Banks are wooing expatriate workers in the UAE with deals on remittances, seeking to corner the lucrative market on money transfers.
Standard Chartered announced yesterday that it would waive fees on all online remittances to India until the end of May. The bank is hoping to attract more deposits from the 1.75 million Indian expatriates in the Emirates.
"We have identified a gap in the market for value-added services on remittances for our customers," said Syed Hammad Haider, Standard Chartered's general manager for retail products and head of new business. "With this move, Standard Chartered is strengthening its position in the cross-border remittance market, which is currently dominated by the exchange houses."
India is the largest recipient of remittances in the world, and transfers going there from the UAE account for US$6.2 billion (Dh22.77bn), or 12 per cent of India's total, according to the 2011 MasterCard Worldwide Insights report.
"The flow of funds from the UAE to India is the most important corridor for the home country, representing 27 per cent of the UAE's remittances," the report said.
While waiving remittance fees could be costly, banks will attempt to maintain their profits through exchange rate differences and from interest earned in the period it takes for a transaction to be processed.
Banks have recently vied for remittance business from the UAE's large population of expatriate workers. Last week, Emirates NBD announced a tie-up with Western Union to enable account holders to make international and domestic money transfers.
However, not all banks have courted this market so assiduously. HSBC ended free international transfers for holders of Advance accounts this month, saying the service was not widely used.
Julien Faye, a partner and head of financial services at Bain and Company Middle East, said competition on fees by banks seeking to protect their market share would be "the next battlefield" for the institutions.
The remittance market in the Gulf was sufficiently large and sustainable to make it an attractive proposition for all banks, not just the exchange houses that have traditionally dominated the business.
"All the local actors have realised that it's a profitable, non-risky business, so they all want to go after it," he said.