Hong Kong's remittance market set for mobile transformation
Overseas workers spend $25m a year to send money home, making Hong Kong's remittance market ripe for disruption. The FT's Alice Woodhouse looks at the challenges of bringing financial technology to the unbanked
Filmed by Tom Griggs. Produced by Tom Griggs and Paolo Pascual. Edited by Paolo Pascual.
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ALICE WOODHOUSE: Visit central Hong Kong on a Sunday, and the first thing you see might not be skyscrapers or shopping malls, but domestic helpers on their day off. Almost 400,000 housekeepers, maids, and nannies work in Hong Kong, earning money to send to their families. About half come from the Philippines.
For years, they spent much of their Sunday queuing at remittance offices like these. But that is changing, as mobile apps make it easier and cheaper to send money home. After finishing school, Joselie dreamed of going to university. Instead, she spent the past 32 years working in Hong Kong.
JOSELIE AQUINO: I send one third of my salary to my mum, and then help my nieces pay for their school because I would like them to finish their studies. I don't want them to be like me. It's because going away from home, it's not easy. It's a very hard decision and very tough.
ALICE WOODHOUSE: Money from overseas workers like Joselie brings in $33bn to the Philippine economy every year. That's the fourth largest total of remittances for a country, and five per cent of the global total. Remittances account for about ten per cent of the Philippines GDP, much higher than other countries in the region.
Joselie's village is more than five hours from the capital, Manila. The money she sends has transformed her family's lives.
BERDADINA AQUINO: [SPEAKING FILIPINO]
ALICE WOODHOUSE: Berdadina doesn't have a phone and doesn't often leave the village. To get the money from Joselie, her son brings it to her by tricycle. Money transfer through Western Union and their rivals is reliable, but relatively expensive. Each transfer costs about $3. That means Hong Kong's domestic helpers spend around $25m on fees each year. That's a juicy target for fintech companies.
Alex Kong, from Hong Kong-based startup TNG, says his app has already shaken up the sector. At the moment, charges are similar to everyone else's. However, his goal is to bring banking services to those who don't currently have them.
ALEX KONG: When we look at providing fintech services, or financial services, we need to pluck the low hanging fruit, which is remittance services, and as and when they can send money home and is free of charge. That's our goal. But we want to make money by providing additional financial services.
ALICE WOODHOUSE: However, many people in developing countries like the Philippines don't trust banks, which they feel cheat them out of their savings.
DAVID BISHOP: One of the reasons why a lot of these are not really ready to take off is, culturally, there are a lot of migrant workers who don't even trust kind of traditional institutions, whether it be the government or, in this case, the banks. And so, if they are not only unable to access the current financial system, but unwilling to because of some cultural perspective of the financial system being out to get them, or not being trustworthy, then you can imagine how difficult of a hurdle that would be for them, then, to kind of leapfrog that and jump into the digital space.
ALICE WOODHOUSE: For now, the prospect of families like the Aquino's swapping cash for QR codes still appears distant.