99588 Migrants’ Remittances from the United Kingdom International remittances and access to financial services for migrants in London, UK A GREENBACK 2.0 REPORT JULY 2015  i Migrants’ Remittances from the United Kingdom International remittances and access to financial services for migrants in London, UK A Greenback 2.0 Report A survey by DMA JULY 2015  iii Contents List of Tables and Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Foreword.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii ExEcutive Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Overview of the project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Demographic breakdown. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Income, savings and financial inclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Remittance habits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x Conclusions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x 1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 International Remittances & Sending Remittances from the UK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Global context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 UK remittances market.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Migration to the UK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 UK remittances market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3 The Greenback 2.0 Survey: Research Objectives and Data Collection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Research objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sample structure definition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sampling method and surveying technique. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4 Empirical Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Demographic and economic profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Job type, occupation, and sectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Individual Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Savings and financial inclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Savings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Banking products and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Access to credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Remittance behaviors: flows, recipients, operators and costs. . . . . . . . . . . . . . . . . . . . . . . . 21 Main recipients and motivations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Channels and remittance services providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Remittance volumes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Perceptions of transaction costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 iv A Greenback 2.0 Report Advantages and disadvantages of remittance channels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Trends in remittances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Received remittances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Internet and mobile phone use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Income and financial inclusion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Remittance habits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Access and use of technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Annex 1—SMEs survey findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Key findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1. Demographic information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2. Business.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3. Financial services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Conclusion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Annex 2—From survey design to field work: A methodological note.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 The questionnaire.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Training of interviewers and testing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 The fieldwork: sampling strategy and entry points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Feedback from fieldwork. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Data entry, cleaning and analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 List of Tables and Figures v List of Tables and Figures Table 1: Remittance flows from UK to focus countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Table 2: Average total cost to send. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Table 3: Main characteristics of the sample, by country of origin.. . . . . . . . . . . . . . . . 10 Table 4: Current legal status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Table 5: Perceived cost of remittance transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Table 6: Mobile phone penetration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 1: International financial flows, 1990–2017.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 2: Arrivals of foreign born individuals in England and Wales. . . . . . . . . . . . . 3 Figure 3: Top 10 key remittance receiving countries from the UK (US$ millions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Figure 4: Top 10 key remittance receiving countries of birth for immigrants in the UK (in ’000s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Figure 5: London boroughs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 6: Status upon entry to the UK, percentage of total sample. . . . . . . . . . . . . . 11 Figure 7: How often do you visit your country of origin? Percentage of total sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 8: Job distribution by type of contract, percentage of total sample. . . . . 12 Figure 9: Hours worked per week (by gender), percentage of total sample. . . . 13 Figure 10: Number of hours worked per week by community, percentage of total sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 11: Sectors of occupation, percentage of total sample. . . . . . . . . . . . . . . . . . . . . 14 Figure 12: Income brackets by country of origin, percentage of total sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Figure 13: Income brackets by gender, percentage of total sample. . . . . . . . . . . . . . 15 Figure 14: Individual income: level since arrival in UK, percentage of total sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 15: Individual income: trend since arrival in the UK, percentage of community sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 16: Are you able to save some of your income? Percentage of community sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 17: If able to save some income, the average amount saved each month (£) by gender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 18: If able to save some income, the average amount saved each month (£) by community. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 19 (i and ii): Where do you have a bank account (please tick all that apply)? Percentage of total sample and percentage by community. . . . . . . . . . . . . 17 Figure 20: What services do you use (tick all that apply), percentage of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 21: Card products used, percentage of products.. . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 22: Why did you choose the bank that you use? Top 3 responses. . . . . . . 19 vi A Greenback 2.0 Report Figure 23: Do you have a loan? Percentage of total sample.. . . . . . . . . . . . . . . . . . . . . . 19 Figure 24: If you have a loan, do you think you will be able to repay it? Percentage of responses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 25: If you do have a loan, where is it from? Percentage of responses. . . . 20 Figure 26: If you needed a loan, who would you turn to? Percentage of total sample. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 27: Who do you send to? Percentage of responses. . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 28: Average amount sent per year (by community and gender). . . . . . . . . 21 Figure 29: What is the money sent used for? (Ranked in importance from 1 to 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 30: How do you primarily send money?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 31: Distribution of operators (Romania). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 32: Distribution of operators (Somalia).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 33: Distribution of operators (Ghana). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 34: Distribution of operators (Bangladesh). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 35 (i and ii): Where do you complete the transaction? Percentage of total responses and breakdown by community. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 36: What is the speed of service? Percentage of responses. . . . . . . . . . . . . . 25 Figure 37: How did you choose your main channel for sending remittances?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 38: Frequency of transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 39: Average transaction amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 40: Perceptions of transaction costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 41: What are remittance costs composed of?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 42: What are the advantages of your primary method of sending remittances?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 43: What are the drawbacks of your primary method of sending?.. . . . . . 29 Figure 44 (i and ii): What problems in the past have you had with this channel? Percentage of total response and breakdown by community. . . . . . . . . 30 Figure 45: If you did have a problem, who did you turn to for help?. . . . . . . . . . . . . 30 Figure 46: Since you arrived has your main method of sending remittances changed?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 47: If yes, what method did you use previously?. . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 48: Has the amount you send increased, decreased or stayed the same since your arrival in the UK?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 49: What is the reason for the change?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 50: Do you receive remittances?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 51: If yes, who sends you money? Percentage of responses. . . . . . . . . . . . . . 32 Figure 52: What do you use your phone for? (Choose up to 3 answers).. . . . . . . . 33 Figure 53: Where and how do you access the internet?. . . . . . . . . . . . . . . . . . . . . . . . . . . 34  vii Foreword Overview of remittances DFID recognizes the importance of remittances to developing countries, in particular for those in poverty. It recognizes that remittances may finance food, housing, health and education and also sometimes investments. The UK is keen that remittance costs are low and remittance channels also need to be secure and legitimate. For this, an open and competitive market of reliable players and participation of both banks and money trans- fer operators is essential as is clear information and rights for remitters. DFID supports work both in the UK but in particular abroad both on regulation and with the market players. The importance of Somalia remittances and the diaspora Worldwide remittances to Somalia account for approximately half of Somalia’s gross national income and exceed the amount the country receives in humanitarian aid, devel- opment aid, and foreign direct investment combined. The Somalia Diaspora in the UK remits approximately $500 million per year. 90% of the remittances are used to buy food, healthcare and fund education. Support to the UK-Somali remittance corridor The UK Government established the UK-Somali Safer Corridor Initiative (“SCI”), which combines a series of both measures in the UK and Somalia to support the flow of remit- tances through more transparent, legitimate, and traceable channels, in a way that could reduce the risk of use for illicit purposes. Actions taken in the first mile (UK) are aimed at improving the compliance standards of UK-based Money Transfer Operators (MTOs), thereby giving greater confidence to the financial sector. The UK has liaised with the market players in the second mile (Dubai) which is regulated by the UAE authorities. At the third mile (Somalia) DFID is supporting the Somalia Government regulation and supervision of the remittances sector through a trusted Agent, as part of a longer term program to support the formalization of the financial sector in Somalia. Throughout 2014 and 2015 the UK Government has monitored developments in the UK-Somalia remittance corridor closely and maintained regular contact with UK com- mercial banks, SOMSA members, money remitters, the Somali community and other stakeholders. viii A Greenback 2.0 Report The DFID funded survey into remittance sending behavior that was carried out by Developing Markets Associates for the World Bank Project Greenback 2.0, is thus an extremely useful piece of research for DFID and helped inform the Safer Corridor Initiative. Gail Warrander Head of Investment and Finance Team Department for International Development (DFID)  ix Executive Summary Overview of the project Project Greenback 2.0 is a project led by the World Bank, aimed at supporting the devel- opment of an efficient and transparent remittances market. Project Greenback 2.0 was launched in Turin, Italy in 2013 and Montreuil, France in 2014. Following the crisis affecting Somali money transfer operators’ access to bank accounts in the UK, the World Bank has been supporting UK authorities in the UK-Somalia Safer Corridor Initiative. It is within this context that a survey of migrants residing in London was commissioned to DMA to investigate the level of financial inclusion and the remit- tance sending practices. The survey collected 602 in-depth interviews of migrants from Bangladeshi, Ghana- ian, Romanian and Somali communities. The survey looks at the economic and financial profile of migrants, as well as their financial behaviors. There is an emphasis on sending remittances and access to financial services. Demographic breakdown The vast majority of the sample declared to be legally residing in the UK, either as a Brit- ish citizen or, in the case of Romanian respondents, as a European Union national. The range of education achieved varied across the sample, however 40 percent of respon- dents across all four community sub-samples had completed some secondary schooling, while 21.2 percent had a bachelor’s degree or equivalent, and 14 percent had achieved a masters or PhD level of education. The vast majority of the sample reported being in permanent employment, although a significant portion of Romanian men reported being contractors or freelance. Income, savings and financial inclusion Differences arise across the subsamples with regards to income. Romanians declared the highest average individual income (with 48.7 percent reporting a monthly net income of greater than £1,500), while Somalis declare the lowest average income in the sample (with 70.6 percent reporting a monthly net income of less than £1,500). As noted in Turin, the relatively better economic position of Romanians could be attributed to hav- ing acquired EU citizenship in 2007, which may ease their integration. On a positive note, the majority of respondents reported that their income has become more constant and secure since their arrival in the UK. In general, the data collected points to a relatively high level of financial access for interviewed migrants, with 95 percent of respondents being banked. The respondents reported high usage of formal financial services and products, including 53 percent or respondents using online banking. While the majority of Romanian, Ghanaians and Ban- gladeshi respondents reported being able to save some of their income each month, x A Greenback 2.0 Report 67 percent of Somali respondents reported not being able to save some of their income each month. This may be connected to the relatively low individual monthly incomes of Somali respondents, and the relatively high amount of remittances sent home on a regu- lar basis. Remittance habits With regards to sending remittances, 53.8 percent of respondents reported sending cash through a money transfer operator. 26.5 percent of respondents use bank trans- fers, with much smaller proportions sending cash to an account, cash in hand or using prepaid cards. The majority of respondents send remittances each month, and while the cost of the transaction is an important consideration, 41 percent of respondents cited the speed of the service as a crucial factor when choosing a service. Ease of use and the security of the channel were also cited significantly by respondents. In reporting transaction costs, many respondents only reported the fee. While respon- dents may consider foreign exchange rates when sending remittances, the majority of respondents did not report the foreign exchange margin or other costs when asked how much they were charged for sending remittances. This illustrates that there is a role for greater awareness and tools that allow remitters to better understand and calculate the costs incurred when sending money. In the context of recent bank derisking, which has affected money transfer operators’ access to banking services, this does not seem to have had a large effect on changing remitters’ method of sending. This was particularly evident in the Somali community, where 94.4 percent of respondents reported that since they arrived in the UK, their main method of sending remittances has not changed. However, the ability of migrants to continue sending remittances through efficient means and to use their operator of choice remains a concern. Conclusions Overall the survey provides insights into how the remittance market currently functions in the UK and migrants’ access to financial services. Based on the findings there are a few areas that would be worth further investigation: • The differences in average monthly income levels across communities • Perceptions of sophisticated financial tools such as insurance, and how to increase uptake • Specific interventions for the Somali community where tools and techniques for increasing savings could be implemented 1 Introduction R emittances often play an important role in the household income of recipients, contributing to daily consumption needs, housing, educa- As part of this Project, a survey was carried out on remittance senders residing in London to investigate their level of financial inclusion and tion and healthcare. On a larger scale, they can their remittance sending practices. also represent a significant financial inflow for recipient economies. Greater recognition of the This report will share key findings from the importance of these flows is demonstrated by research, starting with an overview in Section 2 the increased role played by governments and of the international remittance context and the development actors in harnessing the potential of UK remittance market. It also provides a view remittances for economic development and chan- on trends in the UK market, particularly in the neling them towards productive investment. More wake of significant bank de-risking, leading many recently, the link between remittances and finan- remittance service providers (RSPs) to seek out cial inclusion has also been given greater atten- alternative banking solutions. Section 3 outlines tion as development actors better understand the the objectives of the research, the survey design opportunity to introduce remittance senders and and the sampling techniques for the fieldwork. receivers to other vital forms of financial services. This is followed by Section 4, which presents the empirical findings of the 602 interviews collected. It is within this context that the World Bank It begins with demographic and economic char- launched “Project Greenback 2.0—Remittances acteristics of the participants before focusing Champion Cities” in 2013.1 Turin, Italy and on migrants’ attitudes and behaviors regarding Montreuil, France have been the first and second remittance sending, using financial services, and Champion City, respectively. The central goals savings and investment. Given the current envi- of the Project are to understand the local remit- ronment for remittance service providers in the tances market alongside the financial needs of UK (and in several other countries) and the global migrants sending remittances to their country commitment to reducing remittance costs, there of origin, and implement initiatives—on both the is a focus on the service providers used and the send and receive side—that increase transparency costs incurred. and contribute to increase the efficiency of remit- tance services. Finally, the report concludes with a summary of the main findings and provides recommendations on addressing the barriers and issues faced by migrants in London regarding financial and remit- 1 Further information on Project Greenback 2.0 can be found at http:// tance services, as well as potential areas of further remittanceprices.worldbank.org. inquiry.  1 2 International Remittances & Sending Remittances from the UK Global context investment to developing countries. Remittances also provide an important source of foreign Global remittance flows to developing countries exchange, which can help countries support bal- are estimated to reach $4402 billion in 2015. ance of payments. Further to this, remittances Remittances are one of the most tangible con- tend to be less volatile and more stable in the tributions of migrants to their countries of ori- wake of external shocks, and can in fact increase gin and represent a growing financial flow for in times of crisis (i.e. disasters and humanitarian developing countries, as Figure 1 shows. These emergencies). flows are approximately three times larger than official development assistance and are signifi- At the micro level, remittances constitute an cantly larger and more stable than foreign direct important source of household income. They sup- port basic consumption, as well as investments in education, entrepreneurship and healthcare. 2 The World Bank, 2014. ‘Migration and Development Brief 24’, http:// siteresources.worldbank.org/INTPROSPECTS/Resources/334934- 1288990760745/MigrationandDevelopmentBrief24.pdf. 3 Ibid. Figure 1: International financial flows, 1990–20173 800 ($ billion) FDI 700 600 500 Remittances 400 Pvt debt & port. equity 300 200 ODA 100 0 19 0 19 1 19 2 19 3 19 4 19 5 19 6 19 7 19 8 20 9 20 0 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 20 0 20 1 20 2 20 13 20 4e 20 5f 20 6f f 17 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 19 1 2 INTERNATIONAL REMITTANCES & SENDING REMITTANCES FROM THE UK 3 The development agenda surrounding remit- population of 8.65 million, born outside of the UK. tances has increasingly become a priority; a fact According to the 2011 census the foreign born that is illustrated by the G8’s 2009 commitment population of the UK was estimated at 7.5 million. (and later the G20 in 2011) to reduce the price of A significant proportion of the foreign born popu- sending remittances to five percent of face value lation is believed to send remittances from the sent by 2014 (the 5x5 objective). This goal was UK, which were an estimated USD 2,222 million in re-endorsed at the 2014 G20 Summit in Brisbane 2013,6 driving the demand for money transfer ser- in November 2014 where the agreement was that vices in the UK. Figure 2 illustrates the fluctuating the target is for remittance costs to be no more yet continuing immigration into the UK, with over than 5 percent of face value.4 600,000 arrivals over 2010 and 2011. The top ten key receivers of remittances from the UK remittances market UK are illustrated in Figure 3. These ten corridors reflect many of the top key country migrant com- Migration to the UK munities in the UK (including from developing The UK is a major host of migrants, and Lon- countries), illustrating the link between the size of don remains a global center for migration with the migrant community and the size of the flow of approximately 3.8 million residents, out of a total remittances (Figure 4). 4 We commit to take strong practical measures to reduce the global aver- 6 The World Bank, 2014. ‘Remittance outflows’ http://siteresources age cost of transferring remittances to five percent and to enhance financial .worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/ inclusion as a priority. RemittanceData_Outflows_Oct2014.xls (Last accessed 17 April 2015) This 5 Office of National Statistics & Greater London Authority, 2015. ‘Popu- data should be taken with caution as official data on remittance flows is not lation Change 1939–2015’ http://data.london.gov.uk/dataset/population- collected by the UK government. change-1939-2015 (Last accessed 17 April 2015). 7 Office of National Statistics, 2013. Figure 2: Arrivals of foreign born individuals in England and Wales7 1,300,000 1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - 61 70 0 0 93 6 0 3 6 9 1 98 99 99 00 00 00 00 01 19 19 19 –1 –1 –1 –2 –2 –2 –2 –2 1– 1– re 71 81 94 97 01 4 07 10 6 9 0 fo 19 19 19 19 19 19 20 20 20 20 be ed ed ed ed ed ed ed ed ed ed ed riv riv riv riv riv riv riv riv riv riv riv Ar Ar Ar Ar Ar Ar Ar Ar Ar Ar Ar 4A A Greenback 2.0 Report Figure 3: Top 10 key remittance receiving countries from the UK (US$ millions)8 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 ia ia an nd sh na s ia a na ne ny d er al de st la hi ha In m pi Ke ig ki Po C la G ilip So N Pa ng Ph Ba Figure 4: Top 10 key remittance receiving countries of birth for immigrants in the UK (in ’000s)9 800 700 600 500 400 300 200 100 0 a nd an h a ia ca s na a ne di es ric ny er ai la st hi In ad Af pi Ke ig m Po ki C ilip N Pa Ja gl h ut n Ph Ba So UK Remittances Market encouraging competition. There are a number of MTOs who serve a broad range of communities The UK remittance market is relatively competi- sending money home. tive and offers consumers a range of services, from the traditional ‘cash to cash’ products Whilst the regulatory regime is relatively open, through agents, transfers to and from bank allowing small corridor specialists to flourish accounts, as well as online and mobile services. alongside global MTOs, the broader global regu- latory environment is becoming increasingly The regulatory environment for remittance difficult for large numbers of non-bank remit- services in the UK has been geared towards tance services providers (RSPs) to continue providing remittance services on behalf of their 8 The World Bank, 2010. ‘Bilateral Remittances Matrix’. clients. Several UK banks have been in the pro- 9 London Datastore, 2011. ‘Census data—Population By Country Of Birth’ cess of ‘de-risking’—no longer providing banking http://data.london.gov.uk/dataset/population-country-birth (Last accessed 17 April 2015). services (and therefore access to the international INTERNATIONAL REMITTANCES & SENDING REMITTANCES FROM THE UK 5 payments system) to clients that they consider an important lifeline in an environment that lacks high-risk, such as those providing money trans- formal banking infrastructure.11 fer services internationally. This has meant that non-bank RSPs that have lost their bank accounts In addition to providing greater insight into send- have had to find alternative arrangements in ers’ behaviors and financial inclusion levels, the order to continue operations. This challenge has research also provides some intelligence on come to the attention of development stake- whether the shifts in the UK remittances market holders10 and is a great concern, particularly for as a result of this de-risking has had a marked countries such as Somalia, where remittances are impact on consumers. 10 The World Bank Group, 2013. ‘Barriers to access to payment systems in sending countries and proposed solutions’ http://siteresources.worldbank 11 Reuters, 2014. ‘Somalis panic as cash flow dries up after US remittance .org/FINANCIALSECTOR/Resources/282044-1359488786791/barriers_web lifeline cut’ http://www.reuters.com/article/2015/02/19/us-somalia-money- .pdf. remittances-idUSKBN0LN0GN20150219 (Last accessed 17 April 2015). 3 The Greenback 2.0 Survey: Research Objectives and Data Collection U nder the Greenback 2.0 Project, this survey of migrants in London draws on the design of research already undertaken in Turin and migrant group in Tower Hamlets, at 17.6 percent of the migrant population.13 There is one main Ban- gladeshi bank who handles bank account credits Montreuil, and has been tailored to the London and cash pay-outs as well as a small number of context. There were three main phases of the corridor MTOs serving this community. research: Ghanaian—Estimated 20,000 nationals residing 1. Research design and the definition of the sam- in London. Ghanaians are particularly prominent ple structure in the boroughs of Lambeth, Southwark and 2. Data collection, input and analysis Brent. Ghanaian remittance senders are served by a number of global MTOs as well as corridor 3. Preparation of the final report specialists. Research objectives Romanian—An estimated 57,000 Romanians live in London.14 Romanians are the second largest The aim of the research was to investigate the migrant population by country of birth in Brent level of financial inclusion and remittance send- at 3.6 percent of the Borough population. There ing patterns of migrants in London. The survey are no significant corridor operators sending to focused on both migrants’ current financial and Romania but the large global operators provide remittance behaviors, as well as their needs and comprehensive services to this country. level of access. It was important to understand what barriers or issues these migrant communities Somali—It is estimated that about 25,000 people face with regards to accessing or using these ser- of Somali nationality reside in London.15 The bor- vices. One of the purposes was also be to explore oughs of Tower Hamlets, Brent, Ealing and Har- migrants’ level of financial inclusion and prevalent ingey have the largest numbers of Somalis. There practices in sending remittances to their origin are a number of corridor specialists, who mainly countries. provide cash to cash services. Tables 1 and 2 provide some context from a remit- Sample structure definition tances angle for the communities that were sur- London is one of the most ethnically diverse cities veyed. Bangladesh represents the largest flow of in the world, with more than a third of the popula- remittances from the UK according to the avail- tion born outside of the UK.12 The communities of able data for the four communities and also has focus for the research are: the lowest price. On the other hand Romania has the smallest flow and the highest price. Bangladeshi—Estimated 129,000 nationals resid- ing in London, and is the third largest migrant Figure 5 shows the London boroughs where the community in London. Comprise the largest research was undertaken. These communities 12 Office of National Statistics, 2013. ‘Key Statistics for Local Authorities in 13 Ibid. England and Wales’. http://www.ons.gov.uk/ons/publications/re-reference- 14 Ibid. tables.html?edition=tcm percent3A77-286262 (Last accessed 17 April 2015). 15 Annual Population Survey, 2012. 6 THE GREENBACK 2.0 SURVEY: RESEARCH OBJECTIVES AND DATA COLLECTION 7 TABLE 1: Remittance flows from UK to focus community from the UK, and the types of remit- countries16 tance services available to that community were also taken into consideration. Additionally, Somali Remittances Flows from UK to: US$ millions RSPs have been particularly affected by the with- Bangladesh 853 drawal by UK banks from the provision of banking Ghana 433 services to RSPs and the data collected pro- Romania 71 vides some insight into how senders have been Somalia 500 impacted. The total sample size is 602 individuals, and is TABLE 2: Average total cost to send17 comprised of 4 relatively equal subsamples based on the citizenship at birth of the participants Average Total Cost Average Total Cost (Somalia, Ghana, Romania and Bangladesh). The of Sending £120 of Sending £300 sample is composed of foreign-born individuals Country % % residing in London at the time of the interview Bangladesh 5 2.3 from the four selected countries. Ghana 8.1 5.3 Romania 11.4 6.9 The eligibility criteria to be included in the survey Somalia 6.5 6.5 sample were: 1. Have resided in the UK for at least one year (with or without regular residence status); differ in geographical position, socio-economic levels and modes of migration to the UK. Fac- 2. Live in London, with particular emphasis on the tors such as the size of the migrant community, boroughs of Brent, Ealing and Tower Hamlets; the average cost of sending remittances for that 3. Have an income (through any type of job or occupation); and 16 The World Bank, 2012. ‘Bilateral Remittances Matrix’. 4. Have sent remittances to his/her country of 17 Remittance Prices Worldwide, 2015. https://remittanceprices.worldbank .org (Last accessed 17 April 2015). origin at least once in the past 12 months. FIGURE 5: London Boroughs Enfield Barnet Harrow Haringey Waltham Forest Redbridge Hillingdon Brent Hackney Havering Camden Islington Barking and Ealing Westminster Tower Newham Dagenham Kensington City Hamlets & Chelsea Hamersmith Greenwich Hounslow & Fulham Southwark Lambeth Bexley Wandsworth Richmond Lewisham Merton Kingston Bromley Sutton Croydon IBRD 41851 | SEPTEMBER 2015 8A A Greenback 2.0 Report Sampling method and surveying centers, religious centers etc. From these entry points, researchers approached potential partici- technique pants. Researchers also employed the ‘snowball sampling’ method to gain introductions to further There is currently limited data on the distribution survey participants. of migrant residents across London or on their employment status. Further to this, there is very The survey was conducted by a team of eight little data on the presence of irregular residents. researchers using paper and pencil interviews Given that the reference migrant population is not using printed questionnaires. The interviews fully known in advance, a ‘center sampling tech- lasted approximately 25–35 minutes each. The nique’, following the technique employed in the questionnaire is structured with close-ended research in Turin, has been utilized. questions, skips and connected sections. First, a number of ‘centers’ were identified: associ- ations, places of work, services, shops, community 4 Empirical Findings Demographic and economic also corresponds to the profile of the working population of the UK. profile The range of education achieved for the respon- The demographic profile of the final sample is dents varied with relatively few having a low reported in Table 3 on the next page. It includes level of education and the vast majority hav- statistics on gender, age, education level and mari- ing received at least secondary education and tal status of the 602 interviewed individuals. This approximately 30 percent having achieved at data has been divided by community and includes least a bachelor’s degree. Over 11 percent have statistics on gender, age, education level, and mari- secured a master’s degree. tal status. Whilst there are some differences amongst the The overall sample was biased towards men communities surveyed, these are not particularly (34 percent of the people interviewed are large. The Bangladeshi sample showed both the women). The overall sample is significantly highest proportion of master’s level educated impacted by Bangladesh where only 14 percent of participants and the highest proportion of lower respondents were women. This is to be expected secondary level educated participants. The other as previous surveys have shown that the vast communities are reasonably similar with the majority of senders to Bangladesh are men, who Somali community showing high levels at both tend to manage financial matters in the house- upper secondary and bachelor degree educa- hold, including remittance sending. tional attainments. Senders in the Ghanaian and Somali communi- Nearly half of respondents are married with most ties were more evenly balanced with a slight bias of the remainder stating that they are single. towards male senders. For the Somali community Interestingly, in the male dominated Bangladeshi this was somewhat surprising given that a previ- sample, 69 percent of respondents are married ous assumption of many stakeholders was that whilst only 32 percent of Romanians are. this was a community where the majority of send- Figure 6 shows the legal status of respondents ers are men. The Romanian sample also showed when they entered the UK whilst Table 4 shows a bias towards men which is the opposite of that their current legal status. As can be expected, seen in the research for Greenback 2.0 in Turin. the vast majority of Romanians stated that they There are no official figures that show employ- did not require a visa to enter the UK.18 The major- ment by community but anecdotal evidence ity of Somalis (94 percent) made applications for indicates that in Turin there are many women asylum upon entry. Many Bangladeshis and Gha- operating as domestic workers which is different naians had student visas, tourist visas, work visas, to London where many Romanians are employed or British nationality at entry. Surprisingly, many in laboring and construction businesses. Bangladeshi, Ghanaian, and Somali respondents Sixty-two percent of respondents are aged stated that a visa was not required for their entry. between 26 and 45. This is consistent with many other studies that profile remittance senders and 18 This is due to the freedom of movement provisions for EU members.  9 10A A Greenback 2.0 Report Table 3: Main characteristics of the sample, by country of origin   Bangladeshi Ghanaian Romanian Somali Sex Female 23 69 58 65 Male 129 76 89 84 did not answer   5 3 1 Age Class 16–20 0 1 2 6 21–25 11 3 25 11 26–30 34 9 52 20 31–35 35 14 24 22 36–40 31 25 15 20 41–45 16 21 11 25 46–50 7 15 7 15 51–55 10 14 3 8 56–60 4 19 1 1 61–65 2 11 0 6 65+ 0 7 0 3 did not answer 0 11 10 13 Education Level None: Illiterate 0 1 0 6 None: I can read and write 2 4 1 10 Primary school 2 13 2 5 Lower secondary school 33 16 14 23 Upper secondary school 35 37 35 48 Post-secondary non-tertiary 6 6 19 3 Higher education short-cycle/ 13 16 21 16 foundation course Bachelor’s degree or 27 33 37 31 equivalent Masters 35 16 20 7 PhD or equivalent 1 3 1 1 did not answer 0 3 0 0 Marital Status Married 108 70 50 72 Widowed 0 6 1 3 Divorced 2 10 12 8 Separated 2 16 1 4 Common-law 0 1 4 0 Single 42 41 69 60 Other 0 2 12 2 Regarding current legal status, the majority of There is a variation between the surveyed com- respondents have gained British citizenship, or munities on how often they visit their country in the case of Romanian respondents they have of origin (Figure 7). Not surprisingly given that an EU nationality. There is a small proportion of Romania is in the EU and is the closest country to respondents that do not have regularized status. the UK geographically, this community visits their EMPIRICAL FINDINGS 11 Figure 6: Status upon entry to the UK, percentage of total sample No response Don't know I did not have a visa A visa was not required I had British nationality Asylum seeker/Refugee Seasonal work visa Residence permit for family reuni cation Student visa Work visa 0% 5% 10% 15% 20% 25% Bangladeshi Ghanaian Romanian Somali Table 4: Current legal status Somali Romanian Ghanaian Bangladeshi Work visa 0 1 24 11 Student visa 0 0 0 19 Residence visa for family reunification 0 0 18 18 Seasonal work visa 0 0 2 2 Asylum seeker/Refugee 21 0 1 4 I have British nationality 105 1 69 91 I have the nationality of another EU country 22 141 8 1 I have a long-term EC residence permit 0 0 1 0 I do not have a visa/permit, it has expired and was not 0 0 3 0 renewed I do not have a visa/permit and never have 0 0 5 0 Don’t know 0 2 5 0 No response 0 4 11 4 12A A Greenback 2.0 Report Figure 7: How often do you visit your country of origin? Percentage of total sample Never Rarely Every 5 years Every two or three years Once a year Several times a year 0% 2% 4% 6% 8% 10% 12% 14% 16% Bangladeshi Ghanaian Romanian Somali country of origin several times a year. This com- pares to over 80 percent of Somalis who never Job type, occupation, visit their country of origin. This is to be expected and sectors given the security situation across the territories. All migrants included in the sample and inter- The Bangladeshi community maintain their home viewed had some form of work (Figure 8). This ties but given the entry requirements into the was to ensure that each participant had control UK and the expense and distance in travelling to over financial resources with regards to sending Bangladesh, they return home every two to three remittances. Migrants were asked to describe their years. The data for Ghana is a bit more balanced main job or occupation, the one they consider the with over 40 percent of the community visiting most important in terms of hours, earnings or sta- every year and a similar number visiting every two bility without prejudice for informal occupations to three years. or non-regular jobs. Figure 8: Job distribution by type of contract, percentage of total sample 25% 20% 15% 10% 5% 0% M F M F M F M F Bangladesh Ghana Romania Somalia Contractor/Freelance Employee Entrepreneur/Business Owner Temporary worker EMPIRICAL FINDINGS 13 Figure 9 shows that most people who are working the survey. What is noticeable is that over 30 per- are in employment. Relatively few respondents are cent of women and 60 percent of men work at contracting and similarly there are few entrepre- least 35 hours per week with a sizeable portion neurs or business owners. The largest such group is working over 45 hours. This latter level is head- to be found in the male Ghanaian community. ing towards the maximum number of hours that should be worked in the UK. Proportionately few of the sample are undertak- ing temporary work, and this category of work is Thirty-five percent of females across the sample are undertaken by a larger proportion of Romanian in part time work (i.e. 25 hours or less) whilst the men than the other communities. This aligns with equivalent number for men is 20 percent. Part-time the overwhelming response from Romanians that work is often associated with students given that they return home several times a year or at least they are only allowed to work for 20 hours a week. once a year, and the fact that their status is regu- larized in the UK. Respondents were asked to describe their main job or occupation, which they consider to be Figure 10 shows that the male sample works more the most important in terms of hours, earnings hours per week than the female sample. This may or job stability (Figure 11). A large proportion of partially explain the disparity in incomes seen in the sample work in the service sector, while a Figure 9: Hours worked per week (by gender), percentage of total sample 40% 35% 30% 25% 20% 15% 10% 5% 0% Under 5 5–15 16–25 26–35 36–45 Over hours hours hours hours hours 45 hours Female Male Figure 10: Number of hours worked per week by community, percentage of total sample 40% 35% 30% 25% 20% 15% 10% 5% 0% Under 5 5–15 16–25 26–35 36–45 Over hours hours hours hours hours 45 hours Somali Romanian Ghanaian Bangladeshi 14A A Greenback 2.0 Report Figure 11: Sectors of occupation, percentage of total sample Security Other Management Cleaner Legal profession Administration Construction Hairdresser Teacher Financial services Medical services Shopkeeper Customer services I.T. Driver Hospitality Sales assistance—retail 0% 5% 10% 15% 20% 25% smaller proportion work in higher skilled occupa- The survey also shows that overall women earn less tion sectors. The vast majority of respondents in than men (Figure 13). This result is consistent with all medical services are carers or nurses, however other income surveys for any community in the UK. this category also includes doctors. A high num- Interestingly, the data also shows that the higher the ber of respondents work in retail positions, and income bracket being surveyed, the less the share of the occupations stated by respondents’ fits with that bracket that women have. Again, this is consis- the data received on the type of contract (i.e. the tent with other income data throughout the UK. majority are employees). On a positive note, the majority of respondents from all communities reported that their individual Individual income income has increased since their arrival to the UK (Figure 14). This was followed by those report- Figure 12, below, illustrates individual income ing that their individual income had remained the averages for the four subsamples, while Figure 14 same since their arrival. shows the individual income averages by gender. As in Turin, Romanians declare the highest In a similar vein, the majority of respondents from average individual income, whilst Somalis declare all communities reported that their income had the lowest average individual income in the become more constant, secure or reliable since sample. their arrival in the UK (Figure 15). Figure 12: Income brackets by country of origin, percentage of total sample 12% 10% 8% 6% 4% 2% 0% Less than £501–1000 £1001–1500 £1501–2000 £2001–2500 More than Don't know £500 £2500 Somali Romanian Ghanaian Bangladeshi EMPIRICAL FINDINGS 15 Figure 13: Income brackets by gender, percentage of total sample 25% 20% 15% 10% 5% 0% Less than £501–1000 £1001–1500 £1501–2000 £2001–2500 More than Don't know £500 £2500 Female Male Figure 14: Individual income: level since arrival in UK, percentage of total sample No response Don't know Remained the same Decreased Increased 0% 10% 20% 30% 40% 50% 60% 70% Somali Romanian Ghanaian Bangladeshi Figure 15: Individual income: trend since arrival in the UK, percentage of community sample Bangladeshi Ghanaian Romanian Somali 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Become more constant/secure/reliable Become more uncertain/insecure Remained the same Don't know 16A A Greenback 2.0 Report Savings and financial inclusion monthly individual incomes and the relatively high amount of remittances sent regularly by the An entire section of the survey was dedicated to Somali community. understanding respondents’ savings habits and financial inclusion levels. For those able to save some of their income each month, the amount of money saved can be sig- nificant (Figure 17). For men the amount is over Savings GBP500 and for women it is GBP400 (Figure 18). The majority of Romanian, Ghanaian and Ban- This represents between 30 and 40 percent of gladeshi respondents reported that they were income and therefore demonstrates the savings able to save at least some of their income (Fig- ability and relatively high financial literacy levels ure 16). Many Somali respondents reported that of the respondents. It can be assumed that for they were unable to save each month, which many respondents these savings are then partially correlates with the relatively low reported put towards the money that is sent home. Figure 16: Are you able to save some of your income? Percentage of community sample 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Somali Romanian Ghanaian Bangladeshi Yes No Figure 17: If able to save some income, the Figure 18: If able to save some income, the average amount saved each month (£) by gender average amount saved each month (£) by community £600.00 £800.00 £500.00 £700.00 £400.00 £600.00 £300.00 £500.00 £200.00 £400.00 £100.00 £300.00 £200.00 £0.00 Female Male £100.00 £0.00 Somali Romanian Ghanaian Bangladeshi EMPIRICAL FINDINGS 17 Banking products and services Figure 19 (i and ii): Where do you have a bank account (please tick all that apply)? Percentage The vast majority of respondents have an account of total sample and percentage by community at a UK high street bank (Figure 19). A significant proportion of Romanians also have an account Account in other foreign country with another foreign bank in their country of origin, which fits with many of them returning home on a regular basis and also Account in UK with another foreign bank planning on returning home to live. Account with post of ce bank As shown in Figure 20, the sample use a broad Account with bank in range of banking services and are not just country of origin restricted to traditional transactional banking. Account in the UK with bank Although there are differences between the com- from country of origin munities, there is a relatively high level of sophisti- Account at a UK high cation shown across the sample. street bank 0% 20% 40% 60% 80% 100% Based on the products that are used by each community it could be deduced that more tradi- Account in other foreign country tional forms of banking services (e.g. paying bills with another foreign bank etc.) are utilized by the Somali community whilst Account in UK with another some of the more innovative services such as foreign bank online banking are more frequently used by the Account with post of ce bank Romanian community. Mobile and online banking Account with bank in are more popular with Romanians and Bangla- country of origin deshis than with other communities. Account in the UK with bank from country of origin Bangladeshis are most likely to have an account Account at a UK high in the UK and a proportion also have an account street bank at a bank in their own country. This result reflects 0% 20% 40% 60% 80% 100% the fact that of the sample countries, only Ban- Somali Romanian Ghanaian Bangladeshi gladesh has well entrenched banks in the UK, e.g. Sonali Bank. This option is not available to the other communities that were surveyed. Romanians were the least likely to have an account at a UK bank (although a high number still did) but were most likely to have an account penetration of the pre-paid card (PPC). The PPC in their country of origin. has been particularly popular as a concept posi- tioned for migrants. It would appear from the data The use of cards is popular among those surveyed that the popularity of such products is limited in (Figure 21). The debit card is by far the most the UK. popular such device, with credit cards second and other products, such as pre-paid cards, perform- People chose to open an account with a particu- ing particularly poorly. This data would be con- lar bank for a broad range of reasons, illustrated sistent with the key features of the UK payments in Figure 22. The most prevalent reason was market and also perhaps questions the market one of a convenient location, this was followed 18A A Greenback 2.0 Report Figure 20: What services do you use (tick all that apply), percentage of services Mobile banking Online banking Savings products (e.g. savings account) Loans, credit, overdraft Insurance Investment services Payment of salary Mortgage Paying bills, standing order/direct debit etc. Bank transfer 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Somali Romanian Ghanaian Bangladeshi Note that mobile banking is defined as the ability to access/make a financial service from your mobile phone. Figure 21: Card products used, percentage of products Credit card—non-bank Credit card issued by bank Prepaid card Cash card Debit card 0% 5% 10% 15% 20% 25% 30% Bangladeshi Ghanaian Romanian Somali by customer service and the reputation of the It would appear from the above that people do bank. Interestingly the ability to bank by Internet not make a positive choice of which bank to open or phone was the fifth ranked attribute and this an account with, but rather base their decision on should provide encouragement to technologically convenience factors. This relative inertia may pro- advanced businesses. vide an opportunity for new market entrants. EMPIRICAL FINDINGS 19 Figure 22: Why did you choose the bank that you use? Top 3 responses. 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% e es es s e es ne e k r m nk ts es ce an ac ic dg an at ic ic a ic ho rv vi l b fb le rv v rv kp tr gr e /p r r w s se e e se s o s i or y’ et s s no re er n n w rn nt of of al io te pa /k m fo e/ ci ie te at in ed ity ce to m om an en s n ut us d s ce n ho e i er fin ep oo nv by Em erie Sp /c C vi v er to R G co er ic di k p oy an m se ls ex nd on pl la b lo ia a Is al s to C ec e ity on fe Sp y nt ilit rs w ua Pe Ab Lo Q Somali Romanian Ghanaian Bangladeshi Access to credit Figure 24 shows that most respondents who had a loan felt that they would be able to On average, just over 20 percent of the sample repay it. have a loan (Figure 23). This is broadly in line with the results from the communities that were For those who have a loan, the vast majority use surveyed in Turin. There are differences between a formal provider (Figure 25). Banks were cited the communities, with over 40 percent of Bangla- as the place where most participants would go if deshis having taken out a loan, whilst just 15 per- they needed a loan (Figure 26). However, this was cent of Somalis have done so. For Somalis, where closely followed by friends and family in the UK as the community is almost 100% Muslim, Islamic a source of financial support. banking rules limit the attractiveness of loans whilst for some other communities the use of loans is more common. Figure 23: Do you have a loan? Percentage of total sample 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Somali Romanian Ghanaian Bangladeshi Yes No 20A A Greenback 2.0 Report Figure 24: If you have a loan, do you think you will be able to repay it? Percentage of responses 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Somali Romanian Ghanaian Bangladeshi Yes No Don't know Figure 25: If you do have a loan, where is it from? Percentage of responses 16% 14% 12% 10% 8% 6% 4% 2% 0% e K nk nk n it n er ow ed m tio tio U oy Ba ba kn ho itu cr sa e pl th e ’t st ni on Em ck fic on in in ga ba of se D ds al or st ds ha ci en fit Po an en rc ro fri fin Pu fri s/ -p s/ nt on er nt re th N re Pa O Pa Somali Romanian Ghanaian Bangladeshi Figure 26: If you needed a loan, who would you turn to? Percentage of total sample 60% 50% 40% 30% 20% 10% 0% e K nk nk n it n r ow e ed m tio tio U oy Ba ba kn ho itu cr sa e pl th e ’t t ni on Em ck ns fic on in ga ba of li se D s or ia nd st ds ha c fit Po ie an en rc ro /fr in Pu fri -p s f s/ nt on er nt re th N re Pa O Pa Somali Romanian Ghanaian Bangladeshi EMPIRICAL FINDINGS 21 Remittance behaviors: flows, home for Romanians, alongside the amount they remit and the propensity of respondents who recipients, operators and costs state that they will return to Romania to live on a Main recipients and motivations permanent basis. Parents were reported as the most common bene- Of the communities sampled, Ghanaians cited ficiary of remittances, this was followed closely by children as the recipient of remittances more siblings (Figure 27). Given that a large proportion than any other community. They also return home of participants have gained British nationality, it is frequently, suggesting very close ties with their likely that respondents’ children reside in the UK country of origin. rather than in the country of origin and are there- fore not large recipients of remittances. As Figure 28 shows, Romanian males send by far the highest average amount of remittance each For Romanians however, many have children liv- year. It was noted that a large group of Romanian ing in the country of origin. This finding provides males who work in construction live in hostels an explanation into the frequency of travel back where their cost of living is relatively low, meaning Figure 27: Who do you send to? Percentage of responses 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Parent Sibling Child Cousin Grandparent Other Bangladesh Ghana Romania Somalia Figure 28: Average amount sent per year (by community and gender) £4,000.00 £3,500.00 £3,000.00 £2,500.00 £2,000.00 £1,500.00 £1,000.00 £500.00 £0.00 Bangladesh Ghana Romania Somali Female Male 22A A Greenback 2.0 Report Figure 29: What is the money sent used for? (Ranked in importance from 1 to 3) Savings Debt payment Emergencies (e.g. illness, accident, disaster) Investment (e.g. property, business, retirement) Rent/housing costs Physical goods (e.g. computer, furniture, appliances) Transportation Health Education Food 0% 5% 10% 15% 20% 25% 30% Somali Romanian Ghanaian Bangladeshi they are able to send a significant proportion of reason, closely followed by education and health. their earnings home each month. Investment does not appear to be a particularly strong reason for people to send remittances. Interestingly, Bangladeshi men and women send the same average amount each month. This sug- gests that Bangladeshi women send a higher Channels and remittance proportion of their earnings home, given that services providers women tend to have lower incomes than men. Alternatively their husband may provide some of Cash-to-cash is the most popular way of sending the funds that a wife sends home even though money with all of the communities except for the this would not be counted as income by the wife. Bangladeshis (Figure 30). Pay-out in cash is, in Further research would be required in order to reality, the only method used by Somalis except provide a valid answer to this challenge. for a few who hand carry the cash. Given the lack of alternatives available to this community in the As Figure 29 shows, respondents were asked what UK the data confirms previous preconceptions the money that was sent home was used for. Con- about this community’s way of sending money. sistent with many other surveys, food is the main What is most noteworthy in these research results Figure 30: How do you primarily send money? Cash in hand Paired current accounts Paired credit card Prepaid card (cash or account to prepaid card) Cash to cash Cash to account Bank transfer (account to account) 0% 10% 20% 30% 40% 50% 60% Somali Romanian Ghanaian Bangladeshi EMPIRICAL FINDINGS 23 is that the Bangladeshi community sends money remaining 16 companies account for 13 percent of via bank transfer more than they send cash. This the market. is not a result that previous research has indicated and may be driven partly by relatively recent Figure 33 demonstrates that for Ghana there is a developments in the Bangladesh market which more even split in market share between the dif- have improved the domestic payments environ- ferent operators. The largest providers are Unity ment tremendously. It is also important to note Link, 1st African, Western Union and MoneyGram that the vast majority of Bangladeshis in the sam- with numerous smaller operators also present. The ple were interviewed in Tower Hamlets, where a Ghanaian owned specialists have gained signifi- number of Bangladeshi banks have representative cant market share, also thanks to Bank of Ghana’s offices offering convenient remittance services. It policy to no longer allow exclusivity agreements, is our view that a broader survey of London could which contributed to a more open market place. have impacted this finding, possibly increasing Figure 34 shows that fifty percent of Bangladeshi to a certain extent the relevance of cash to cash respondents’ surveyed use Sonali Bank (a Ban- services for Bangladesh. gladeshi bank) to facilitate remittance transfers, Figure 31 shows that Western Union and Money- however a large range of over 28 providers were Gram account for 82 percent of the market for reported. To some extent the results reflect where sending from the UK to Romania. Interestingly the the survey was undertaken, which was in Tower gap between the market shares of each company Hamlets and the surrounding area. Whilst Sonali is lower than might be expected based on their Bank is known to have a good share of the UK- global market shares, but is probably driven by Bangladesh market, its showing in the survey is the fact that MoneyGram is available via the post arguably boosted by the fact that its main London office which has the largest branch network in Branch is located in Tower Hamlets, which does a the UK. Other mainstream MTOs do not have any high level of business in account and cash counter sizeable market share despite having extensive remittances. networks of pay-out locations in Romania. It would be expected that if the survey were As shown in Figure 32, nearly three-quarters of undertaken in other areas of London or indeed the Somali community surveyed use Dahabshiil. in other UK cities with large Bangladeshi com- It has long been understood that Dahabshiil was munities but without a Sonali Bank presence the largest operator in this community, but the the results would differ. For example, Ezremit, scale of their market position was perhaps not which has branches in North and West London, is so well understood. The next largest company known to have a strong customer base amongst is Amal with 9 percent. This means that the the Bangladeshi community which would prob- ably be reflected if the survey was carried out in e.g. the Wembley area; whereas if the survey was conducted in Birmingham or Manchester an MTO Figure 31: Distribution of operators (Romania) 4% Figure 32: Distribution of operators (Somalia) 5% 5% 13% 9% Other 48% Barclays Bank HSBC 34% Money Gram Amal Nationwide Dahabshiil Transfer Wire 74% Other 2% 2% Western Union 24A A Greenback 2.0 Report Figure 33: Distribution of operators (Ghana) 6% 20% 15% 2% 3% 2% 21% 2% 2% 14% 3% 2% 2% 2% 2% 2% 1st African Ecobank Express funds Ghana Commercial Bank HSBC Money Transfer MoneyGram Natwest Pay Afrique Natwest Small world Standard Bank Swift Transfer Unity link Western Union Other Figure 34: Distribution of operators (Bangladesh) 2% 4% 2% 1% 16% 6% 4% 4% 1% 2% 1% 6% 1% 50% AN Express Any BA Exchange Co UK Ltd Brac Sajaan HSBC IFIC money transfer Ria Small world Sonali Bank UK Ltd Southeast Financial Services Standard exchange Wall Street Western Union Other such as BRAC Sajaan (which has busy agents in technology could be successful and also could these cities) would be expected to have a stron- help to reduce transaction costs. ger showing than it does in the Tower Hamlets based survey. Services that deliver remittances to the benefi- ciary within an hour are the most popular (Fig- This data clearly shows that most remittance ure 36). Given that for Somalis, the vast majority transactions are completed at a counter and that of remittances are used for food and basic neces- the use of online and phone transfers is minimal sities, it follows that speed of service is a key (Figure 35). A low segment of the sample use consideration.19 Given that the majority of Ban- the post office. Interestingly the only service that gladeshis in the sample use account services to is available at the post office is MoneyGram and send money home, it is unsurprising that it takes therefore this may explain why the numbers are relatively low. Whilst the data on the use of the internet and phone transactions is low it does 19 Additionally, all the operators sending to Somalia advice that funds are available within minutes and therefore it is expected that this community show that these options are being used by some would advise that their service is available on the same day or within an which, again, indicates that the application of hour.. EMPIRICAL FINDINGS 25 Figure 35 (i and ii): Where do you complete the transaction? Percentage of total responses and breakdown by community No response Don't know Friend/family member going home An intermediary (hawala, bus driver, etc.) By phone Online At a store At the post of ce At a counter (bank, MTO location) 0% 10% 20% 30% 40% 50% 60% 70% 80% Friend/family member/acquaintance going home An intermediary (hawala, bus driver, etc.) By phone Online At a store At the post of ce At a counter (bank, money transfer location) 0% 20% 40% 60% 80% 100% Somali Romanian Ghanaian Bangladeshi Figure 36: What is the speed of service? Percentage of responses They do not guarantee a predetermined time Six days or more 3–5 days Two days One day Same day Within an hour 0% 5% 10% 15% 20% 25% 30% 35% Somali Romanian Ghanaian Bangladeshi 26A A Greenback 2.0 Report Figure 37: How did you choose your main channel for sending remittances? Don't know Religious group 1% No response 1% 1% Association 1% Family in my home country 12% Internet 10% Word of mouth 42% Embassy 0% Advertising in my language in the media 10% Advertising in my language Advertising in Advertising on 7% the street and newspaper, TV, transportation radio 7% 8% 3–5 days for funds to be received. This would sug- the convenience of pay-out locations and new gest that factors other than speed are of greater product launches. importance to this community. It is understood that other surveys conducted for private sector The internet is the main information source for operators have also identified trust in the service around 10 percent of senders. New and exist- provider as an important consideration when ing providers use the internet to promote their choosing a service. products and it would appear that this activity is proving effective and certainly more so than Word of mouth has always been the main driver more traditional forms of promotion, e.g. print of information on remittances and the research advertising. confirms this phenomenon (Figure 37). What is interesting is that the next most popular reason is ‘family in home country’ which accounts for Remittance volumes around 12 percent. This shows that receivers can Figure 38 shows that the majority of respondents have a role to play in deciding which product to send money every month. However, a large pro- use and this is particularly so for factors such as portion of Bangladeshis send 2–4 times a year, Figure 38: Frequency of transaction 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Every Fortnightly Once a Every 2 Every 3 Twice a Once a Don’t know week month months months year year Bangladesh Ghana Romania Somalia EMPIRICAL FINDINGS 27 Figure 39: Average transaction amount 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 50 00 0 0 0 0 0 0 0 0 00 15 20 25 30 35 40 45 50 –1 r5 n 1– 1– 1– 1– 1– 1– 1– 1– a 51 ve th 10 15 20 25 30 35 40 45 O ss Le Bangladesh Ghana Romania Somalia which may partly explain why they may choose a Figure 40: Perceptions of transaction costs slower speed of service. Figure 39 demonstrates that the most frequent 1% 16% transaction size for Somalis and Ghanaians is £100 4% or less, while Bangladeshis and Romanians report Fees a broader range of transaction sizes. Costs arising from the foreign exchange Other costs charged Perceptions of transaction costs 79% to the receiver All of the above The survey questioned respondents to under- stand their perceptions of costs associated with remittance transactions (Figure 40). Respondents only, costs arising from foreign exchange, other were asked to estimate what the cost for each costs charged to the receiver or all of the above) average transaction was in either percentage or (Figure 41). The consolidated results show that pound sterling terms. They were also asked what only 21 percent of respondents reported the total the reported cost was composed of (i.e. fees cost, a foreign exchange charge, or any other cost Figure 41: What are remittance costs composed of? 100% 90% All of the above 80% Other costs charged to the 70% receiver 60% Costs arising from the foreign exchange 50% Fees 40% 30% 20% 10% 0% Somali Romanian Ghanaian Bangladeshi 28A A Greenback 2.0 Report Table 5: Perceived cost of remittance transaction Estimated Costs as a Percent Estimated Costs as a Percent for Those Who Thought There for Those Who Thought There Country Was Only a Fee Was a Fee and FX Actual Costs Percent20 Somalia 5.0 5.0 6.5 Romania 7.7 6.8 11.4 Ghana 3.9 3.9 8.1 Bangladesh 1.5 N/A 5.0 apart from a transaction fee. The result is signifi- For Somalis, almost all who quoted the cost as cant as all transactions to the four countries cov- a percentage did so at the 5 percent mark. For ered in this survey do actually include a foreign those who quoted in GBP, they quoted an average exchange margin, and in some cases, additional cost of 5.56 percent for fee only. fees to the receiver. This may indicate that con- sumers are not aware of or are unable to clearly Table 5 shows a comparison between the actual report the items that comprise the total cost cost of transaction and the perceived cost. beyond the transaction fee. This was also a finding The results should be treated with caution as of the Greenback study in Turin. there is no direct link in comparing, for a particu- When looking at this phenomenon by subsample, lar respondent, a particular response with actual it can be seen that less than 5 percent of Ban- transaction costs they incurred in their transac- gladeshi respondents reported any currency tion. However, as a broad conclusion it would exchange or other costs. A significant propor- appear that the perception of costs and the reali- tion of Romanians reported that the figure they ties are quite different and that respondents per- quoted was the total cost, however it is unclear ceived costs to be lower than they actually are. whether they indeed understood the full cost of a transaction, or if they believed that the fee repre- Advantages and disadvantages sented the total cost. of remittance channels Ninety-eight percent of Bangladeshi respondents The majority of respondents cited speed as the reported that fees were the only cost element main advantage of their primary method of send- for their transaction. They estimated this cost at ing remittances (Figure 42). This was followed by 1.5 percent of the send amount. cost and reliability. None of the respondents cited their lack of papers or tax reasons as a reason for For Ghanaians, 65 percent of the subsample choosing a particular service. reported fees were the only cost and put the level at 3.85 percent of the amount sent. Only 17 per- Interestingly, the majority of respondents cent of this subsample claimed to have reported reported that there were no downsides to their the total cost (including foreign exchange primary method of sending (Figure 43). This may costs) and they put the average total cost at reflect part of the reasoning behind why con- 6.45 percent. sumers are not likely to change their method of sending. For Romanians, 56 percent of those who answered this question only reported fees when talking about costs. For them, the average fee reported was 9.85 percent. Of those who quoted total cost, the average was 6.8 percent of the 20 The World Bank, Q1 2015. http://remittanceprices.worldbank.org (Last send amount. accessed 17 April 2015). EMPIRICAL FINDINGS 29 Figure 42: What are the advantages of your primary method of sending remittances? No response I don't have papers/tax reasons Convenient opening hours It is easily accessible for the people I send . . . It is close to my home It is secure/reliable It is easy to use It is quick It is cheaper 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Somali Romanian Ghanaian Bangladeshi Figure 43: What are the drawbacks of your primary method of sending? No response No downsides The opening hours are not practical It is dif cult for my family to receive the . . . It is far from my home It is less secure It is dif cult to use It is slow It is more expensive 0% 10% 20% 30% 40% 50% 60% Somali Romanian Ghanaian Bangladeshi Trends in remittances providers specialize in serving certain regions of the Somali territories, thus consumer choice Significantly, the vast majority of senders have is also driven by pay-out location on the receive never had a problem when sending remittances side. The complete sample also sees little move- (Figure 44). This was reported across all four ment in the main method of sending remittances. subsamples. For those who have changed their method of sending, a significant proportion are Ghanaians When asked who they would turn to if they did and Romanians who have switched from carrying encounter an issue, the vast majority of respon- cash by hand to a formal method (Figure 47). dents reported that they would turn to the man- agement of the service provider (Figure 45). For the Somali, Ghanaian, and Bangladeshi com- munities, the majority of respondents stated Significantly, Somalis appear to be the least that the amount of remittances they send has likely to change their method of sending remit- increased (Figure 48), and noted that the reason tances (Figure 46). It is understood that particular 30A A Greenback 2.0 Report Figure 44 (i and ii): What problems in the past have you had with this channel? Percentage of total response and breakdown by community No response The receiver's information was . . . The recipient had to pay an . . . The money arrived late The amount received was not . . . The money was lost/not received I've never had a problem 0% 20% 40% 60% 80% 100% 100% 80% 60% 40% 20% 0% I’ve never had a problem The money was lost/not received The amount received was not correct The money arrived late The recipient had to pay an unexpected fee to receive the money The receiver’s information was not correct No response Somali Romanian Ghanaian Bangladeshi Figure 45: If you did have a problem, who did you turn to for help? No one 6% The police Don't know 4% 7% The embassy 0% No response 17% Friends 4% Branch manager 30% Management of MTO-Receive side Management of 2% MTO in UK 30% EMPIRICAL FINDINGS 31 Figure 46: Since you arrived has your main method of sending remittances changed? 30% 25% 20% 15% 10% 5% 0% Somali Romanian Ghanaian Bangladeshi Yes No Figure 47: If yes, what method did you use previously? Cash in hand Paired current accounts Paired credit card Prepaid card (cash or account to a prepaid card) Cash to cash Cash to account Bank transfer (account to account) 0% 5% 10% 15% 20% Somali Romanian Ghanaian Bangladeshi Figure 48: Has the amount you send increased, decreased or stayed the same since your arrival in the UK? 16% 14% 12% 10% 8% 6% 4% 2% 0% Somali Romanian Ghanaian Bangladeshi Increased Decreased Remained the same Don't know 32A A Greenback 2.0 Report Figure 49: What is the reason for the change? 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% ed ed ds ds nt s nt s w e as as ee sed ee sed ie sed ie sed kno o ns e e n n i p i p ’t cr cr ’ ts rea ’ ts rea ec ea ec ea sp in de f r incr f r ecr on re a s s i en inc i en ec o o D o ha p p d r s r d N h ci e ci e be ha be has m e e re hav re av m m m e e h co co Th Th nu nu in in e e y y T h T h M M Somali Romanian Ghanaian Bangladeshi for the change was an increase in income (Fig- Figure 50: Do you receive remittances? ure 49). There was a more even split for Roma- nians on the amount of remittance sent increasing or remaining the same. Received remittances Unsurprisingly, the vast majority of respondents (almost 90 percent) report that they do not receive any remittances in comparison to about 10 percent who do receive money (Figure 50). Of the few who do receive funds, the majority receive money from parents (Figure 51). For some Yes No Don't know No response participants, this may correlate with having a stu- dent visa, and needing some funds for tuition and other necessities. The majority of recipients are those from the Bangladeshi community. Figure 51: If yes, who sends you money? Percentage of responses Bangladeshi Ghanaian Romanian Somali 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Spouse/partner Friends Children Faith-based organisation or charity Parents Other organisations, associations, non-pro t, etc. EMPIRICAL FINDINGS 33 Internet and mobile phone use on the internet or are based on other new tech- nologies. In addition, this will make communica- Virtually every person who was surveyed has a tion with remittance senders easier and present mobile phone (Table 6). This is not surprising at the right conditions for initiatives for app based all given that mobile phone penetration in the UK remittance price transparency tools. stands at 92 percent21 and mobile phone based services are ubiquitous in the areas where the It can be seen in Figure 52 that the majority of surveys were conducted. the sample have used their phones for straight- forward functions; calls, SMS and even accessing What is perhaps of more interest is that over the internet. A smaller, but significant, segment 80 percent of respondents have a smart phone. use apps and go on social networks. Interestingly This is particularly relevant as this may encourage only 15 percent of people have made payments new types of remittance service that are available via their phones. Studies in this area indicate that this may well be driven by a mixture of lack of 21 Ofcom, 2014. ‘The Communication Market Report’ http://stakeholders education in this area, together with uncertainty .ofcom.org.uk/binaries/research/cmr/cmr14/2014_UK_CMR.pdf.. as to the security of such payments. Table 6: Mobile phone penetration Somali Romanian Ghanaian Bangladeshi # Mobile phone? Yes 147 147 140 150 No 2 1 6 0 If yes, smart phone? Yes 113 127 110 138 No 33 20 28 12 Figure 52: What do you use your phone for? (Choose up to 3 answers) No response Don't know Make payments Use apps Go on social networks Internet access Phone/send and receive text messages 0% 5% 10% 15% 20% 25% 30% Bangladeshi Ghanaian Romanian Somali 34A A Greenback 2.0 Report Figure 53: Where and how do you access the internet? Don't know Outside the home: other public places Outside the home: employment centre Outside the home: internet cafe Outside the home through a computer at . . . At home through other means At home though a mobile phone At home through a computer . . . 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Somali Romanian Ghanaian Bangladeshi The vast majority of people access the internet of computers and smart phones together with at home with the sample evenly split between cultural changes has meant that the vast major- access via a computer or a mobile (Figure 53). ity of the sample are now able to use the internet Traditionally, many migrants used internet cafes as from the convenience of their own home. a primary place of access. Reductions in the cost 5 Conclusions T he survey conducted as part of Project Green- back 2.0 provided a detailed overview of the financial and remittances habits of four migrant Whilst these communities commonly cited that since arrival to the UK their income has increased, and become more stable, they remain relatively communities residing in London. An investigation low earners when compared to London averages. into the income and saving habits of the Ghana- Given the education levels seen, it would be of ian, Romanian, Somali and Bangladeshi communi- interest to investigate further why these commu- ties has provided useful conclusions on financial nities see lower income levels. inclusion levels amongst migrant communities. It has also highlighted the extent to which respon- A positive outcome of the survey was the high dents are able to support their families in their level of financial inclusion and bankarization home country. seen—over 95 percent of respondents stated that they have a bank account. The data suggests a The findings obtained outline a number of sig- high level of financial literacy, given the range nificant trends both within each community and of banking products and services used (at least across the sample as a whole, these have been a quarter of the sample stated that they had grouped into three main areas; some form of insurance and/or savings product— illustrating the sophistication in financial products • Income and financial inclusion acquired by respondents). Financial literacy levels • Remittances habits observed are unsurprising given the high general level of education across the sample. However, • Access and use of technology this finding is not conclusive and given the rela- tively low income levels seen, further financial Income and Financial Inclusion literacy training to mitigate potential shocks and With over 65 percent of the sample in employed identifying suitable products for doing so, could work, main sources of income are stable allow- be of benefit. While we have seen some use of ing for the vast majority of respondents to save a insurance products, these are low in comparison proportion of their income (on average between with the use of other products. 30–40 percent of income is saved each month). Specific interventions for the Somali commu- The one community that stated in larger numbers nity (given that 68 percent of respondents have that they were unable to save were the Somalis, stated that they have been unable to save) that who incidentally were also the most frequent provide tools and techniques for saving would be senders of remittances (albeit lower amounts); advantageous. they also had some of lowest income levels across the sample. 2013 data from the ONS puts median Remittance habits gross weekly income earnings in London at £658 (approximately £2851 in monthly income). The Basic necessities are the most common reasons most commonly cited personal income bracket why money is sent, and cash-to-cash is by far across the sample was between £1001–1500 per the most prevalent service used. Remittances are month, which is a weekly income of approxi- generally sent on a monthly basis with the most mately £346. This is markedly lower than the commonly cited amount sent, being no more median income levels seen in London as a whole. than £100. Sixty-nine percent of respondents  35 36A A Greenback 2.0 Report stated only the fee as the cost charged for send- Access and use of technology ing remittances, seeming less aware of the foreign Mobile phone and internet use across the sample exchange margin they are charged. Eighty per- is incredibly high. A large proportion of respon- cent of respondents stated that they have never dents also use smartphones. Just over 500 had a problem with the remittance channel that respondents use either mobile banking or online they use, which may explain the reluctance to banking services, suggesting a good understand- seek out alternative methods of sending. ing of how technology can be applied to improve Given the recent changes in the remittances mar- access to financial services. This is particularly ket in the UK pertaining to derisking, a stand-out interesting given the prevalence of cash-to-cash finding from the sample is the lack of switching services used by respondents in place of other of the service used as reported by respondents. technology-driven remittance service. An oppor- Seventy-six percent of all respondents state tunity clearly exists for technology driven ser- that they have not changed the way that they vices or providers to increase customer uptake send money home, and 94 percent of the Somali beyond where it stands currently. A useful finding respondents reported that they were still using that might support this trend is the fact that the the same company despite the well-publicized majority of respondents heard about their current difficulties that this community is experiencing.22 service by word of mouth (42 percent). Services This finding could be interpreted in a number of that have previously invested time and effort in ways, but it is certainly worth noting that 83 per- developing relationships with specific communi- cent of respondents use either Dahabshiil (74 per- ties are seeing the long lasting benefit of those cent) or Amal (9 percent), both of whom are still activities, making it difficult for new entrants to providing services to consumers, despite having gain real traction. had issues maintaining UK bank accounts. This Overall the survey provides concrete insights, would suggest that for operators who have lost providing an evidence base in support of how their bank accounts, they are currently still offer- the remittances market is understood to be func- ing services, limiting disruptions to consumers. It tioning in the UK currently. What is particularly would be useful to continue tracking this situation insightful is the level of education and finan- to identify if any such change will occur as the cial inclusion prevalent within each community. situation becomes more challenging for MTOs to Migrants continue to be active financial support- continue to offer services. ers of their families back home; given the rela- tively low income levels, work to reduce the cost of sending money home is a useful and worth- BBC, 2013. ‘Barclays account shutdown raises Somali fears’ http:// 22 www.bbc.co.uk/news/business-23255853 (Last accessed 17 April 2015). while activity for all stakeholders. References BBC, 2013. ‘Barclays account shutdown raises The World Bank, 2010. ‘Bilateral Remittances Somali fears’ http://www.bbc.co.uk/news/ Matrix’. business-23255853. The World Bank, 2012. ‘Bilateral Remittances London Datastore, 2011. ‘Census data—Population Matrix’. by Country of Birth’ http://data.london.gov.uk/ The World Bank Group, 2013. ‘Barriers to access dataset/population-country-birth. to payment systems in sending countries Ofcom, 2014. ‘The Communication Market Report’ and proposed solutions’ http://siteresources http://stakeholders.ofcom.org.uk/binaries/ .worldbank.org/FINANCIALSECTOR/ research/cmr/cmr14/2014_UK_CMR.pdf. Resources/282044-1359488786791/barriers_ Office of National Statistics, 2012. ‘Annual Popula- web.pdf. tion Survey’. The World Bank, 2014. ‘Migration and Develop- Office of National Statistics, 2013. ‘Key Statistics ment Brief 24’, http://siteresources for Local Authorities in England and Wales’ .worldbank.org/INTPROSPECTS/Resources/ http://www.ons.gov.uk/ons/publications/ 334934-1288990760745/Migrationand re-reference-tables.html?edition=tcm%3A77- DevelopmentBrief24.pdf. 286262. The World Bank, 2014. ‘Annual Remittances Data’. Office of National Statistics & Greater Lon- The World Bank, 2014. ‘Remittance outflows’ don Authority, 2015. ‘Population Change http://siteresources.worldbank.org/ 1939–2015’ http://data.london.gov.uk/dataset/ INTPROSPECTS/Resources/334934- population-change-1939-2015. 1288990760745/RemittanceData_Outflows_ Remittance Prices Worldwide, 2015. https:// Oct2014.xls. remittanceprices.worldbank.org/en. The World Bank, Q1 2015. http://remittanceprices Reuters, 2014. ‘Somalis panic as cash flow dries .worldbank.org, up after US remittance lifeline cut’ http:// www.reuters.com/article/2015/02/19/ us-somalia-money-remittances-idUSKBN- 0LN0GN20150219.  37 Annex 1—SMEs survey findings In parallel with the main survey presented in this report, a survey was carried out on diaspora entrepre- neurs in London to better understand their payment habits and use of financial services. Diaspora communities residing in London were surveyed from February to May 2015 as a continuation of remittance related research for Project Greenback 2.0 that focused on Bangladeshi, Ghanaian, Roma- nian, and Somali communities. This note provides a high level overview of the results obtained from the SME survey. What is your country of origin? Vietnam Tanzania Trinidad 2% 1% 1% Afghanistan Algeria Sri Lanka Unknown 1% 1% Bangladesh 1% 4% Angola 8% Spain 1% Brazil 1% 1% Somaliland Burundi Somalia 1% 1% 4% Sierra France Leone 1% 1% Germany Romania 1% 11% Ghana 12% Portugal 2% Hungary Poland 1% 4% India 5% Pakistan Ireland 5% Italy 1% Nigeria 2% 6% Jamaica Malta 1% Kenya 1% Lithuania 1% 15% Key findings The main eligibility requirements for this survey include respondents being born outside of the UK and owning their own business. In total 85 respondents completed the survey, and respondents came from a wide range of countries. 38 ANNEX 1—smes survey findings 39 1. Demographic information The survey collected demographic information on respondents. Thirty-eight percent of respondents are female, and over a third are between 35 and 44 years of age. The data shows that there are relatively few young entrepreneurs in the sample. What is your age? 65 to 74, 55 to 64, 1.90% 21.20% 75 or older, 0% 18 to 24, 3.80% 25 to 34, 45 to 54, 9.60% 28.80% 35 to 44, 34.60% The majority of respondents moved to the UK in the previous decade, followed closely by those who moved to the UK between 1990 and 1999. What year did you move to the UK? 50% 40% 30% 20% 10% 0% 1979–1989 1990–1999 2000–2009 after 2009 Respondents are relatively highly educated, with well over half having achieved at least a bachelor’s degree or equivalent. What is the highest level of education that you have received? PhD or equivalent, 1.9% Masters, 25.9% None, 0.0% Primary school, 3.7% Lower secondary school, 3.7% Bachelor's degree or equivalent, Upper secondary 27.8% school, 24.1% Post-secondary Higher education non-tertiary, 9.3% short-cycle/ foundation course, 3.7% 40A A Greenback 2.0 Report 2. Business Respondents were asked some questions about their businesses. Almost half (48 percent) of respon- dents started their business between 2000 and 2009 and 43 percent started their business since 2009. The most reported business sectors across the sample included retail, restaurant/cafes, and personal services (such as salons, barbers). This may reflect the relative ease of accessing entrepreneurs in retail and shop settings in comparison to other settings, rather than a true indication of the sectors diaspora entrepreneurs are involved in. What type of business do you run? Property, 2% Security, 1% Printing, 1% Professional IT, 7% services, 7% Health services, 1% Retail, 37% Export and Import, 1% Decorator, 1% Restaurant/Café, 16% Finance, 2% Transportation, Education, 5% 7% Personal services, 10% When asked how many employees the business has, the average number reported is 4.7, and when asked if employees are primarily from the same diaspora group, the response was fairly even, with 48.9 percent stating yes and 51.1 percent stating no. The average annual turnover reported by respondents is £756,188.20, while the median average turnover is £84,500. Additionally, the average profit margin reported is 31 percent. Are there any links between your business here and your country of origin? Yes, 34% No, 66% ANNEX 1—smes survey findings 41 Thirty-four percent of respondents reported a link between their businesses in the UK and in their coun- try of origin. When asked to describe the link, several reported the import of goods for sale in the UK while others reported that their country of origin provides a customer base/market for their business. 3. Financial services The survey also enquired into the respondents’ use of financial services for their businesses. What nancial products do you use for your business? No response Don't know Other nancial instruments (insurance, employee savings scheme, etc.) Investment funds Gilts Savings account, deposit certi cates, savings bonds Current account: bank or post of ce bank 0 10 20 30 40 50 60 70 80 The vast majority of respondents reported using some type of financial services for their business, mainly in the form of a current account. Only 8 percent of respondents reported not having a bank account for their business, with the main reason being that it is not needed. If you do not have a bank account for your business, why do you not have an account? Don't know They do not offer Islamic nancial services I do not have papers or meet the conditions to . . . I had problems with the staff I fear that I will get into debt It is too expensive I do not earn enough I do not trust banks/the post of ce I do not need one 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% When asked for the reasons behind the choice of bank to use, respondents provided a range of answers including proximity, reputation of bank, and ability to bank by internet/phone as the most frequent answers. 42A A Greenback 2.0 Report Why did you choose your bank? (multiple answers allowed) 40% 35% 30% 25% 20% 15% 10% 5% 0% ss es an Cus f se s es by of s ice t/p s pu now e e k se a es nk on on re o w se ce rn ice an n tio edg o r ne at om vic ic Ba on ho s rv kn sp vi b ea rv rv tr si se sp l ee ser r of ia ic e ’t rr s bu n v e re fin r d m e er n la e/ Sp nt al la o D k o o cu t ci m ie te Is N n m es f d ty al ta an rti i en ho in t si on d pa r oo Is rvic ve rs to ec Re G co o Pe ic di nk se e N ls d on ba lo la ia C s to e ity fe Sp y nt ilit w ua Ab Lo Q When asked if they currently had a loan, the overwhelming majority (75 percent) reported no. This is reflected in majority of respondents reporting that they financed the start-up of their business through personal savings. How did you nance the start-up of your business? (multiple answers allowed) 60% 50% 40% 30% 20% 10% 0% Commercial Personal bank Personal Loan from Crowdfunding Angel investor bank loan loan savings family/ or venture friends capital Respondents were also asked whether they require financing to grow their business and if yes, how they planned to access such financing. Do you require nancing to grow your business? Not sure, Don't know, 5.8% 3.8% Yes, 34.6% No, 55.8% ANNEX 1—smes survey findings 43 Even though the majority of respondents financed the start of their business through personal savings, the majority of those who did plan to access further financing planned to do so through bank loans or an investor. If yes, how do you plan to access nancing? 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Commercial Personal bank Personal Loan from Investor Crowdfunding Re-investing bank loan loan savings friends/ the profits family from my business Turning to payments, the survey inquired whether respondents made cross-border business payments. The majority (70 percent) reported no. Do you make cross-border business payments? Yes, [VALUE] No, [VALUE] For those who do make business payments, the majority use bank transfers. 44A A Greenback 2.0 Report If yes, how do you make those business payments? 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Bank Cash to Money FX Paired Cash in Don't No transfer account transfer company current hand know response (account services services accounts to (cash to account) cash) In contrast, when asked how they receive business payments, there was a relatively significant portion of payments that were received in cash. How do you receive business payments? (multiple answers allowed) 40% 35% 30% 25% 20% 15% 10% 5% 0% Bank transfer Cash to Money FX company Cash in hand No response (account to account transfer services account) services (cash to cash) Conclusion The survey, which was conducted over a wide range of communities, shows that in many ways diaspora SMEs are not noticeably different to other SMEs. In particular: • The majority of migrant SME entrepreneurs are over 35 years old. • They are highly educated with at least half having a degree and a quarter a Master’s degree. • Most SMEs have employees, some are from their own community but an equal number are not. • Around a third of respondents have direct links with their country of origin. • Most SMEs surveyed have banking relationships and use mainstream services. • Most SMEs were established using the owner’s personal funds or through borrowing from family and friends. As might be expected, there is little evidence that borrowing from a bank was used to estab- lish a business. ANNEX 1—smes survey findings 45 • A third of respondents are looking to raise further finance, with around half looking to do so via banks and other formal financial products • These businesses require greater levels of international payments than other community groups. They utilize mainstream bank-operated payment facilities as the norm. Their use of international money transfer services is quite limited for business payments. Diaspora SMEs in London are incredibly diverse, and this paper has given a snapshot of the insights gained from the short survey undertaken. A deeper analysis of specific sectors that entrepreneurs work in or the potential barriers migrant entrepreneurs face in accessing formal financial services could pro- vide fruitful areas of further research. Annex 2—From survey design to field work: a methodological note The questionnaire prior to the launch of the fieldwork. During this pilot, it was noted that some of the wording and To align with the research undertaken previously sequence of the questions needed further clarifica- in Turin and Montreuil, the questionnaire used for tion to elicit the appropriate response. Feedback this research was based on the questionnaires from the pilot was discussed with the project man- from those projects and adapted for the Lon- ager and integrated into the final questionnaire. don context. The original questionnaire used in Turin was inspired by past studies and surveys on In addition to the final questionnaires, interview- migration and remittances.23 ers were also given: • A guide with practical information, detailed As far as possible, the questions were translated description of each section of the question- and formulated to elicit the most relevant infor- naire and clarification on terms and definitions mation from participants while also allowing a comparison of survey results with research under- • Confidentiality agreement signed by the inter- taken in other Champion Cities. viewers and the project manager • Assistance with contacting centers and access- The questionnaire structure was intended to first ing entry points understand whether or not to include a poten- tial target migrant in the sample by asking four • Vouchers in the value of £10 for a local super- eligibility questions. This was followed by sec- market or in the form of a SIM card with £10 tions focusing on demography, financial inclusion, calling credit. remittances, income and earnings, employment, and legal status. The fieldwork: sampling strategy and entry points Training of interviewers The fieldwork took place from January 9 to Feb- and testing ruary 25, 2015. The pilot interviews took place The project manager coordinated a fieldwork from December 12 to 21, 2014. team composed of eight interviewers. Prior to Interviewers were divided into four teams of two the fieldwork, the interviewers attended a train- people, with each team focusing on a specific ing session on the project objectives and on the community. This allowed the interviewers to work broad structure of and reasons for the study. Dur- together and coordinate on approaching entry ing the session, the entire content of the question- points and undertaking interviews. This also naire and strategies for the sample definition and allowed the interviewers to gain the trust of com- interview process were discussed. munity ‘gatekeepers’ who could introduce them Interviewers were given draft questionnaires and to additional entry points and to gain further encouraged to practice undertaking the survey understanding of the assigned community. Given that the fieldwork was undertaken during 23 World Bank, 2014. ‘Migrants’ Remittances from Italy’ https://remittanceprices the winter, it was particularly helpful for interview- .worldbank.org/sites/default/files/migrants_remittances_italy.pdf. ers to be able to set up and approach participants 46 ANNEX 2—FROM SURVEY DESIGN TO FIELD WORK: A METHODOLOGICAL NOTE 47 indoors, generally at a community center, religious the incentive (£10 voucher for a UK supermarket), center, in a shop or at malls, where they could whereas middle to higher income range respon- anonymously approach participants. These loca- dents were indifferent. tions were also valuable in that the diversity of locations allowed access to migrants from a range Likewise, one of the interviewers for the Ghanaian of ages, lengths of stay, and socio-economic community is Ghanaian and reported that upon backgrounds. finding out about her background, potential partici- pants became more willing to partake, perceiving Additionally, interviewers were available to con- this as ‘helping a community member’. Nevertheless, duct interviews at various times of the day and Ghanaians needed assurance as to the research’s different times throughout the week. This meant impartial authenticity, due to an assumption that the they were able to intercept participants with vary- research was for an existing or new MTO. ing working hours and individual and religious practices. Across all four communities, participants found the survey too lengthy and too repetitive in Feedback from fieldwork places. They also had some issues understanding the format of the questions on banking products. Overall, there was relatively little difficulty in Some interviewers felt that limiting answers to establishing areas and places to find participants. one or three responses was detrimental. In fact, all However, gaining the community’s trust was the interviewers reported that participants had prob- key challenge for every community. Interviewers lems selecting what the remittances were used noted that being from the community or speaking for. Participants, found it hard to choose between their respective language, would have helped in the different options, which often resulted in their gaining trust. selecting the first three options on the list. In addition, the interviewers for the Bangladeshi Most participants were not so interested in how community, noticed that though language barrier the data would be used. Some claimed that this was only an issue with the older generation, other type of study had already been conducted. This potential participants were nonetheless suspicious was more so with the Somali community and the of them. And since men are the main remitters occasional Ghanaian participants. Ghanaians also within that community, being sensitive to Ban- claimed that the fees of money transfer operators gladeshi cultural norm, added to the challenge of were too high. finding participants. Nevertheless, despite the challenges, the survey’s Similarly Somali men (particularly of the older length and the sensitive nature of the finance and generation) were reluctant to be interviewed. This legal status questions, participants did not refuse initially challenged the goal to achieve a balanced to participate. Overall, there was a high comple- sample structure. Moreover, the interviewers tion rate. reported that many potential participants claimed that this kind study had already been undertaken, which gave them further cause to not participate. For both Bangladeshi and Somali communities, Data entry, cleaning and analysis the interviewers relied on building relationships As the interviews were completed, research- via community-run businesses (Bangladeshi) and ers submitted completed questionnaires to the community leaders (Somali) in order to access research team on a regular basis. This allowed the participants. research team to keep track of the data over the survey period and monitor progress. Both interviewers for the Romanian community are Romanians and therefore did not experience Once the surveys were submitted, the recorded the aforementioned challenges. However, finding data was uploaded to an online survey tool. a broader range of Romanian respondents proved Once all the data was uploaded, the dataset was difficult. This was due to an overwhelming number exported and processed by the research team for of lower income migrants willing to participate for data analysis. Migrants’ Remittances from the United Kingdom International remittances and access to financial services for migrants in London, UK