Examining Remittances Through a Behavioral Lens

This note identifies drivers that influence choice of money transfer services for a migrant. It discusses various behaviors and cognitions of migrant workers that could be used by remittance service providers to design product features, processes, and marketing messages. The note suggests that there is a need for innovation in money transfer product design. It states that there are various options for value addition in remittance services on the basis of the behavior of migrants such as emergency credit, optional voluntary savings, and insurance against accidents or health. Key points highlighted in the note include:

• For sending a first remittance, a migrant generally uses a service that has endorsement from peer migrants;
• Migrants tend to choose those services that take minimal time for the money to reach their families;
• For a migrant, spending too much time in bank queues or traveling long distances to remit money results in a loss of income;
• Remittance behavior of migrants, including value of money and frequency of remittance, are often influenced by the discussions with peers they live with;
• Migrants build relationships with money transfer service providers as they see a lot of value in the service.