Correspondent Banking Quietly Strips Wealth From Vulnerable Groups

Correspondent banking routes cross-border payments through intermediary banks in hubs such as New York or London. Each layer charges fees, adds a foreign-exchange spread and delays settlement. Dilip Ratha, the World Bank’s former head of remittance research and now CEO of Ratha Global and a director at Encryptus, says the 1970s-era system disproportionately erodes the incomes of migrant workers, refugees and low-income families. A $200 transfer from Dubai to Lagos, for example, may leave the recipient with just $185.

The Fintech Times published the analysis on June 16, 2026. Remittances to low- and middle-income countries reached $685 billion in 2025, up 5.8% year on year. The global average remittance cost remains above 6%, while some routes in sub-Saharan Africa exceed 8%, still higher than the United Nations’ target of reducing the cost to 3% by 2030. At a 6% rate, migrant families are charged more than $42 billion a year. Ratha advocates developing regulated stablecoin payment networks.