Digital Remittances Surge 20%; Strong Q4 Performance Expected

The UAE's foreign exchange and money transfer sector posted steady growth in the third quarter of 2024, driven by rising demand for financial transfers and currency exchange services. Digital channels now account for 10-20% of all transfers, with this share expected to grow significantly in the coming years as customer behavior shifts toward technology-driven solutions.

Rashid Al-Ansari, deputy chairman of the Banking and Money Transfer Institutions Group, pointed to several factors behind this growth. The UAE's economic strength and flexible business environment played a key role in boosting transfer volumes. At the same time, positive momentum in recipient countries' economies helped sustain demand.

Exchange rates also worked in favor of the sector. The dirham's strength against many major currencies increased the purchasing power of money transfer recipients in their home countries. This made sending money more attractive for UAE residents, especially during peak seasons like the start of the school year and religious holidays.

**Digital transformation picks up speed**

The shift to digital platforms is becoming more noticeable. Al-Ansari noted that customer confidence in digital technologies is growing, and the range of available transfer options keeps expanding. This trend reflects broader changes in how people handle financial transactions.

But it's not just about convenience. The regulatory environment is pushing more customers toward licensed and trusted institutions with strong market presence. New regulatory frameworks announced in June opened the door for new companies to enter the market, creating healthy competition based on fairness and transparency.

**Strong fourth quarter expected**

Al-Ansari expects the fourth quarter to show strong performance. Several factors support this outlook. Holiday seasons typically drive up demand for liquidity as people spend on celebrations, travel, and gifts. The UAE's stable job market continues to generate steady income flows that turn into regular transfers.

Exchange rate fluctuations and rising financial needs from families abroad add to transfer volumes. Countries dealing with high inflation create additional demand for money transfers from overseas workers.

Large national projects and notable growth in tourism and hospitality sectors, along with global events in the final quarter, should also contribute to higher transfer volumes.

**2026: A turning point**

Looking ahead to 2026, Al-Ansari sees the sector entering a critical phase built on three pillars: digitization, regulatory development, and changing customer expectations.

Digital services will become smarter and smoother. Artificial intelligence will play a bigger role in enhancing security, fighting fraud, and personalizing financial services in ways we haven't seen before. Open banking services and digital wallets will continue reshaping the transfer experience, cementing the UAE's position as a regional hub for financial innovation.

On the regulatory side, the sector is entering a new phase of maturity and transparency. The Central Bank of the UAE is implementing advanced supervisory frameworks that will likely trigger a wave of market exits or merger and acquisition activity among institutions.

The digital generation will drive the main transformation in the coming period. As younger generations dominate the market and new legislation promotes financial inclusion, companies will need to adapt quickly or risk being left behind.

This shift represents more than just technological change. It's about meeting the expectations of customers who grew up with smartphones and expect financial services to be as easy as ordering food or booking a ride. Companies that can blend regulatory compliance with user-friendly digital experiences will likely capture the largest market share.