The interview with Elton Çollaku, Administrator of Union Financiar Tirane (UFT)

The interview with Elton Çollaku, Administrator of Union Financiar Tirane (UFT)

  1. The Bank of Albania has announced that in 2021 the highest level of remittances was recorded since 2009, about 761 million euros. How do you see this development based on your work?

UFT operational data show that during the last few years, the flow of remittances to Albania has seen significant growth.

In my opinion, there are a number of factors that have led to this trend in remittances. One of the main reasons definitely has to do with the return of the migratory trends of Albanians going to more developed countries in recent years, which has led to more fresh arrivals in the Albanian diaspora in Western countries and consequently has been reflected in a growth in the flow of remittances to Albania.

An increased need for financial support for their families in Albania during the period of the COVID-19 pandemic, in the 2020-2021 period, has been one of the reasons for the increase in the flow of remittances to the country.

The pandemic also led to the reduction of the use of informal channels, as a result of the restriction of movement among countries, bringing a significant increase in the channeling of remittances from informal to formal/official channels in the entire network of financial operators in the country.

During the pandemic period, online transfers marked an exponential increase, directly affecting the increase in the volume of transfers to Albania. This undoubtedly was also favored by the very low fees offered in the online services of money transfer operators.

Over the last few years, we have seen a significant increase in money transfers using online channels, while maintaining the levels of transactions carried out at brick and mortar points. Western Union, for years, has been offering online money transfer services, allowing for money transfers at very low rates, without the need for in-person visits, leading to an increase in transfer volumes. 

Very affordable fees are also applied to the transactions carried out in the in-person network of Western Union agencies, making it possible to offer the service to a very large part of the clientele that feels more comfortable with that type of service.

The physical presence in Albania, with a very wide network of service points, covering even the most rural areas, in addition to providing quality service has also been giving the population wider access to financial services, automatically positively influencing the flow of remittances.

  • What products and services does the financial market offer to migrants and specifically how does Western Union serve this category?

Western Union is the global leader in money transfers and many other payment services around the world. With 170 years of experience, the Western Union platform enables the movement of money in more than 200 countries and territories around the world, thus connecting not only migrants with their families, but also businesses, financial institutions, etc., through a giant network of service points across the globe, access to bank accounts, e-wallets and cards.

With the increase in the use of online services, Western Union has also adapted its services to technological developments and to offer migrants more convenience and diversity in options. In Albania too, we have been assisting by providing online digital services for years, as well as other services that are continuously launched for our customers, always accompanied by ever more affordable rates, enabling Western Union to be a leader in the remittance market.

  • Do you think that the country’s economy and financial market will continue to rely on remittances?

In principle, as a phenomenon indisputably linked to emigration, the performance of remittances is directly related to the migratory trends of a country, with high levels of migration in the population accompanied by higher flows of remittances, which are sent by migrants to support family members in the countries of origin. Over the years and with the inclusion of this category of migrants in the life and society of the host countries, a kind of stability of remittances and their decline is observed and usually this is a 10-15 year cycle. In that context, in Albania too, the trend of remittances followed the above principle.

In recent years, as a result of the new migratory tendencies of Albanians towards the countries of Western Europe, they have also brought a fresh wave of people to the Albanian diaspora in the West. As a result, a growth trend of remittances is observed, which is directly related to these migratory trends and the support of migrants for their families in Albania.

Referring to market experience, I think that in the coming years too, as a result of the above phenomenon, there will continue to be a growing and stable trend of remittance flows to the country. These funds are essential for the livelihood of many families and the Albanian economy as a whole.

Over the years, remittances have been between 8 to 13 percent of the GDP, which makes it clear the very large impact they have on the Albanian economy. It is estimated that approximately a quarter of Albanian families are completely dependent on remittances.

  • How do you evaluate the legal framework for the development of the financial market in the country?

In my personal perception, the Bank of Albania has never been an obstacle in licensing new actors who met the existing legal and regulatory requirements. In this sense, I think that the Bank of Albania has played a positive role in promoting competition in the financial services market in the country.

The new Payment Services Law brings Albanian legislation closer to EU’s second payments directive, PSD2, and is an important step, because it creates more opportunities for fintech companies to penetrate and expand their activity in the market. At the same time, it increases cooperation with second-level banks, it is more of a window for financial institutions. I think this is a necessary and driving link in this industry, also due to the fact that banks are traditionally more rigid when it comes to collaborations or system integrations, also due to their profile and focus.

  • What would you suggest to improve?

The implementation of the Payment Services Law can bring a positive impact on the financial services market. In the meantime, it remains essential to increase efforts to have an environment where fair competition prevails and informality is eliminated. Improving the professional abilities of the public administration is also a very important part and has a great impact on the progress of the process.

The above have been raised as concerns by the American Chamber of Commerce in Albania.

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