What changes does coronavirus bring about in remittances in Ukraine?
Expectedly, the quarantine was extended — everyone seems to have gotten used to the remote work situation, and 1000 and 1 recipe for the success in building the efficient work of employees from home is already a routine rather than something new.
While the offline business calculates the losses incurred and thinks how to reach the end of the quarantine measures, online is growing, changing the habits of Ukrainians in the consumption of goods and services. Money transfers are definitely one of the most clear payment services. Let’s talk about them today.
Remittances by labor migrants
First of all, it is important to read carefully the release report on the World Bank website. It is about visiting this website directly, instead of reading sketchy information about Ukraine, which has been actively disseminated by our media.
The main source of remittances to Ukraine is our labor migrants. The amount of currency transferred from them to our country is growing every year and at the end of the year it could be compared with financial assistance from the IMF. The World Bank in its article calls Ukraine a record holder country in terms of the amount of money received — $ 16 billion in 2019. To my mind the figure is quite bold, because, according to the NBU, the remittance flows amount to $ 2.271 billion. On the other hand, the regulator’s figure does not include banks data.
Coronavirus forced hundreds of thousands of labor migrants to return to Ukraine, and then the 2019 record numbers are a cruel joke for us. Instead of the anticipated average decline of 20%, Ukraine, which is highly dependent on labor migration, will lose more, at about 30–40%. However, I cannot be sure of these figures, because no one knows what post-quarantine measures will be taken, and when Ukraine resumes passenger service. Moreover, we do not know the real number of our compatriots who have not returned to the motherland.
Domestic money remittances
The most logical conclusion is that the Western Union, Moneygram and other offline cash departments will lose a turnover. They are not closed, because bank centers work during the quarantine. However, the quarantine deterrent has still reduced the number of box office visitors to a minimum. The online services have become the new standard of life, and therefore banking and non-banking services that allow people to transfer money, now enjoy an increase in demand. I can’t evaluate it in exact figures of the entire market, but the average growth of 30–35% in my field of activity can be considered the average market indicator.
The fintech services, which have already been working in that sphere for a long time and have had strong positions and a stable customer database before the quarantine, will be especially strengthened. The already launched online banking, which will save uncommissioned transfers between their accounts and the most loyal commissions to cards of other banks will also grow.