The financialisation of Small and Medium size Money Transfer Operators (SM-MTOs) after the financial crisis in London
The global stream of remittances forms a 601 billion Dollar industry. Transacted online or exchanged in cash over the counter, processed by vast payment institutions, or mediated by agents who harbour strong connections with migrant communities, every day a myriad money transfers flow across state borders. To many individual recipients, remittances can provide a vital source of capital. To countries with a vast diaspora, they constitute a substantial sector of the GDP, and an important axis for development. To regulators and the banking industry, however, remittances have also become the object of close governance, where the imperative to police financial crime can clash with the imperative to extend financial inclusion.
This Leverhulme funded project examines the financialisation of the vast, yet scarcely researched market of Small and Medium sized Money Transfer Operations. Starting in January 2018, and with an empirical focus in London, we unpack the multi-scalar political, financial, and commercial imperatives which shape regulatory frameworks, and examine just how such top-down interventions come to affect everyday practice: in how Money Transfer businesses operate, in how they frame their relationship with senders, and ultimately in the nature of remittance flows themselves.
What we know
A vast body of literature has been dedicated to unpacking financialisation, or the process whereby finance has come to extend ‘beyond its traditional role as provider of capital for the productive economy’, shaping how national economies and polities are governed (van der Zwan, 2014, 99-100). Within this scholarship, remittance related research has added three potent lines of enquiry. Much research has been dedicated, in the first instance, to interrogating what scholars have termed the ‘global remittance agenda’. As private intra-household transfers have come to constitute a veritable global resource, often praised for its democratising potential, and for its ability to withstand fluctuating interest rates in advanced economies, scholars have critically examined the transformation of poverty into a market, and the danger of reducing the problem of global inequality to one of inefficient financial management.
A second stream of research has correspondingly sought to explicate the ensuing contradictions. Authors have interrogated how nation states are being connected to investment markets through the securitization of remittances (Datta, 2016; Hudson, 2008; Soederberg, 2013), and how high finance is seeping into the everyday lives of remitters and recipients on a micro level. Drawing upon a Foucauldian framework of governmentality, finally, a third body of work looks at the power of financialisation to go beyond neutral allocations of capital, and to impose a certain rationality premised on “responsibilized”, consciously risk-taking citizens who operate like miniature firms.
Collectively, this important body of work has stopped short of shedding critical insight into the financial intermediaries – and specifically SM-MTOs - which channel these cross-border capital flows. Our knowledge of these intermediaries is limited to: (i) a recognition that remittance service providers range widely, from formal institutions such as banks, to a vast pool of informal community based systems; (ii) an awareness of the policy imperative to stimulate account-to-account transfers, shaped by broader financial inclusion and securitisation agendas; and (iii) a critique of the formal / informal demarcation, and the potentially erroneous conflations of informality with money laundering and terrorist financing (Pieke et al., 2005; Carling et al., 2007; de Goede, 2003, 2008; Lindley, 2008).
Yet there is hardly any literature on how remittance intermediaries navigate the regulative framework of financialisation, or indeed on how this shapes the practice of money transfers.
What we add
This project adds an important new direction to the macro and micro foci explored in existing remittance literature, by interrogating the mezzo scale of Small and Medium Transfer Operators. In focusing on disciplinarity, we seek to unpack, on one hand, the role of financial, political and commercial actors in shaping regulative frameworks. Of equal conceptual interest, however, is how financialisation is negotiated in the everyday by Money Transfer Operators, who may evade, resist, or even pass these types of rationality to the migrant men and women who use their service.
To this end, this project seeks to:
- Map the size, typology, assets and market orientation of London’s SM-MTO, and so provide a first comprehensive overview of this migrant industry.
- Identify the scrutinise the multi-scalar political, financial and commercial imperatives which shape the financialisation of SM-MTOs in post-crisis London
- Explore how SM-MTOs negotiate financialisation every day.
Kavita Datta, Professor of Development Geography, School of Geography, Queen Mary University of London.
Olivia Vicol, Postdoctoral researcher, School of Geography, Queen Mary University of London.