Economic, structural, and behavioral drivers of informal remittance use and Fintech solutions for formal channel adoption in Bangladesh

Abstract

This study examines the economic, structural, and behavioral factors influencing Bangladeshi migrant workers’ use of informal remittance channels such as Hundi. The findings show that favorable exchange rates, lower transaction costs, faster transfers, minimal documentation, trust in personal networks, and convenience encourage migrants to use informal systems. Based on a survey of 150 Bangladeshi migrant workers in Gulf countries and interviews with remittance service providers, the study identifies economic incentives as the strongest factor, supported by social and convenience-related influences. It recommends FinTech-based solutions, including competitive exchange rates, zero-fee trials, instant transfers, localized mobile onboarding, and real-time tracking, to encourage migrants to use formal remittance channels and thereby improve financial inclusion, foreign exchange reserves, and regulatory oversight in Bangladesh.