Financial products for low-income migrants in host countries: Philippines National Bank

This article was originally drafted by the Lee Kuan Yew School of Public Policy for Issue 14 of the newsletter “Asian Trends Monitoring Bulletin” as part of the Rockefeller Foundation’s Searchlight Process. For more Searchlight content on futurechallenges.org, please click here.

A growing stock of migrant workers inevitably leads to a growing amount of money and a growing demand for remittance services. This presents an opportunity for financial institutions that want to tap into the growing stock of money by offering attractive remittance services.

One such example is the Philippines National Bank (PNB). As Singapore has a very large population of migrant workers from the Philippines, there is a large amount of profit that could potentially be made from providing remittance services. Thus, PNB has opened several branches in Singapore and has created a wide variety of remittance services that cater to all needs.

The cheapest remittance service provided is the direct remittance from a PNB Singapore account to another PNB account in the Philippines. This is not only the cheapest service but also the one that offers the highest service quality: the money reaches the beneficiary account immediately, and there is an online banking option for remitters with internet access. The low service charge and high service quality act as incentives for both remitter and beneficiary to open PNB accounts.

However, as not all remitters and beneficiaries have or wish to open PNB accounts, PNB provides other services in order to capture a higher market share. PNB now allows remittance payments to be made to accounts in other local banks in the Philippines. PNB has also created the Global Filipino Card, a reloadable prepaid automated teller machine (ATM) card that beneficiaries can hold without opening a bank account. Remitters can transfer money directly to the ATM card.

However, the most far-reaching of these remittance services are the over-the-counter and door-to-door services that allow beneficiaries to directly receive cash without opening bank accounts or needing to find an ATM. The over-the-counter service allows beneficiaries to claim the cash from a number of payout outlets in all major cities in the Philippines, while the door-to-door service allows direct delivery to the homes of the beneficiaries. These two services in particular are very useful for beneficiaries that are not technologically savvy or live in remote areas that don’t have access to bank branches and ATMs.

These kinds of services are currently unique to PNB, and have not been replicated by other banks. Bank Negara Indonesia  does not provide these extensive services for Indonesian remitters, despite also having branches in Singapore. Most banks in Singapore also provides very limited services for remittances, only handling inter-bank telegraphic transfers. However, as the number of international migrants continues to increase, other banks would do well to follow PNB’s lead and provide these cheap services, as they not only provide great value to unbanked remittance recipients, but also a great potential for profit.