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FI Challenges and Opportunities

FI Challenges and Opportunities

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FI Challenges and Opportunities

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  1. FI Challenges and Opportunities Elizabeth McQuerry Federal Reserve Retail Payments Office elizabeth.mcquerry@atl.frb.org

  2. Opportunities • Remittances are big business – transactions • Remittance senders need entire range of financial services – new customer relationships • Possible Community Reinvestment Act (CRA) credit for offering remittance services – compliance • It’s ACH – no new systems need • Develop new or deeper customer relationships with employers • Access to Bansefi’s Beneficiary Account Registration (BAR) website • FIs can easily pre-open a Bansefi bank account for a third-party beneficiary in Mexico

  3. Challenges • Potential customers may be undocumented and/or unbanked • CBR/PBR format not familiar to many FIs or initially not available in all softwares • CLABE (Mexican bank account number) perplexing to some customers and FIs • FIs often not well versed in marketing or prepared to assist customers with ESL needs • FX profit has previously been an issue for larger banks

  4. Enrollment Process • Information Gathering • Review “Mexico Service Manual” http://www.frbservices.org/Retail/pdf/FedACHiMxManual.pdf • Form a cross-functional Implementation Team • Enroll in service • Set Up & Testing • Test formats end-to-end • Prepare to roll out marketing campaign • Begin Offering Service Check list on internet: http://www.frbservices.org/Retail/pdf/DirectoMexico_NextSteps.pdf

  5. Readiness Tips • Understand what’s different about payments to Mexico • Understand Mexican account numbers (info in Service Manual) • CLABE – 18 digit deposit account number constructed from Mexican bank ABA number, locality code, account number and check digit • Debit cards - 16 digits number assigned by VISA but linked to CLABE account • Include beneficiary name and other required fields • Provide internal training for front line and back room staff

  6. Happy FIs • Directo a México • FIs with a commitment to working with Hispanic and/or new immigrant communities • FIs desiring to build new customer constituency and strengthen community ties • FIs with employer relationships (new account holders with Direct Deposit; automated transfers; etc.) • Ideal for small and medium size FI • F3X Pilot • FI wanting to manage own foreign exchange • FI with corporate customers needing to pay invoices in foreign currency • Ideal for Top 50 FI

  7. Industry Issues • How to bring back office tool (ACH) into bank lobby to serve customer needs and processing efficiency? • How to make FIs more comfortable sending cross-border payments? • How to make FIs more knowledgeable of and confident with compliance issues? • How to ensure that “Cross-Border II” gets off to best start – industry education, IAT capability in all softwares, processor readiness, operator readiness, provide FI tools to be successful?

  8. Directo a México Volume

  9. Directo a México Volume

  10. FIs sending payments No. of FIs

  11. Primary Contact Elena Whisler Program Specialist – Directo a México Retail Payments Office (404) 498-7879 elena.whisler@atl.frb.org Secondary Contact/ Operational Issues: John F Morris Retail Payments Office (404) 498-8283 john.f.morris@atl.frb.org Program Contacts