Transforming International Remittance for Serbian Diaspora using Blockchain and Digital Identity
This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI)
AID:Tech’s blockchain remittance solution offers affordable, transparent money transfer services to users in and outside of Serbia. Implementation partners, senders and recipients gain traceability over the remittance process with fees >3%; in line with UN SDG 10.C
The solution is developed in partnership with UNDP Serbia and part-funded by The Rockefeller Foundation. The solution launched in September 2018 with the support of the city administration of Nis, Serbia.
The international remittance market is expected to reach US$616 billion in 2018. Whilst costs and speed at which international remittance has significantly improved for many, users is less than developed economies continue to be subjected to disproportionately high costs. Remittances for South African users can reach as high as 24% per transaction. Across the world, the average cost per remittance has reached around 7%. For the Serbian Government, if also solves the problem of the diaspora re-engaging with their home country.
With international remittance playing a key role in economic development, especially in the context of growing global movement, the costs and, for some, the inaccessibility can be oppressive and leaves much to be desired.
The high costs of existing remittance offerings contribute to further issues. In 2017, personal remittance inflow amounted to US$ 3,587,025,444. With amounts that constitute almost 10% of the country’s GDP, there has historically been little transparency into how remittance converge from across the world in Serbia and are redistributed by recipients for various needs and purposes. High costs also lead to the proliferation of informal services where the lack of oversight leads to further opaqueness as well as lack of protection for users as consumers.
To encourage micro and macro economic development, there is clear demand to reduce remittance costs, in Serbia and globally. In line with the UNDP’s objectives, greater transparency into a key part of the country’s economy will also enable more effective and positively impactful decision making, especially around strategy and policy making in a sustainable manner.
The solution is a product of a collaborative partnership between AID:Tech and United Nations Development Programme (UNDP) Serbia. It is one that encompasses the end-to-end remittance journey. The solution will be made available to Serbian Diaspora as senders, who wish to remit to friends and family in Serbia as recipients. The solution will also have dedicated interfaces for UNDP Serbia administrators, and for merchant partners, including utility providers and grocery retailers.
The project objectives include providing affordable remittance fees to users, amongst others. This project will see remittance fees no higher than 3% per transaction for senders. Recipients do not bear any fees at all. Another objective of this solution is to provide transparency and insight into international remittance from an institutional level. With remittance playing a key role in country economy, the Serbian government has keen interest in playing a more active, impactful role to ensure that remittance funds positively impact lives of the country’s citizens. With better understanding of how funds enter and are distributed, authorities are better placed in decision-making, especially when concerning with economic policy making. In particular, the solution has the support of the Serbian Prime Minister, Ana Brnabić, and involves the city administration of Nis where the pilot will launch.
At present, AID:Tech is working with UNDP Serbia to implement project launch, which will be followed by platform maintenance and ongoing discussions around scalability and replicability. Beyond scaling service availability for Serbian users, there is expectations to replicate the same solution via other UN country offices in Q1 and Q2 of 2019.
Outside of AID:Tech’s partnership with the United Nations Development Programme, this solution is also currently being considered by the Asian Development Bank for implementation in the Pacific. This opportunity may see further partners on board, including Citi, who are interested in integration of payment technologies with the AID:Tech blockchain solution for data capturing, structuring and dissemination - injecting transparency in the remittance process, for instance, between Australia, New Zealand, Samoa and other Pacific Islands.
What Makes Your Project Innovative?
The blockchain remittance solution pioneers the use of innovative technology for social and financial inclusion in one, whilst accounting for diverse stakeholders interests. By taking a collaborative approach, not only does the project benefit from a wide range of supporters but also innovative in ensuring that deliverable benefits is not siloed and only enjoyed by a few, but outcomes such as datasets are usable for parties involved.
Its deployment will directly address the UN SDG No. 10.C - to reduce remittance transaction fee to below 3%. This blockchain remittance solution is also one that incorporates multi-sector partnerships to leverage innovative technologies for sustainable social and financial impact, all the whilst, generating data that can be leveraged by users, civil organisations, commercial representatives and the public sector.
What is the current status of your innovation?
Right now, AID:Tech is working with UNDP Serbia for project launch, in conjunction with an ongoing public awareness campaign. The solution will have a controlled pilot period of 1 month, allowing for close management and refinement in the period running up to public launch. Periodically alongside the pilot and subsequent expansions, platform maintenance and ongoing discussions around scalability and replicability will take place with the support of data from key metrics established. Beyond scaling service availability for Serbian users, there is expectations to replicate the same solution via other UN country offices in Q1 and Q2 of 2019.
Collaborations & Partnerships
AID:Tech and UNDP Serbia developed the solution in collaboration. This solution is endorsed by the National bank of Serbia as well as Serbian Prime Minister, Ana Brnabić. It currently involves the city administration of Nis, local utility providers and retailers who act as our merchant partners.
Users, Stakeholders & Beneficiaries
Users directly benefit from secure, affordable and traceable remittance services.
UNDP Serbia and local public authorities benefit from greater transparency over inbound remittance which forms a significant portion of the country's GDP. Prior to this solution, there is little understanding of impact of remittance on the economy.
Merchant partners gain the opportunity to be direct participants of a state-backed solution which can attract new customers.
Results, Outcomes & Impacts
Currently in controlled testing, the launch of the solution is expected to produce the following outcomes after one month of service:
- Acquisition and retention of users with the support of marketing campaigns managed by UNDP Serbia.
- Transactions made on the blockchain platform from Serbia Diaspora to friends and family in Serbia
- Data capture of transactions made on the platform and form periodic reports (weekly, monthly etc)
As there is currently little usable data and no comparable programme in place, there is no reference points in terms of measurement of impact of the solution. Instead these indicators will be measured base on growth rate. For instance, how many active users are on the platform in 3 months, 6 months and 1 year. These measurements will serve to indicate whether the solution is one that users opt for. This is based on the assumption that usability and cost will be the two main factor influencing choice of platform for users.
Challenges and Failures
As the solution is in its early stages of deployment, the main challenges encountered revolve around the development process. These include achieving legal and regulatory satisfaction across the many stakeholders involved in the project.
There are other identified risks which we anticipate to encounter throughout the implementation periods:
- Incorrect assumptions made about user behaviour
- Lack of contextualised understanding to meet users’ and the market’s needs
To mitigate these risks, AID:Tech works closely with partners on the ground who are experts in the field of remittance and have first-hand experience in implementing solutions for the Serbian market. By working with partners who work directly with users, or with users themselves, the solutions are designed and built with their needs in mind. To further mitigate any communications risks, there are ongoing campaigns, conducted in local languages and advertisements in places where remittance users frequent.
Conditions for Success
Integral to AID:Tech's solution is the utilisation of blockchain technology. Not only is the technology itself fairly young and unfamiliar to most, but the majority of limelight shone on the technology has been about private sector development and as a newsworthy news topic. A key condition of success is therefore achieving buy-in from the relevant stakeholders who are all on the same page to want to see a deployment succeed. Often this requires a process of knowledge exchange and demystification of innovative technologies.
Funding support outside of revenue generation is also critical. AID:Tech's model is one of high volume and low margin. Whilst addressable market sizes are substantial, to successfully transition from project-based to recurring revenue (sustainable scaling) requires funding support that can really aid the overcoming of certain major commercial barriers.
Since 2015, AID:Tech has been implementing core technology platform for a range of different use cases. These include international aid, social welfare and healthcare delivery. Whilst the launch of the Serbia project takes place, AID:Tech is in preparation of other launches including the launch of the blockchain platform for distribution of welfare aid to farmers in Syria.
In Q4 2018, AID:Tech will also be launching the world's first peer-to-peer donation application; available for both institutional and consumer donors. This launch will be in partnership with the Irish Red Cross.
These case studies demonstrate the replicability of the solution - regardless of use case, the underlying technology remains the same. With currently live case studies, we are also working with partners to scale user and geographical reach - progressively establishing the replicability of the solution.
Learning the complexity and timeframe expectations when working in multi-sector partnerships. In particular this project includes large, international NGOs as well as public sector entities. For instance, internal decisions specific to individual organisations cannot be influenced yet can have definitive effects on the project and progress.
We are surprised by the amount of top talent we are able to attract from private sector, in the development and deployment processes, who are interested and want to work with a for-profit business doing a social good.