Digital Remittances: The Future of Sending Money
In today’s fast-paced world, digital remittances are emerging as the future of sending money, and GraceKennedy Limited (GK) is leading the charge in Jamaica. With a rich history in the remittance business, GK is adapting to the changing landscape, driven by the need for efficiency and lower costs.
For decades, GK has been a dominant player in Jamaica’s remittance market, boasting over half of the market share, thanks in part to its exclusive partnership with Western Union. This collaboration has allowed GK to thrive, especially during the pandemic when many turned to formal channels for sending money. In 2021, GK’s money services segment generated a staggering $9.67 billion in revenue, showcasing the strength of its operations.
However, the tides have shifted. By 2024, GK reported a decline in revenue to $8.62 billion, with profits before tax dropping to $2.73 billion. The first quarter of this year saw a six percent dip in revenue, highlighting the challenges faced in markets like Guyana and Trinidad & Tobago. “We’re continuing to take market share, but globally, the cost for sending remittances is coming down,” explained Frank James, GK’s new CEO. “This is designed to allow people to send money globally at a lower cost.”
Traditionally, remittances involved sending money through agents at physical locations, which allowed companies to charge higher fees. But the world is changing. More companies now enable direct transfers to bank accounts or digital wallets, reducing costs for customers. While this is great for senders, it means that companies earn less in fees.
James emphasized the need for GK to adapt its business model to this new reality. “Digital remittances are the way of the future; it is happening all over the world,” he said. Currently, digital remittances account for just over 20 percent in Jamaica, compared to over 50 percent globally. This gap presents a significant opportunity for growth.
To capitalize on this trend, GK has onboarded its first digital sub-agent, TFOB (2021) Limited, which operates the Lynk mobile app. This move aims to enhance convenience for customers. Additionally, GK is piloting the GK One mobile app in Cayman, Guyana, and Trinidad & Tobago, allowing users to access their funds directly in their wallets.
Artificial intelligence is also on the horizon, with plans for an AI-enabled contact center to better serve customers. “We’re using technology to improve customer needs,” James noted, highlighting the company’s commitment to innovation.
As GK navigates these changes, it’s also keeping an eye on potential challenges, such as the proposed remittance tax in the United States. James remains optimistic, stating, “Jamaica’s remittance has always been resilient because people are sending money for their families and loved ones.”
With the landscape of remittances evolving, one has to wonder: how will these changes shape the future of sending money in Jamaica and beyond?