Remittances and Financial Inclusion

Remittances are straightforward but play one of the most critical roles in the modern economy. With remittances, workers send life-changing funds back to their relatives and communities worldwide. These funds have become vital to countries' development and financial inclusion worldwide.

Essential Roles of Remittances


To say remittances are critical to the modern global economy is an understatement. Around 1 billion people globally depend on remittances to support their families or themselves. Estimates indicate that about 200 million people send remittances back to their home countries. With another 800 million people using them to pay for essentials.

These remittances can make up a substantial portion of the income for many households. The scale of remittances has also grown dramatically over the last 20 years as more people than ever send money back to their home countries. Most of the funds from these remittances are used to pay for bare essentials such as food. Over the next few years, it is estimated that well over $5 trillion will be sent in remittances.

Investment in Communities

These funds sent by workers to their home countries are absolutely essential for their communities. Remittances are indispensable in reducing poverty by paying for basic needs such as food. Most of the remittances that are not used for essentials are used for investment or savings purposes. This allows communities excluded from traditional financial services to build up their systems of savings and investments. 

Additionally, most remittances globally are sent to rural areas. These communities are very far from traditional financial services, and remittances, especially ones sent digitally, allow rural communities to access funding.

Several years ago, remittances actually passed foreign direct investment as the largest source of financing for emerging economies. In dozens of countries worldwide, remittances make up a large portion of the economy.  


Countries that see large inflows of remittances have even begun programs to incentivize expats further to send money home. These include tax breaks and encouraging them to direct funds that assist with community development, such as helping local businesses grow. 

Some have been able to send enough back to their home countries that they have been able to build entire schools or fund the education of students. This shows how remittances can be incredibly powerful for global communities' development. Education has been dramatically improved for people all over the world thanks to significant inflows of remittances. 

By funding education, these funds give people the tools they need to develop their communities and make a better life for themselves. According to the UN, if all low-income students globally could read, well over 150 million people could be lifted out of extreme poverty, and education is one of the central goals of global development

Supporting Global Agriculture

Many people around the world rely on farming for their income. As mentioned earlier, remittances, especially those based around digital money services, allow rural communities to get access to funding quickly. This funding will enable farmers to purchase insurance, new equipment, better seeds, or invest in long-term growth. 

With agriculture still being the most significant form or one of the most prominent forms of employment in many emerging economies, this funding is beneficial. This funding gives many farmers the opportunity to establish credit histories and begin working with traditional financial services. By funding farmers, remittances work to increase financial inclusion. 

Enhancing Remittances

Shortcomings of Money Services

Remittances have been around for decades and have relied on money services like Western Union to send money from workers to their families around the world. But there are many shortcomings to these money services for those wanting to send money to their home country.

It can take several days for a direct deposit to go through Western Union, and this makes it incredibly difficult for workers to help their relatives pay urgent bills. There are also hefty fees that senders have to pay for funds to reach their families, and with money services, the recipients will also need to pay a fee to access the funds. These delays and costs are potentially devastating for families that rely on remittances to pay for essentials. 

Role of Crypto

Cryptocurrency has incredible potential to make remittances faster, cheaper, and more reliable. Anyone with an internet connection can access crypto networks, and this allows underserved or isolated communities to receive remittances quickly. Additionally, by relying on blockchain technology, transactions, and transfers can occur much faster when compared to traditional money services. 

Blockchain networks also charge much lower fees to use when compared to money services. This is huge for low-income communities that have little money, to begin with. Users also do not need a bank account to access cryptocurrencies. This allows for financial inclusion as people that cannot access traditional banking locally can still access remittance funding via blockchain.

Role of Automation

Much of the back and forth between banks during international money transfers can quickly and efficiently be automated. This can dramatically speed up transaction times between banks in different countries and reduce the overall cost of international transactions. Additionally, machine learning can be implemented to ensure that these transactions are secure from end to end. For remittances to remain central to financial inclusion, banks must work to streamline their international payments operations with new innovations

Enhancing Internet Access

Already cell phones and internet access have become widespread globally. This trend must continue as many communities need more consistent internet or electricity access. Fortunately, with the global rollout of 5G networks, it should be more accessible than ever to connect people with the remittance flows they need. Additionally, banks and fintech can begin to offer more complex financial services to mobile users. 

Key Takeaway

Remittances are absolutely critical for the global economy. They provide hundreds of millions with funding that is used to feed, educate, and develop people and communities around the globe. Remittances are central to driving and creating opportunities for financial inclusion. With new innovations, remittances can help people more than ever before, but to accomplish this, both the public and private sectors must continue to commit to making remittances as easy as possible to both send and receive. 

Thanks for reading ✌️
Learn How To Go Digital

Receive a series of insightful emails, over the course of 3 weeks, that will show you how to grow your business with digital account opening.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Request Access
14 - Day Free Trial

Get Started

Try For Free Today

Want to see if Under works for your team? No worries, give it a shot before you commit.

Talk With Sales
Free Trial