The remittance company Opportunity Kauswagan Remit Inc. (OK Remit Inc.) said billions of pesos could be made by tapping even the low-income segment of the business, particularly in the rural areas.
OK Remit Inc. President Martin Camahort reiterated the remittance market is fairly well-developed as a large number of players offer a variety of financial services even for the less financially endowed.
According to the executive, the total outstanding portfolio of the top 7 microfinance institutions (MFIs) in the country amounted to P12.5 billion as of end-December 2014. The MFIs provide credit services to more than 2.3 million customers.
OK Remit plans to grow its mobile payments and remittance business in the rural areas through so-called digital finance platforms.
“OK Remit, with its in-house technology and an agent network with outreach in deep rural areas, is positioned to partner with e-money issuers [EMIs] to offer full range of financial services,” he said at the recent Asia-Pacific Financial Inclusion Summit.
The remittance company will expand its reach in the rural areas through MFI partners Alalay Sa Kaunlaran Inc. (Aski) and Taytay Sa Kauswagan Inc. (TSKI).
Aski Executive Director Rolando Victoria said Aski’s portfolio now amounts to P1.41 billion.
Aski’s services include mobile payments and remittance, insurance, as well as loans. Aski operates in 12 provinces in Northern and Central Luzon and has a total of 72 branches.
Through MFIs, they plan to educate their customers on savings, the digital payment systems and adopting the various mobile financial services.
“The transition from traditional payments systems to digital payments is not automatic. The customer undergoes a journey before he or she starts using the service regularly. The journey is full of decision points wherein the customers decide whether to adopt and continue using the service or not,” he said.
A research study, conducted by MicroSave on financial capability gaps and financial well-being of microfinance clients, shows rural clients trust financial services that were mostly used in their community. MicroSave are global consultants on microfinance issues.
Rural clients tend to transact with community-based access points such as cooperatives, microfinance non–governmental organizations, e-money agents over other access points. Similarly, clients from lower economic class such as “Class D” and “Class E” tend to transact with community-based access points more than others.
Class D are households that have some comfort and means but basically thrive on a hand-to-mouth existence.
Class E, which is extremely low class, are people who evidently face great difficulties in meeting their basic survival needs.
He said rural clients prefer a service point where success of transaction is guaranteed. They make financial decision based on opinion from the remittance sender, family members and other influential opinion leaders in the community.
He said OK Remit’s approach is to leverage customer relationship and educate them about digital financial services.