Introduction

Migrants play an essential role not only in bolstering South Korea’s economy by addressing gaps in its aging labour sector but also in contributing to the economic growth of their home countries through remittances. These migrants, while pivotal to economic growth, navigate distinct financial challenges, especially in areas such as cross-border remittances. To address this, SentBe, a prominent digital remittance service provider in South Korea, partnered with UNCDF to explore how to improve the financial lives of these migrants. This collaboration has already empowered SentBe to deliver financial literacy education to more than 1,000 customers, of which more than 300 are women.

Objective of the study

UNCDF’s initial publication on SentBe delved into the transaction patterns of three migration corridors from South Korea—to Bangladesh, Myanmar, and Nepal. Building on that, UNCDF and SentBe conducted a phone survey with active SentBe customers from Nepal, Bangladesh, and the Philippines, with the latter serving as a control group, in the first half of 2022. The survey sought to discern their remittance habits, the benefits they derive from the service, and the challenges, if any, that they faced.

Methodological limitations

The phone survey conducted with SentBe has several methodological limitations: 

1. Sample selection: The survey was not designed to represent SentBe’s entire clientele or all migrants in South Korea. It focused on a sample determined by corridor and gender.
2. Sample size discrepancy: The target was 400 respondents, but the survey concluded with 201 respondents: 108 from Bangladesh, 71 from the Philippines, and 22 from Nepal. Due to challenges of sample size and bias, the Nepalese data was limited and thus excluded from the core analysis of this article. 

Access to remittances: Customer archetypes

The survey revealed variations across SentBe’s major customer corridors in attributes such as education levels, sectors of employment, income brackets, financial product usage, remittance-sending patterns, and financial literacy. By analysing these granular behavioural and demographic differences between corridors, opportunities emerge to develop financial services and educational offerings tailored to the unique needs and characteristics of each customer segment. It is important to note that the findings pertain to these customers and may not necessarily represent the broader migrant populations of the respective countries. 

Among the SentBe surveyed customers:

Bangladesh Corridor:

• Education and employment: Most of the respondents have tertiary education. The top sectors they are engaged in include education (23 percent), services (22 percent), and manufacturing and production (18 percent).
• Remittance patterns: On average, these respondents remit about 25 percent of their income. Corporately, the proportion sent is lower, a consequence of higher salaries, higher expenses in South Korea, or perhaps a tendency to save locally.
• Platform preference: Around half of the respondents used a mix of platforms. There is a clear inclination towards mobile platforms, at 40 percent for remittance activities.

The Philippines Corridor:

• Education and employment: Most migrants in this corridor have secondary education. A significant number are involved in manufacturing and production (55 percent), followed by services (13 percent), and education (13 percent).
• Remittance patterns: These migrants have a consistent pattern of sending money back home, with an average of 42 percent of their income being remitted. This suggests a significant financial commitment towards supporting families or investments in the Philippines.
• Platform preference: Digital adoption is evident among these migrants, with a dominant preference for mobile platforms (79 percent) for remittance activities. This indicates comfort with and access to technology.

Sources: SentBe Customer Phone Survey, except where asterisks (*) indicate transaction data from SentBe’s Management Information System.

Note: Income brackets are: low < 1,000,000 KRW (~US$775) per month, middle = 1,000,001– 3,000,000 KRW (~$775-2,300) per month and high > 3,000,001 KRW (~$2,300) per month. Bands for the annual amount sent per customer are: low < $500 per year, mid-to-low $500-$1,000, mid $1,000 – $5,000, and high > $5,000.

Disclaimer: The personas presented above, Mohammad and Mika, are based on the corridor’s profiles and a set of interviews that SentBe conducted between 2020 and 2021 for migrants living in South Korea. For more information about the migrant’s interviews, please visit: https://www.sentbeimpact.org/blog.

Actionable activities for improving access

The diverse financial behaviour across corridors provides a fertile ground to identify unmet needs and craft tailored solutions related to access. Some solutions that could boost access in this context are:

• Customized remittance promotions: Corridors have their unique patterns, influenced by cultural or seasonal events such as festivals or harvest periods. It is essential to offer corridor- specific promotions during these peak times. For instance, in the context of SentBe’s transaction data, we observe a higher frequency of low-value remittances within the corridor from South Korea to the Philippines, compared to other corridors. Introducing promotions, designed and implemented by staff members who share the same cultural background as the users, adapted to their needs would perhaps encourage larger transactions that could be beneficial in certain scenarios.
• Multilingual mobile app interface: The diverse linguistic backgrounds of migrants in South Korea highlight the need for a more inclusive mobile experience. By offering a mobile app interface in multiple languages, especially those predominant in the major corridors, financial institutions can provide a more personalized and user-friendly experience. This not only enhances user satisfaction but also broadens the app’s reach, catering to a wider migrant audience.

Usage of financial services

Migrants’ financial behaviours, particularly in the realm of financial services utilization, present a multifaceted picture, with choices often shaped by their national backgrounds and the realities presented in their host nation, South Korea.ⁱ

Types of formal financial services used

Nearly all of SentBe’s interviewed migrant customers from Bangladesh (99 percent) use at least one financial service in addition to remittances. In the case of the interviewed Filipino migrants, as many as 27 percent reported using only remittance services and no other financial services.

The types of financial services used differ by corridor. Nearly every interviewed Bangladeshi migrant has a savings account, over a quarter use a credit card, and a fifth have insurance. Comparatively less prevalent than the Bangladeshi migrants, a third of the migrant customers from the Philippines corridor have a savings account. Hardly any interviewed Filipinos have a savings account, a quarter use a mobile wallet, another quarter have insurance, and 13 percent have a credit card.

This suggests that there is significant potential to expand migrants’ use of financial services, but the most relevant and useful services may be different for migrants from each nationality. Attention should be directed towards financial services that are underutilized by migrants in their home countries but have higher usage rates in South Korea. For instance, according to the World Bank, debit card usage is a noteworthy area—only 16 percent of the Filipino corridor clients used a debit or credit card, and 5 percent of the Bangladeshi general population owned a debit or credit card.ⁱⁱ In contrast, 28 percent of the interviewed migrants in South Korea utilized these type of payment instruments.

The observed gap between lower domestic card usage in home countries versus higher card uptake in host countries indicates an opportunity for financial institutions to cross-sell and offer diverse financial services. For example, the financial institution partners could introduce various card products at different parts of the migrant journey: when migrants return home, capitalizing on the familiarity and trust gained through their overseas card experience, or other products such as family cards while the migrant is overseas.

Figure I. Q10. In the past 12 months, which of these financial services have you used?

Digital adoption varies across corridors. For instance, while many from the Philippines corridor do not use phones frequently for financial services, a significant portion of those from the Bangladesh corridor leverage mobile devices for various financial tasks.

Figure II. Q11. In the past 12 months, for what financial services and transactions did you use your mobile phone?

There are differences in how remittances sent by men and women are used. Remittances sent by men are largely used for household expenses and savings, whereas those sent by women are predominantly used to cover household expenses, utility and energy costs, and health expenses. Roughly one-quarter of men and women use their remittances for productive investments, but far fewer women save, which may limit their ability to build wealth over time.

Figure III. Q13. For what purpose have you used the majority of the money you received/send abroad? (Intended use of remittance)

Actionable activities for improving usage

The strong preference for mobile platforms among migrants in South Korea underscores the potential of mobile-enabled digital financial services. This mobile-first trend, especially dominant in the Philippines corridor, reveals specific areas where tailored solutions can significantly enhance the user experience and meet the unique needs of these migrants. Some solutions inspired by this mobile-centric behaviour include:

• Mobile remittance alerts: Push notifications or SMS alerts for favourable exchange rates, transaction confirmations, and promotions can keep users informed and engaged. Such alerts can foster trust by ensuring transparency and timely updates, especially during crucial remittance periods or events.
• Local currency savings accounts: By collaborating with local institutions, a more seamless integration with non-resident local current and saving accounts in the recipient’s currency can be provided. For the Bangladesh corridor, where there’s a potential preference for local savings, this would be particularly appealing. Such integrations ensure a more seamless experience for migrants while saving and transferring money.

Financial health

Using UNCDF’s framework for financial health,ⁱⁱⁱ the survey paints a picture of financial well-being among respondents. While many feel financially secure, there’s a notable difference in financial control, especially in decision-making related to the use of remittances. Interestingly, women senders seem to have a stronger say in how remittance funds are utilized.

Financial security and resilience

Over half of the surveyed customers indicated that their ability to handle a financial emergency improved after using SentBe. Two-thirds of the interviewed men and women customers reported having money left at the end of the month after meeting their expenses. One-fifth of men and two-thirds of women have $1,500 or more set aside to cover emergency expenses, a mark of financial resilience. Interestingly, clients of the Philippines corridor tend to worry more about financing their daily expenses but are more capable of bringing forth emergency funds than other customers.

Figure IV. Financial resilience – confidence, stress and ability to handle emergencies

Financial control

The survey also looked at the sense of control customers have over the process of sending remittances, which, given the unknowns related to the lack of a physical transaction process, can be quite stressful. While 50 percent of the respondents indicated that they feel less stressed about sending money abroad since they started using SentBe, 33 percent reported feeling more stressed. Addressing these customers’ concerns will be important in maintaining and expanding SentBe’s client base.

Interestingly, while half of the men decide to join a remittance service based on consultation with others, the vast majority of women make this decision alone. When it comes to deciding how the funds are used, 42 percent of customers reported that they—the senders—decide, while an equivalent 41 percent indicated that the recipients decide.

However, there were interesting, gendered differences, with women senders maintaining more financial decision-making power over the final use of funds than men. This might be connected to the intended use of remittances being different between men and women. Men users’ remittances are used for investments and savings while women users’ remittances are used for living expenses. Investments and savings tend to be bigger in amount and might also require longer-term consideration for decision-making between different family members. As the latter is more likely to be a smaller amount, it is easier for women users to make decisions on the usage of remittances.

Figure V: Decisions-making in joining and using

Financial freedom

Overall, in the survey sample, 78 percent of respondents reported that remittances had a positive impact on their financial lives, a potential indicator of financial freedom. The majority of men and women respondents across the corridors expressed this view. However, the small sample size across corridors warrants caution in generalizing the results.

Drawing parallels from Bangladesh, recipients who opt for digital channels exhibit better financial resilience. This suggests that when remittances sent from South Korea are also received digitally, such as in Bangladesh, the benefits for both senders and recipients are enhanced. For insights on the impact of digital receipts in Bangladesh, see this detailed analysis.

Actionable activities for improving financial health

The dataset reveals a distinct gender dynamic in financial behaviour among migrants in South Korea. With women having a stronger say in remittance decision-making, and with specific gender preferences evident in financial choices, there’s a clear need for gender-sensitive financial solutions. Recognizing these gender-specific behaviours provides an avenue for financial institutions to offer more tailored products and services that cater to the unique needs and preferences of both men and women. Here are some solutions that can address these gender dynamics:

• Women-focused savings plans: Women often prioritize certain financial goals, such as child education or family health. Collaborating with remittance service providers in their home countries can pave the way for savings and investment plans tailored to these priorities, potentially supporting long-term planning. By offering products that resonate with women’s financial goals, financial institutions can foster trust and loyalty among this demographic, ensuring their financial needs are met effectively.
• Local support centres: The cultural backgrounds of migrants play a pivotal role in their financial behaviours. SentBe is aware of this and has established customer support centres in migrant- dense areas of South Korea. These centres are staffed by agents who are knowledgeable about the language and various cultural nuances, which allows them to offer personalized and culturally sensitive services. Such centres can bridge the gap between migrants and financial institutions, offering a more inclusive and understanding environment that caters to the unique needs of different migrant groups.

Conclusion

The partnership between UNCDF and SentBe demonstrates a practical application of SDG 17: Partnerships for the Goals. This joint initiative not only promotes financial inclusion but also showcases the transformative potential of leveraging technology in line with SDG 9: Industry, Innovation, and Infrastructure. The findings on the distinct financial behaviours of men and women underscore the importance of addressing gender disparities, resonating with the objectives of SDG 5: Gender Equality. Lastly, by aiming to understand and cater to the unique needs of migrants in South Korea, the research contributes to reducing financial inequalities, advancing the goals of SDG 10: Reduced Inequalities.

The survey provides insights into the financial behaviour of a sample of Bangladeshi and Filipino migrants in South Korea, customers of SentBe. The findings present opportunities for financial institutions and ecosystem stakeholders to tailor products and services to better meet the needs of migrant demographics in South Korea.

Further research and collaboration between stakeholders are important to build on the survey insights and to continue to improve access to financial services for migrants. For a comparative understanding of migrant behaviour in different countries, you may refer to our other publications on the topic.