November 2021
- The Saudi Arabia Remittance market is anticipated to grow at a CAGR of 2.8% during the forecast period FY’20-FY’25.
- Growth of digital payments solutions, along with rising fintech ecosystem are further expected to give a boost to numerous entities that facilitate online payments in the country.
- Opening of the market to allow foreign MTOs will encourage entry of new players in the oligopolistic remittance market
Saudi Arabia is one of the most economically prosperous country in Asia and hence is a prominent emigration destination to a many South Asian countries. Of the current population of 33 Million, more than 37% of population comprises of expats with India, Pakistan, Nepal, Philippines, Bangladesh, Sri Lanka and Egypt being key source countries. This results in a high contribution of outbound remittance in the industry as the expats send money to their home country periodically.
Due to increased focus on hiring Saudi nationals at higher level posts, more and more people are looking to move from Saudi Arabia. This led to a decline in the remittance industry size by value. However post-COVID the scenario has reversed due to higher propensity to save.
Until 2019, the foreign MTOs were not allowed to set up business independently. But based on G20 National Remittance Plan, Saudi Arabia has opened the markets for foreign MTOs which will boost the industry growth.
How is the competitive landscape in International Remittance Industry of Saudi Arabia?
The Saudi Arabian Remittance market is dominated by major 7-8 which are providing remittance services from a very long back. A very high amount of capital would be required to make any position in the oligopoly remittance market of Saudi Arabia. More than 95% of the remittance market is hold by 8 firms and the competition has been growing largely since the increase in penetration of digital channels. Entry of STC pay has gained a substantial market share since it begin their operations and all other banks are now focusing on strengthening their digital channels.
In Saudi Arabia, foreign MTOs were not allowed to open their branches and providing remittance services independently in the Kingdom. Since 2019, the plan have been introduced but there are many rules and regulations which are to be followed for the foreign money exchanges. The paid up capital has not been standardized for the foreign players and it is to the discretion of Saudi Central Bank SAMA. This means that the entry barriers are high for the remittance industry in the Kingdom.
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What is the future takeaway for industry players?
Given the backdrop of increase in volume and value of outbound international remittance transactions, analysts at Ken Research expect a growth of 4.5% during 2020-21 and CAGR of 2.8% during 2020-25F.
During this period, value of transactions is expected to peak in 2025 which will be driven by the opening of the market for foreign MTOs and growing adoption of digital solutions.
Analysts at Ken Research further expect that digitalization of services and corresponding marketing campaigns are expected to drive the revenue of remittance industry at a CAGR of 3.1% during 2020-25F
Key Topics Covered in the Report
- Overview of International Remittance Industry in Saudi Arabia (Statistics on Corridor wise Transaction volume and value)
- Industry segmentation (By Type of Transfers, Corridor wise)
- Cross Comparison of Major players on Operational and Financial Parameters (December 2020)
- Company Profile of Major Players (Overview, Products and Services, USP, Business Strategies, Branch wise Operational Performance, Cumulative Financial Performance, Recent Developments)
- Growth Drivers and Challenges to Saudi Arabia International Remittance Market
- Industry trends and developments
- Risk factors in the industry
- Rules and Regulations by Government Bodies
- Impact of COVID-19 and Future Outlook of Industry
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Ankur Gupta, Head Marketing & Communications
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