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Fintech Inclusion and Remittance Cost Reduction for OFW Households

Financial technology enables substantial reductions in cross-border remittance costs, directly improving the net disposable income and financial stability of recipient migrant households. By lowering transaction barriers and promoting digital account adoption, fintech mechanisms foster greater financial inclusion and facilitate productive savings behavior. Optimizing these digital corridors requires addressing existing gaps in digital literacy and institutional infrastructure to secure sustainable economic welfare.

Goal of work

Examine how fintech platforms reduce cross-border remittance costs and enhance financial inclusion for Overseas Filipino Worker recipient households.

Methodology

Comparative literature synthesis and secondary analysis of digital remittance corridor reports and published household finance studies.

Scientific novelty

Synthesizes fee disintermediation mechanisms with recipient-side financial management practices within Philippine cross-border payment corridors.

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Master's Thesis

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Fintech Inclusion and Remittance Cost Reduction for OFW Households

Author:

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First M. Last

Advisor:

Dr. First Last

City, 2026

Contents

Approval Sheet
Abstract
1.2 Statement of the Problem and Objectives
1.3 Significance and Scope of the Study
Chapter 2: Theoretical and Conceptual Framework
2.1 Digital Financial Inclusion and Transaction Cost Reduction
2.2 Remittance Transfer Mechanisms and Household Financial Behavior
Chapter 3: Research Methodology
3.1 Systematic Literature Review and Documentary Synthesis
3.2 Comparative Evaluation Criteria for Digital Remittance Corridors
Chapter 4: Analysis of Fintech Adoption in OFW Remittance Channels
4.1 Cost Disparities Across Traditional and Digital Transfer Modalities
4.2 Impact of Financial Literacy and Intermediation on Household Allocation
Chapter 5: Policy Implications and Strategic Framework
Chapter 1: The Problem and Its Background
1.1 Background of the Study
Bibliography
Conclusion

Introduction

Cross-border financial transfers constitute a fundamental pillar of economic resilience in the developing world, supporting millions of dependent households across multiple welfare dimensions. Financial technology has emerged as a transformative mechanism capable of disintermediating conventional banking channels, lowering transaction fees, and accelerating capital flows [5], [6]. In recipient economies such as the Philippines, remittance inflows provide crucial liquidity that stabilizes basic consumption, supports educational attainment, and buffers vulnerable families against macroeconomic shocks [2], [4].

Despite the rapid proliferation of mobile payment infrastructures and digital banking platforms, structural friction in fee schedules and intermediation margins continues to erode the net value received by migrant worker families. Traditional remittance corridors impose disproportionate costs on smaller cross-border transactions, diminishing the disposable capital available for domestic savings and productive asset accumulation [3], [7]. This systemic friction highlights the urgent necessity to examine how fintech integration actively reduces remittance overhead and promotes sustained financial inclusion [6].

Existing literature frequently emphasizes broad macroeconomic flows or focuses exclusively on migrant sender demographics, often neglecting the receiving end of digital adoption. A comprehensive inquiry into how recipient households engage with digital transfer tools and allocate resulting financial surpluses is essential for designing targeted financial policies [1], [4]. Clarifying these micro-level adoption dynamics establishes a grounded foundation for optimizing digital delivery systems and improving financial welfare among remittance-dependent communities [2], [5].

This paper examines the mechanisms linking fintech adoption to remittance fee reduction and evaluates its subsequent influence on household financial management among overseas worker beneficiaries. Utilizing a critical synthesis of empirical literature and secondary data on cross-border corridors, the investigation identifies systemic barriers to digital uptake and outlines institutional strategies for equitable financial integration [3], [6]. The ultimate contribution lies in formulating evidence-based frameworks that optimize transaction efficiency and foster long-term economic security [1].

Synthesis of Remittance Intermediation, Literacy Constraints, and Household Financial Security

Scholarly discourse underscores that modern digital transfer mechanisms substantially lower transactional friction and expand access to mobile banking, fostering broader digital financial inclusion for remittance-receiving households (FinTech, 2023). However, the realization of lasting household welfare from reduced remittance costs depends heavily on recipient financial management practices. Evidence from Philippine migrant households indicates that remittance allocation remains concentrated primarily in immediate consumption, education, and debt obligations, with financial literacy significantly governing investment preferences and savings patterns (MAIN, 2018). Furthermore, empirical assessments confirm that investment behavior serves as the strongest predictor of financial security among worker dependents, whereas deficient financial literacy directly hinders optimal fund allocation and moderates wealth accumulation (IJFMR, 2024). A critical synthesis of these scholarly positions reveals an evident research gap: while existing literature establishes the operational benefits of digital platforms and separately identifies domestic spending patterns, few empirical models examine how the direct adoption of fintech channels specifically alters the subsequent allocation decisions of recipient households. Moreover, several methodological and conceptual limitations must be acknowledged. Current empirical evidence largely relies on descriptive and cross-sectional regional surveys, which restrict causal inferences across diverse migrant corridors and cannot account for evolving macroeconomic shocks or institutional support variations. Addressing these research limitations requires longitudinal methodologies and mixed-method frameworks that integrate transactional data from fintech applications with household balance sheets to establish how digital inclusion directly converts transaction cost reductions into productive domestic investments and sustainable economic resilience.

References

  1. Determinants of Financial Security of Overseas Filipino Workers' Dependents (OFWDS): An Analysis of Remittance Management of OFWDs in Region 12, Philippines
    Wilma A. Mercado -
    DOI Link
  2. THE CORRELATION OF INTERNATIONAL REMITTANCE OF OVERSEAS FILIPINO WORKERS (OFWs) TO THEIR FAMILIES' FINANCIAL CAPABILITIES AND LIFE SATISFACTION
    Ericca Balboa, Jia Faye Delfin, Ella Marie Malicay et al.
    DOI Link
  3. Digital Financial Inclusion and Remittances: An Empirical Study on Bangladeshi Migrant Households
    Kazi Abdul Mannan, Khandaker Mursheda Farhana
    DOI Link
  4. Financial Management of Overseas Filipino Workers’ Beneficiaries
    Ann Charyl M. Gallo
  5. Exploring the impact of fintech on financial inclusion: Literature review
    LAHROUR, Khalid, HORR Latifa
  6. Digital Economy and Financial Inclusion: The Impact of Fintech on Financial Inclusion
    Phulari Bhagwat Gopal
  7. Motives and Giving Norms Behind Remittances: The Case of Filipino Overseas Workers and Their Recipient Households
    Michael M. Alba, Jessaine Soraya C. Sugui
  8. Motives and Giving Norms behind Remittances: the Case of Filipino Overseas Workers and their Recipient Households
    Josef Yap, Jose Ramon Albert, Aubrey Tabuga et al.

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