1. Remittance Project
Discussing the business opportunity, competition and strategies for
operation
01st Aug 2013

2. 2
Agenda
Total Business Opportunity
- Global Market
- Regional Market
- Local Market
Why should ADCB look into the business?
A Look at the Competition
How can ADCB do it?

3. 3
• More than 215 million people (3% of the world’s population) live outside their
countries of birth, and over 700 million migrate within their countries.
• Migrants today would constitute the fifth most populous country in the world.
• Global remittance flows, including those to high-income countries, are estimated
to total $514 billion in 2012, an increase of 10.8% since 2011.
• Global remittance flows to developing nations are estimated to total $401 billion in
2012, an increase of 7.7% over the $372 billion in 2011.
• Demographic forces, globalization, and climate change are expected to
increase migration pressures both within and across borders in the coming
years.
• Worldwide remittance flows, including those to high-income countries, are
expected to reach $550 billion by 2013 and $615 billion by 2014.
• Remittance flows to developing countries are expected to grow at 7-8 percent
annually to reach $467 billion by 2014.
Source: World Bank’s Migration and Development Brief 18.
Remittance: The Global Market

4. 4
Remittance: The Global Market
4
0
100
200
300
400
500
600
700
800
2009 2010 2011 2012 2013 2014 2015
Global Remittance flow (in $billion)
Data calculated using World Bank Data and a projected 7-8% growth rate in 2012-2014 and estimated global remittance flow of $608 billion in 2014.
• One of the reasons for the high growth rate
over the last few years is the increase in
migration of portions of the native population
of many countries to other countries.
• On the international stage, countries have
realized the importance of remittances for the
population and the economy of the country
and have taken steps to monitor remittance
prices worldwide.
• In 2008, the G8 planned to monitor prices
and take steps to control them whenever
necessary.
• On April 19th 2013, The World Bank
announced the establishment of the Global
Knowledge Partnership on Migration and
Development (KNOMAD), envisioned to
become a global hub of knowledge and policy
expertise on migration issues.

5. 5
Remittance: The Global Market
5
Top 10 Remittance Receiving Countries
(2012)
Rank Country Remittance (in $
billions)
Migrants per 1000 of the
population
1. India 69 -0.05
2. China 60 -0.33
3. Philippines 24 -1.27
4. Mexico 23 -3.11
5. Egypt 21 -0.20
6. Nigeria 21 -0.22
7. Pakistan 14 -2.00
8. Bangladesh 14 -1.04
9. Vietnam 10 -0.34
10. Lebanon 7 -12.08
• Net migration rate is the difference between the
number of persons entering and leaving a country
during the year per 1,000 persons.
• A positive migration rate indicates net immigration
whereas a negative migration rate indicates a net
emigration.
• If a country is involved in net immigration, it means
it holds a high number of immigrants who will
transfer money from the country of current residence
to their home country.
• If a country is involved in net emigration, it means
that it will send out a large portion of the native
population and will therefore receive large amounts
of money in remittance.
• Therefore, countries with a negative net
immigration rate, or those countries involved in
net emigration stand to receive large amounts of
money in remittance.
Source: World Bank Data Report on Migration and Remittances 2012

6. 6
Remittance: The Global Market - A quick look at the UAE
6
• The United Arab Emirates has a net migration rate of 16.82, which makes it the 3rd highest
net immigrator in the world. Expatriates constitute 70% of the population.
Top Immigration Countries, 2010
number of immigrants, millions
Top Immigration Countries, 2010
percentage of population
Source: World Bank’s Migration and Remittances Factbook, 2011

7. 7
Remittance: The Regional Market
7
Remittance outflow from MENA region
In $ billions
-10
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013 2014 2015
Remittance outflow
(in $billion)
Growth Rate (%)
Remittance outflow from GCC region
In $ billions
0
10
20
30
40
50
60
70
80
Saudi
Arabia
UAE Kuwait Qatar Oman Bahrain Total
• $83 billion was the amount of money remitted by expatriates in GCC countries in 2012.
• The GCC region accounted for 15% of the total remittance flow in 2011.
• The Gulf – South Asia corridor is considered to be the second largest market for
remittance flows after USA – Latin America.

8. 8
Remittance: Outflow of the Local Market
8
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014 2015
UAE Remittance Outflow
UAE Remittance
Outflow (in $billion)
Growth Rate (%)
The remittance outflow for the years 2013 to 2015 have been estimated using the
forecasted growth rate for the MENA region.
The main reasons for the robust remittance
outflow are-
• Immigration: According to the World Bank, the
UAE ranks 14th on its list of “Top Immigration
Countries” as per 2010, with 3.3 million
immigrants. The UAE also ranks 3rd on the
World Bank’s list of “Top Immigration Countries
– in terms of population”, with 70%.
• Labour Force:
The large foreign workforce, coupled with the
fact that the UAE is one of the fastest growing
tourist destinations, with a 10 million annual
tourist flow has helped contribute to remittance
flows.
• Prices
According to the World Bank, sending
remittances from the UAE to Pakistan (an
average 4.92 percent of the money transferred)
is the cheapest corridor in the world, while
the UAE to Sri Lanka (6.35 percent) is the fifth
cheapest. To send US$200 from the UAE to
India – where a significant chunk of the nation’s
earnings are sent – costs an average 5.02
percent, while it can be as cheap as 2-3 percent
depending on the bank used.

9. 9
Agenda
Total Business Opportunity
Why should ADCB look into the business?
- Revenue Analysis
A look at the competition
How can ADCB do it?
9

10. 10
Remittance – Why should ADCB look into the business?
10
Revenue
Analysis
Top-Down
Approach
Using World Bank
Remittance Data
Bottom-Up
Approach
Using data obtained
from conducting
exchange house
surveys
• For fair comparison, only data from the top
exchange houses and the above analyzed corridors
is used. Banks are excluded for the same reason
and weighted average of different prices across
different modes of remittance (cash to cash, cash to
account) is taken.
• Ticket sizes of $500 are used as base values for
calculation.
• Total UAE remittance outflow is estimated at $20
billion.
• Market research shows that 60% of remittance
flows are routed through exchange houses,
which amounts to a $12 billion flow.
• For the bottom up approach, estimates were
calculated using data obtained from UAE
Exchange, which is the world’s largest exchange
house.

11. 11
Remittance – Revenue Analysis
11
Top-Down Approach
Corridor Fees Margin Total Cost
%
Total Cost
(in $)
India 4.09 1.594 2.406 12.062
Nepal 4.71 0.304 1.254 6.274
Pakistan 3.374 0.92 1.6 8.0.18
Philippines 5.952 0.72 1.864 9.552
Sri Lanka 4.996 1.01 2.008 10.042
Weighted average of total cost: $9.1896 (for transaction of
$500)
Therefore transaction of USD 12 billion gives a revenue of
$231,120,000 – controlled by exchange houses
Therefore, transaction of USD 20 billion gives a revenue of
$367,200,000 – total revenue pool
Therefore, remainder i.e. $136,080,000 – controlled by
banks and hawalas
Bottom-Up Approach
Average cost by transaction of AED 1000/- is AED 17.69
The revenue made by UAE Exchange on a flow of $6 billion amounts to $106,171,001.
Then on a remittance flow of $12 billion, the exchange house market makes $212,342,000 which is the total revenue
controlled by exchange houses.
Then on a remittance outflow of $20 billion, the entire remittance market makes $353,903,333 which is the total revenue.
Banks and Hawalas capture the remainder which amounts to $141,561,333 which is the total revenue opportunity.
According to analysis, total revenue pool estimated between $353,903,333 and $367,200,000

12. 12
Agenda
12
Total Business Opportunity
Why should ADCB look into the business?
A look at the competition
How can ADCB do it?

13. 13
Distribution of Licensed Money Changers (End 2011)
Remittance - Competitive Landscape
Emirate/City Head Offices Branches
Abu Dhabi 24 146
Dubai 78 292
Sharjah 9 94
Ajman 2 23
Umm Al Quwain 0 6
Ras Al Khaimah 0 15
Fujairah 1 14
Al Ain 5 38
Grand Total 119 628
Exchange House No. of Branches
UAE Exchange 118
Al Ansari Exchange 110
Al Fardan Exchange 40
Major Exchange Houses in UAE
The number of moneychangers
operating in the UAE reached 119
with 628 branches, compared to 114
main offices and 562 branches at the
end of 2010.
Typical Product Suite
Source: Central Bank of UAE Annual Report 2011, Websites of Exchange Houses
• Remittances
• Currency Exchange
• WPS Salary Distribution
Allied Services
• NRI Account Opening
• Mobile Top-up
• NOL Card Recharge
• Airline payments
• Bill Payments
• National Bonds

14. 14
Agenda
14
Total Business Opportunity
Why should ADCB look into the business?
A look at the competition
How can ADCB do it?
- Understanding and identifying the target audience
- Identifying the two approaches
- Things to keep in mind

15. 15
Remittances – The Target Audience
15
Audience
Blue Collar
• Income < AED 5000/-
• Estimated population : between 2.45 and 3.02 million
• Value price and convenience more than anything else.
White Collar
• Income > AED 5000/-
• Estimated population : between 5.18 and 5.75 million
• Value speed and convenience more than anything else.

16. 16
Competitive Variables
Source: MasterCard Research, Team Analysis
COMPETITIVE VARIABLES
MTOs /
EXCHANGE
HOUSE
HAWALA BANKS
Price
• Hawala and exchange houses are the cheapest options for sending
remittances.
Speed
• Instant cash from MTOs is the fastest remittance service.
• Bank products like direct deposit and check take more than four days.
Reliability
• Banks are the most reliable service as money is credited directly to
the account.
Customer Service
1. MTOs provide better customer service in terms of explaining the
process, helping to complete forms, speaking the local language, etc.
Ease of Sending
• MTOs provide better reach through exchange houses, door-to-door
delivery, the post office, etc.
Ease of Receiving
• Hawala operators provide doorstep services
• Remittances sent through hawala are not taxed.
Banks lag other providers in meeting send side remittance needs

17. 17
Remittances – The Two Approaches
17
Solo Approach (e.g. Al Rajhi Bank) Partnership Approach (e.g. NCB)
Advantages Disadvantages
Total revenue is
for the taking
Competition
Easier to
coordinate
Marketability
Overbearing
burden
Advantages Disadvantages
Marketability Shared revenue
Combined
Strength
Shared burden
The same services will be offered in both approaches. What changes is the
method of operation.
Typical Product Suite
• Remittances
• Currency Exchange
• WPS Salary Distribution
Allied Services
• NRI Account Opening
• Mobile Top-up
• NOL Card Recharge
• Airline payments
• Bill Payments
• National Bonds

18. 18
Remittances – Operational Analysis
18
Services Partnership Solo
WPS Partnership with C3 – C3
provides “door to door
service” in labor camps
Self backed
Remittances Partnership with MTO,
such as Xpress Money,
Money Gram, etc.
Self backed
Allied Services Self backed Self backed
Blue Collar Workers
White Collar Workers
Services Partnership Solo
WPS Partnership with C3 Self backed
Remittances Same partners as with blue
collar workers. Extend
banking and corporate
services to White Collar
Workers.
Self backed
Allied Services Self backed Self backed

19. 19
Remittances – Additional things to keep in mind
19
Key Departments
• Administration
• AML & Compliance
• Audit
• Branches
• Correspondent Banking
• Customer Service
• Finance
• Information Technology
• Marketing
• Operations
• Personnel
• Process
• Product
• Quality
• Reconciliation
• Treasury
Factors determining the choice of the business partner
• Reputation amongst competitors and the audience
• Reliability
• Financial Assets
• Competitive History/Previous Alliances
• Worldwide network