Remittances to Latin America: experiences, strategies and opportunities to incorporate people into s

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Remittances to Latin America experiences,
strategies and opportunities to incorporate
people into savings and credit institutions
APEC Conference Shaping the Remittances Market
by Shifting to Formal Systems June 3-4th 2004,
Tokyo, Japan

• Manuel Orozco,
• Georgetown University

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Latin American immigrant economic practices
(annual expenses)
Capital investment
Consumption
Donations
Family remittances
Trade and services retail (US3,000)
Community (US10,000 year)
Household economy (US3000)
Property and other I (US5,000)
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Source Central Banks and National Money
Transmiters Association
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Remittance recipient households
Source El Salvador, Honduras and Guatemala
Bendixen and Associates survey Dominican
Republic Emmanuel Sylvestre Associates survey
(commissioned out by the author) Guyana
Laparkan Trading survey (commissioned out by the
author) Ecuador Mauricio Orbe (PulsoEcuador)
Mexico El Colegio de la Frontera Norte.
Problemas y Perspectivas de las Remesas de los
Mexicanos y Centroamericanos en Estados Unidos,
El Colegio de la Frontera Norte Departamento de
Estudios Económicos. Mexico 2002, p. 30.
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Counter-cyclical nature Quarterly flows to
selected Latin American countries
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Latin American Immigrants and bank accounts
Source Data reported from survey of immigrants
in New York, Los Angeles and Miami commissioned
by the author, administered by Emmanuel
Sylvestre, Protectora Inc. August 2003.
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People with bank accounts in Latin America
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Do you have financial obligations (loans)?
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Remittance Market Composition in Latin America
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Cost comparison between principal amount sent and
sending 200
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Percent cost to send 200 to Latin America
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Efforts and initiatives by players to bank the
unbanked

• Experiences for the U.S. and Latin America

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Banking the unbanked Experiences in the Americas

• Commercial Banks
• Banco UNO, Central America
• Banco Salvadoreño, El Salvador
• Banco Industrial, Guatemala
• Citibank, Wells Fargo, Bank of America, U.S.A.
• Community/local banks, U.S.A.
• Jamaica National Building Society, Jamaica
• Government
• Red de la Gente, Mexico
• FDIC and Federal Reserve Bank of Chicago and
  Atlanta
• Non-profit MFIs and Credit Unions
• Fedecaces (Credit Union), El Salvador
• Banco de Oaxaca, Mexico
• Banco Solidario, Ecuador
• U.S. credit unions

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Observed Results
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Remittances, banks and new accounts
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Credit unions, remittance and membership
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Banking the unbanked mainstreaming Latinos as
financial agents in the U.S.

• The interest of financial institutions is not on
  the transfers, but on making a long term
  relationship with the sender.
• Two approaches
• Focusing on specific strategies to the sender
  and/or recipient market
• Use of the same marketing tools.
• Result mainstreaming Latinos as financial
  agents.
• Two premises
• Realistic approach about what to offer and how.
• In the U.S. Accept Mexicos Matricula Consular
  as a valid form of identification to open a bank
  account.
• Financial services offered
• Savings and checking account
• ATM cards
• Credit cards Starter Community Visa Card
• Small loans
• Mortgage loans
• Marketing tools
• Expected results

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Marketing and Success

• Marketing Strategies
• Traditional mediums Use of both radio and print
  advertising, particularly Spanish radio programs
• Spanish-language Materials and Financial Literacy
  (Hire and Train bilingual bank staff)
• Community Involvement/Partnerships (Marketing at
  ethnic, religious, or community events--such as
  Cinco de Mayo, Tejano festivities--and/or through
  ties to local organizations or businesses.
• One-on-One individualized attention
• Packages Nueva Frontera, Instant Access, Gold
  Pack
• Measuring Success
• Number of accounts opened
• Deposit Retention
• Realistic approach, slow growth

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The role of donors promoting financial democracy
in Latin America
Projects funded by the Multilateral Investment
Fund of the IADB, 2001-2004
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The role of donors promoting financial democracy
in Latin America

• The United States Agency for International
  Development
• Mexico US500,000 to Cajas Populares Credit
  Union US900,000 annually, 2004-2008 to improve
  financial services to low income remittance
  receivers
• Jamaica US280,000 grant to JNBS
• El Salvador US500,000 scholarship fund
• GDA US600,000 alliance promotion with VISA

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Challenges and Opportunites

• Spreading technologies
• Promoting a policy dialogue among civil society,
  the state, diasporas and the private sector about
  the relevance of diasporas
• Facilitating a regulatory environment to bank the
  unbanked

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International money transfer operation
TWO DATA STREAMS
MTCs bank
MTCs Agent POS
Money Transfer Company
Data Transfer Report (customers
sending Information)
Remittance sender
Wire Transfer (cash transfer Amount)
Regulatory Environment Compliance Monitoring
ADs bank
MTC Money transfer company POS Point of
sale AD Agent distributor (on receiving side)
MTCs Agent POS
MTCs rec. country Agent Distributor
Players MTO, agents at POS, distributing agents,
banks Type of MTO player -Transfer WT, MO,
hand delivery -Scope National, Regional/country
Financial CU, unlicensed
Remittance recipient