Because of mobility restrictions and other limitations imposed to combat the COVID-19 epidemic, the foreign exchange and remittance sector had a global decrease in 2020. As per a recent World Bank analysis, global remittance inflows will decrease by 2.4% in 2020, following a 3.7% gain in 2019.

Annual remittances from expatriates in the UAE to their home countries were Dhs156.8 billion in 2020, down from Dhs165 billion in 2019. According to the Central Bank of the UAE's Annual Report 2020, external remittances in the UAE fell by 5%, or Dhs8.3 billion, in 2020.

Considering this, the country surpassed the World Bank's initial projection of a 20% loss in remittances this year, achieving only a 5% loss. Later, the World Bank revised its forecast to reflect a 7% decline in remittances for the year.

Last year, a total of Dhs113 billion was transmitted mostly in the nation through exchange firms, while Dhs43.8 billion was transmitted overseas through banks, indicating that exchange firms completed 72% of these remittances, while banks executed the leftover percentage.

As per the Central Bank of the UAE, India scored first among the top three destinations for external personal remittances, accounting for 33.6% followed by Pakistan (11.9 %) and the Philippines 6.7%.  Due to employment losses and wage cuts triggered by the pandemic, the CBUAE recorded a 15.6% drop in remittances to India and a 15.3% drop in remittances to the Philippines last year.

“The pandemic is still not over, but we are hopeful that the currency exchange sector will grow by around 2.4% this year because of numerous factors, like the steady lifting of travel bans that we anticipate to continue with the deployment of the vaccine; the return of levels of spending to normalcy, and the expansion of economic activity supported by the completion of significant domestic projects and investment efforts. These developments and fresh investments will boost the need for employees and, because of the need for remittance services,” said Rashed A. Al Ansari, CEO of Al Ansari Exchange.

“With international investments and financial flows into the local market, Expo 2020 is expected to drive the country's foreign exchange and remittance industry even further. The modifications to the commercial corporations' legislation are also a beneficial move for the economy as a whole our sector specifically since encouraging 100% foreign ownership onshore will attract new investors and investments. These efforts, advances, and projects would act as a catalyst to boost economic growth and hasten recovery from the pandemic's devastation,” Rashed remarked.

“We had a strong remittance performance in 2020, transferring a total of Dhs40.2 billion and gaining a 36% market share among several other exchange companies,” he added. It is worth noting that outward personal remittances transferred through UAE banks totaled Dhs43.8 billion. During the timeframe, we accounted for 26% of all remittances transferred from the UAE. We anticipate 2.6% growth in 2021, which is consistent with the World Bank's projections for low- and middle-income nations. Remittances are much more robust since they are a necessary service for individuals and corporations, notably in today's world when cross-border trade is at its peak.”

Rashed stated, "This could be the case for impacted small firms, as they struggle to comply with the Central Bank's recently issued rules and rules, which entered into effect in early 2018, to manage and further simplify this sector." The number of registered exchange businesses in the UAE fell to 90 in 2020, from 140 in 2017, for a multitude of reasons, like a failure to fulfill the Central Bank of the UAE's license and compliance standards. With the outbreak of the pandemic and the severe global economic conditions, we anticipate additional smaller exchange business closing and likely acquisitions between medium and bigger exchange businesses.”

“We expect to see a speedier adaptation of regulatory standards to keep up with the advancement of change occurring locally and globally. We also advocate for cutting the cost of using credit cards for purchases in general, and remittances particularly. In the UAE, the fee of using a debit card is now at 2-3%, which is quite high.” Rahed added.

“The organization observed a considerable increase in our digital transactions in 2020,” stated Mohammad Bitar, Deputy CEO of Al Ansari Exchange. In contrast to 2019, our client base rose by more than 212% throughout our digital platforms, including our mobile app now accounting for more than 14% of our total remittance exchanges. In 2021 and beyond, we anticipate increasing digital transformation initiatives in the industry. We continue to be strong in our commitment to investing in and establishing digital projects that address the future requirements of our customers".

“Al Ansari Exchange holds 36% of the UAE's market share among exchange businesses and 26% of the UAE's market share of overall remittances,” Mohammad Bitar stated. We are constantly looking for chances for development and expansion that fit our strategic goals.”