the customer experience. This helps service providers stay competitive in the evolving remittance market and attract a larger customer base.

Can you discuss any significant trends or changes in consumer behavior regarding remittance transactions since the introduction of digital platforms?

The introduction of digital platforms in the remittance landscape has brought about notable changes in consumer behavior regarding remittance transactions. Several significant trends have emerged because of the adoption of digital platforms. One of the prominent trends is the shift towards digital channels for remittance transactions. With the convenience and accessibility offered by digital wallets like stc pay , Mobily Pay , UrPay Technologies , consumers have increasingly embraced these channels as their preferred method for sending money. Another significant trend is the increased frequency of remittance transactions. Digital platforms have made it more convenient for consumers to send money, with a marketing-oriented concept, leading to more frequent transfers. Furthermore, digital platforms have facilitated a change in consumer behavior regarding comparison shopping. With digital platforms offering transparent and competitive exchange rates, customers have become more inclined to compare rates and fees across different providers like Wise platform. This has led to a more informed customer base that seeks out the most cost-effective options for their remittance transactions.

Could you elaborate on any innovative technologies or systems that have revolutionized the remittance industry, such as blockchain, AI, or mobile applications?

The remittance industry has experienced significant transformation through the adoption of innovative technologies and systems. Several key technologies have revolutionized the industry, including blockchain, artificial intelligence (AI), and mobile applications. Blockchain technology has emerged as a game-changer in the remittance industry. Its decentralized and secure nature allows for transparent and efficient transfer of funds across borders. Blockchain-based remittance systems eliminate the need for intermediaries, such as banks, by enabling direct peer-to-peer transactions. This not only reduces costs but also accelerates transaction settlement times. Artificial intelligence (AI) has also made significant contributions to the remittance industry. AI-powered systems can analyze vast amounts of data to detect patterns and make accurate predictions. This capability helps in fraud detection and prevention, ensuring the security of remittance transactions. Mobile applications have played a crucial role in revolutionizing the remittance industry. They have transformed smartphones into powerful remittance tools, allowing users to send and receive money conveniently and securely.

As I said previously, mobile applications provide a user-friendly interface that simplifies the remittance process. Users can initiate transactions, track their transfers in real-time, and receive notifications on their smartphones. This level of convenience and accessibility has significantly increased the adoption of digital remittance services.

How have regulatory changes or compliance requirements influenced the adoption and development of digital remittance platforms in Saudi Arabia and the wider MENA region?

Regulatory changes and compliance requirements have played a significant role in shaping the adoption and development of digital remittance platforms in Saudi Arabia and the wider MENA region. These changes are aimed at ensuring the integrity of the financial system, preventing money laundering, and protecting consumers. In recent years, regulatory authorities in Saudi Arabia and the MENA region have implemented stricter regulations and compliance measures to govern remittance activities. These regulations often authorize remittance service for banks and money transfer companies to provide the remittance services and make them adhere to anti-money laundering (AML) and counter-terrorism financing (CFT) regulations and implement robust Know Your Customer (KYC) procedures.

These regulatory changes have influenced the adoption of Fintechs and digital remittance platforms in several ways. Firstly, they have allowed fintechs to provide remittance service by complying with the EMI regulatory requirements. This has led to the emergence of more sophisticated and secure digital remittance systems that incorporate features such as identity verification, transaction monitoring, and reporting mechanisms.

Have there been notable partnerships or collaborations between financial institutions, fintech companies, or other stakeholders that have facilitated the growth of digital remittance services in this region?

The digital remittance services in the MENA region have experienced substantial growth, thanks to impactful collaborations and partnerships between financial institutions, fintech innovators, telecom companies, and even governments. These strategic alliances have fostered innovation and accessibility by combining expertise and resources to introduce user-friendly, secure, and efficient remittance solutions. This collaboration has amplified the reach and convenience for customers across the region, making cross-border transactions more seamless and inclusive for individuals and businesses alike.

Several partnerships have emerged in Saudi Arabia, harnessing the potential of digital remittance services, such as the acquisition of WU and stc pay , the partnership between Eniaz company and Thunes company, D360 Consulting Bank with Thunes company, and the collaboration between Urpay and MoneyGram International company. These partnerships enable seamless integration between remittance platforms, banks, or fintechs, allowing customers to use their digital wallets or payment systems to send money internationally. This integration has facilitated cross-border transactions and improved the overall customer experience.

What future trends do you anticipate in the digital transformation of remittance services in Saudi Arabia and the MENA region? Are there emerging technologies or shifts in consumer behavior that might shape the industry?

The remittance services industry in Saudi Arabia and the MENA region is undergoing a significant shift. The convergence of technological advancements and evolving consumer behaviors is driving this change. Industry is adopting blockchain, AI, and mobile-centric solutions to enhance efficiency, security, and accessibility. This evolution will be driven by regulatory adaptations, partnerships, and a focus on customer needs. The future of remittance services promises to be more personalized, secure, and inclusive. Digitalization will play a crucial role in simplifying transactions and fostering financial inclusion across different populations in the region. The transformation of remittance services in the region will see an increased adoption of mobile payments, the adaptation of blockchain-based platforms, and the use of remittance-based data analytics.

Dharman AlDharman MSc, PMP?, PgMP?, P3O?, CLSSBB?, RMP? , Deputy Chairman of Mjalis Investment | ????? ?????????

He holds a bachelor’s degree in business administration, then a master’s degree in management information systems from King Saud University. He held several positions at Alinma Bank , Ersal Money Transfer Corp , UPayments company and SAB Bank in e-commerce, digital payments and remittances filed in various departments, product development, operations and business development from 2013 until now. Partner and board member in several companies in the fintech and payments sector Member of the E-Commerce and Financial Technology Committee at the Riyadh Chamber of Commerce & Industry . He is an investor and Vice Chairman of Mjalis Investment | ????? ????????? Company, which invests in several sectors, including the payments and financial technology sectors.