Access to and Usage of Digital Remittances: A Case Study of SentBe

Introduction: The rise of outbound remittances in the Republic of Korea

The Republic of Korea’s rapid economic growth has earned it the nickname “Miracle on the Han River”. In 2000, outbound remittances surpassed inbound transfers and have increased ever since. These trends have been driven by innovation and risk-based regulation, equally influencing the cross-border payments landscape and allowing non-bank financial service providers to offer nimbler digital channels for international remittances.

SentBe is one of the country’s fastest-growing fintech companies and was one of the first Samsung Pay partners. Founded in 2015 and currently serving more than 50 countries, the company specializes in digital cross-border money transfers. SentBe has placed an increasing focus on providing financial services across the migration life cycle—pre-departure, arrival, settlement, re-return and post-return.

SentBe has partnered with UNCDF to better understand the financial needs and constraints of last mile migrant customers, especially those from Bangladesh, Myanmar and Nepal. This will enable them to offer financial literacy services and support these underserved groups towards access to and usage of digital remittances and financial services through formal channels. To this end, UNCDF has carried out institutional data mapping and demand- and supply-side data analytics on more than 1.5 million SentBe cross-border remittance transaction records. This article shares key insights on migrants’ access to and usage of digital remittances and financial services, discussing how they influence migrants’ financial inclusion and resilience. 

Access to remittances 

Migrants’ access to digital remittances depends on the availability, affordability, safety and convenience of such solutions in both their home and host countries, as well as their awareness of these services. While not entirely complete, access can be inferred through customer profiles.

While net migrant inflows and the total value of outbound remittances declined as a result of the COVID-19 pandemic ¹, the number of SentBe customers has increased substantially. 

The SentBe transaction data, covering the 2017 to 2021 period, provides an insight into the company’s current customer profile. About 60 percent are men. As shown in Figure I, more than half are between 25-34 years old, and nearly all are below the age of 45. Around three-quarters of SentBe’s customers are international migrants, most of whom are Vietnamese, Filipino, Thai, Indonesian or Indian. Migrant clients tend to be younger than Korean national clients. About half of migrant customers live in the Seoul Metropolitan Area, and a quarter live in Busan-Gyeongnam, or Southeastern Maritime Industrial Region, also shown below.

Most migrant men, and therefore most of SentBe’s new and active customers, hold temporary worker visas, which are issued to migrants working in the manufacturing and agricultural sectors—they are only allowed to work part-time. 

And housewives ² are only conditionally allowed to work under their marriage visas (Figure II).

As shown in Figure III, while the gender gap among new Korean clients has hovered around 50 percent, the gender gap among new migrant customers has gradually closed since 2020, reaching near parity at the end of 2021 (the latest data available). This is partly related to shifting migration and demographic patterns, as more women have moved to Korea on marriage and student visas in recent years. It may also be linked with recent brand awareness campaigns, which SentBe implemented among specific migrant communities.

As shown in Figure IV, women have a lower dropout rate than men ³ Forty percent of women customers are retained for at least a year or longer, compared to 34 percent of men. This could indicate that women are more loyal to SentBe but could also reflect that migrant women remain in Korea longer than men. When age is considered, older women (35 years or more) tend to be the most loyal customer group, and the greatest dropout is seen among younger men (between 18 and 34 years old). It may be beneficial for SentBe to target groups with higher retention rates.

Customers making frequent transactions and those sending amounts less than US$500 per transaction are least likely to drop out.

Usage of Remittance Services

The extent to which migrants use digital financial services, for instance, the frequency, volume and sizes of transactions and the sending and receiving methods used, depends on whether the services are designed with migrants’ needs in mind, whether the use cases for domestic payments incentivizes the shift in behavior for migrants and their families towards adopting trusted digital financial services.

Transaction amount and frequency 

As shown in Figure V, the average quarterly value of remittances sent by each customer has steadily increased since SentBe launched its customer-to-customer remittance service in 2016 ⁴. This is likely due to increasing brand awareness and perhaps due to the introduction of more gender-smart and migrant-centric financial products. A notable gender gap has persisted over time.

Figure VI shows similar information in a different way, focusing more on the distribution of transaction values and frequencies across customer groups. In 2021, a vast majority of customers sent more than $1,000 worth of remittances, and more than half sent over $5,000. Two-thirds of customers sent more than five transactions, and two out of every five sent more than 10.

Historically, men sent more transactions and higher volumes than women. However, the disparity in the number of transactions has evened out. For instance, in 2019, 39 percent of men and 35 percent of women made more than 10 transactions per year, compared to 43 percent of men and 42 percent of women in 2021. Similarly, the gap in transaction volume has narrowed. In 2019, 52 percent of men and 39 percent of women sent over $5,000 per year, compared to 61 percent of men and 52 percent of women in 2021. As mentioned before, this shift could be related to the visa structure and the changes in migration demographics as a result of the COVID-19 pandemic, and it may also reflect an increase in brand awareness among women in recent months.

Platform 

By the end of 2021, almost all SentBe transactions were initiated using a mobile app, and the rest were initiated through a web browser. While SentBe operates two offline agent-staffed customer service centres in areas with large migrant worker populations, these account for a negligible proportion of the total number of transactions. Overall, among migrant customers, women and youth tend to use the mobile phone app significantly more than men and older customers.

Overall, 83 percent of recipients receive their remittances in a bank account, 15 percent receive them in cash and the remaining 2 percent receive them via a mobile wallet (Figure VII). Slightly more remittances sent by men (87 percent) are received digitally—in either a bank account or a mobile wallet—than those sent by women (82 percent) ⁵ .

Interestingly, only 6 percent of remittances sent by youth aged 18-24 years are received in cash compared to 18-22 percent of those sent by people 35 years and older. While this may reflect young migrants using remittances to make deposits into their personal accounts back home, it may also suggest that young migrant clients help to improve the digital and financial literacy of their families. This will be further explored in the next article of the series.

The use of mobile wallets is predominantly driven by the Korea-Bangladesh corridor, where 46 percent of transactions are received in a wallet due to high rates of adoption of digital financial services. For further insights, please see our case study on Bangladesh-based BRAC Bank.

“Remittance service is generally considered a common financial service in many other countries. The case of Korea, which has been ranked among the top 10 to 15 of the world’s largest remittance sending countries, has, however, a distinctive background giving a particularity to SentBe. The Korean regulatory environment had allowed only banks to provide remittance services until the law began to permit non-banks to operate remittance services in 2016. In such circumstances, banks have remained privileged without making remittance services better. For migrant workers accounting for the major pillar of remittance senders in Korea, it is more than costly and inconvenient, in some cases leading them to use illegal cross-border money sending despite its assumed high risks. Distinguished from banks, SentBe is thus oriented to serve migrants neglected in the market for long and has been expanding its impact on financial inclusion beyond Korea.”

Hanna Yim, Business Impact Team Leader, SentBe

Conclusion

SentBe has a growing migrant customer base with a shifting customer profile. More migrants are using their services, and they are sending larger and more frequent transactions than in years past. Migrant women are a growing share of SentBe customers. This is a consequence of both the changing migrant demographic in Korea and SentBe’s adoption of a more gender-centric approach, which has included the addition of financial literacy programmes as well as efforts to increase its brand awareness among key demographics. More important, once onboarded, women customers tend to be more loyal and require lower customer retention costs than men.

On the receiving end, the majority of remittances sent through SentBe are received in a bank account, indicating high levels of financial inclusion among migrants and their families. However, the use of mobile wallets, and thus digital financial inclusion, is highly dependent on the development and adoption of such products in receiving countries. For instance, as many as 46 percent of transactions to Bangladesh are received in a mobile wallet compared to only 2 percent of all SentBe remittances.

Achievements and next steps

So far, beyond the findings shared in this article, the collaboration between SentBe and UNCDF has led to a better understanding of SentBe’s customers and their remittance behaviour. SentBe is currently part of a pilot to develop a Financial Literacy Toolkit that will be published in Q3 2022. This research collaboration supported these efforts by helping SentBe tailor its financial literacy content to the partnership’s target population, migrants from Bangladesh, Nepal and Myanmar. So far, SentBe has used this content to successfully train more than 1,000 clients, including more than 300 women, from the target countries. Finally, the data analytics work has also generated collective insights that will help SentBe introduce customer-centric financial product innovation with a gendered lens.

As an immediate next step, SentBe and UNCDF will publish another blog based on the analysis of data from a recent lean-data survey, which was carried out to provide a deeper understanding of migrant customers’ behaviour to further tailor the financial literacy training tools to the target corridors.

References

1. World Bank, “Personal remittances, paid (current US$) – Korea, Rep.“, DataBank. Available at https://data.worldbank.org/indicator/BM.TRF.PWKR.CD.DT?locations=KR (accessed on May 2022).
2. Statistics Korea, “International Migration Statistics; Number of incoming foreigners by type of visa and citizenship“, Korean Statistical Information Service (KOSIS) database. Available at https://kosis.kr/eng/statisticsList/statisticsListIndex.do?menuId=M_01_01&vwcd=MT_ETITLE&parmTabId=M_01_01#content-group (accessed on May 2022).
3. Customers are considered to have dropped out if they have not made a transaction in the last 30 days.
4. The reason for the spike in transaction value in the second quarter of 2021 is unclear.
5. Because the transaction data does not include information about the characteristics of remittance recipients, this data is disaggregated by characteristics of the sender.