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From the Front Lobby to the Back Office. Building a Successful Remittance Program The Payments Institute Atlanta, GA July 30, 2008. Agenda. Understanding the Global Remittance Market Remittances and Financial Institutions Is your Bank or Credit Union Immigrant Friendly? Ensuring Success

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from the front lobby to the back office

From the Front Lobby to the Back Office

Building a Successful Remittance Program

The Payments Institute

Atlanta, GA

July 30, 2008

  • Understanding the Global Remittance Market
  • Remittances and Financial Institutions
  • Is your Bank or Credit Union Immigrant Friendly?
  • Ensuring Success
  • Take-Home Tips / Other Resources
remittances to developing countries 301 billion usd
Remittances to Developing Countries - $301 billion USD

150 million immigrants worldwide sent US$301 billion in remittances in 2006

world migration and remittance facts
World Migration and Remittance Facts
  • United States
    • Top destination country for emigrants - 38.4 million
    • Top remittance sending country - $42.2 billion USD
    • Accounts for 1/3 of worldwide remittance flows
  • Top migration corridors involving US (*Top ten)
    • Mexico* (10.3M); Philippines* (1.6M); Germany (1.4M); India (1.1M); China (1.1M); Vietnam (1.1M); Canada (1M)
  • Top remittance receiving countries
    • India ($27B); China ($25.7B); Mexico ($25B); Philippines ($17B)

Sources: World Bank (Migration data 2005; remittance data 2006); Citigroup

remittance flows africa
Remittance Flows – Africa
  • Remittances to Africa totaled $38.9 billion in 2006
  • The top five recipient countries are Morocco, Algeria, Nigeria, Egypt and Tunisia
  • Migration is predominantly intra-regional with significant international migration to former European colonial powers
  • The US is also a major migrant destination, with the majority coming from Nigeria and Ghana
remittance flows asia
Remittance Flows – Asia
  • Asia and Oceania receive $113.9 billion in remittances annually, making it the largest regional recipient in the world
  • India, China and the Philippines are the top three recipients of remittances in the region
  • US to Asia remittances = $24B in 2006
  • Main destinations for migrants are the US, Russian Federation, and New Zealand
  • Significant intra-regional migration to Australia, China, Japan and Singapore
  • The US is among the main migrant destinations for Filipinos in particular
remittance flows latin america
Remittance Flows – Latin America

Mexico $24.3 billion

  • Almost $68B in 2006
  • Mexico is the largest recipient at $24.3B or 36% of all transfers to Latin America & Caribbean
  • US has historically been main destination for Latin American migrants
  • Increased migration to Europe (mainly Italy & Spain) and intra-regional migration is changing trend
focus on us to mexico remittances
Focus on US-to-Mexico Remittances

Item data is estimated based on average value of $350 per remittance

what s driving remittances
What’s driving remittances?
  • Globalization and mobility of labor
  • Transnational ties
  • “Insurance” – In case of crop failure, natural disaster, job loss of other family members, etc.
  • Holiday gifts (Mother’s Day)
  • Ease of communications brings expectations and a sense of obligation
who are the remitters
Who are the remitters?

According to a Pew Hispanic Center survey of

Latino remitters:

  • Nearly half of those born outside the US send money regularly
  • 43% do not have a bank account
  • Average remitter spends 13 years in the US
  • 63% watch TV, listen to radio predominately in Spanish
  • 3 out of 5 are male with an average age of 37
  • 59% did not complete high school
  • 57% make less than $30,000/year
  • Most of those employed are unskilled laborers
sizing your market
Sizing your Market
  • US Census Hispanic population data -
    • County-by-county look at Hispanic population
    • Data does not show Mexican population alone, but rather Hispanic population in general
  • Migrant corridors
    • People from a certain community in the home country emigrate to a specific area in the US
    • Talk to embassies or consulates, churches and community organizations in your area
hispanic market potential census data example st louis county mo
Hispanic Market PotentialCensus Data Example – St. Louis County, MO
  • 19,364 Hispanic residents in 2006
    • Nearly 2% of total population in 2006
    • 34% of Hispanic population is age 20-39
    • 68% is of working age (15-64)
    • Hispanic population grew 30.5% from 2000-2006
      • Total population declined 1.6%.
hispanic growth compared to total growth








Total population

Hispanic population















Total pop

Hisp pop

Hispanic Growth Compared to Total Growth
  • Understanding the Global Remittance Market
  • Remittances and Financial Institutions
  • Is your Bank or Credit Union Immigrant Friendly?
  • Ensuring Success
  • Take-Home Tips / Other Resources
remitters as financial institution customers challenges
Remitters as Financial Institution Customers - Challenges
  • Potential customers might be unbanked
  • Lack of traditional documentation
  • Special marketing and customer service needs
    • Language barrier
    • Hours of operation don’t suit immigrant population’s needs
  • Money transfer businesses dominate remittance market
    • Estimates of remittances sent through banks vary from 5% to 19% of transfers
remitters as financial institution customers opportunities
Remitters as Financial Institution Customers - Opportunities
  • US Hispanic purchasing power - $870 billion in 2008; $1.3 trillion by 2015*
    • Hispanic growth rate is three times the national rate
  • 59% of Hispanic adults have a cell phone**
  • Remitters need broad range of financial services
    • Building blocks for customer attainment, retention and cross-selling
  • Strong customer loyalty
  • Possible Community Reinvestment Act (CRA) credit for offering remittances

Sources: * (Research and Markets report); **Pew Internet and American Life Project

remittances 101 types and features of remittance services
Remittances 101Types and features of remittance services
  • Cash-to-cash
    • Predominant consumer preference
    • More convenient but more costly
  • Account-to-account
    • Supports financial inclusion on both ends of transaction
    • Typically a lower-cost option than other types
  • Account-to-cash / Cash-to-account
    • Flexible to accommodate lack of account on either side of the transaction
  • Web options
    • PayPal and Xoom
  • ATM and prepaid cards
    • Flexible to accommodate greater access to financial services
remittances 101 key cost drivers
Remittances 101Key cost drivers
  • Upfront capital outlay – software, technology, implementation and customer service
    • Build vs. buy
  • Marketing costs
    • As brand gets established, marketing focus shifts from customer acquisition to retention
    • Loyalty and retention programs
  • Variable costs
    • Transaction initiation, customer ID verification, distribution costs, core FX costs
  • Ongoing support costs
    • Technology, product enhancements, data center and program management

Source: Citigroup

remittances 101 understanding fees foreign exchange
Remittances 101 Understanding fees & foreign exchange
  • Pricing varies significantly by service, distribution network, type of product and destination country
  • Costs
    • Remittance fees for sending and possibly for paying out transfer
    • Exchange rate spread
      • Difference between foreign exchange rate at which remittance provider buys currency and retail exchange rate applied to sender’s transaction
      • Can be a hidden fee to the receiver
offer the right mix of products and services
Offer the Right Mix of Products and Services
  • Low-cost check cashing and money orders as transitional services
  • Accounts that do not require high opening balances or high fees
  • Low minimum balance savings options
  • Credit-building products
  • Remittances are a critical part of portfolio of products
  • See Appleseed study on Banking in a Global Market
compliance and remittances
Compliance and Remittances
  • Bank Secrecy Act
    • Prevents financial institutions from being used as intermediaries for criminal activity
    • Reporting and record-keeping requirements
  • USA Patriot Act
    • Requires Customer Identification Program
    • Section 326 lists forms of acceptable identification
    • Supports FIs’ ability to offer account to non-US citizens
  • Office of Foreign Assets Control (OFAC)
    • Requires that international items be screened against the Specially Designated Nationals (SDN) List
    • FIs must have a written procedure for complying with OFAC regulations
  • Understanding the Global Remittance Market
  • Remittances and Financial Institutions
  • Is Your Bank or Credit Union Immigrant Friendly?
  • Ensuring Success
  • Take-Home Tips / Other Resources
front lobby tips
Front Lobby Tips
  • Adapt to serve unbanked and migrant consumers’ financial service needs
  • Financial education is vital
    • Need to change customer behavior in two countries
  • Reach out to immigrant communities to develop new customer relationships
    • Consider more convenient branch locations and hours
  • Offer more than one type of remittance product to meet the needs of all customers
back office tips
Back Office Tips
  • Determine necessary payment information to collect from customers in accordance with origination and compliance practices
  • If using ACH, verify that software accommodates cross-border ACH formats (SEC codes CBR/PBR)
    • Be ready for new cross-border IAT format in March 2009
  • Pre-fill origination forms for front lobby to streamline required and repetitive information
integrating the remittance service to your environment
Integrating the Remittance Service to Your Environment
  • “Remittance corner”
    • Separate space dedicated to remittance services
    • No waiting in general teller line for remitters
    • Efficient systems for repeat customers
    • Placards advertising exchange rates
  • Signage directing customers
    • Se habla español
  • Community outreach
    • Make people aware of services offered
  • Understanding the Global Remittance Market
  • Remittances and Financial Institutions
  • Is your Bank or Credit Union Immigrant Friendly?
  • Ensuring Success
  • Take-Home Tips / Other Resources
business plan and goal setting
Business Plan and Goal Setting
  • Remittances are an important component of overall business growth strategy
  • Determine your objective in offering remittances
    • Transactional vs. relational
  • Be realistic about your goals
    • Number of transactions, new accounts, loans, etc.
    • Cross-selling, up-selling
    • Generally not an overnight success
staffing staff education
Staffing / Staff Education
  • Foreign language-speaking staff
    • Puts immigrant customers at ease
    • Creates customer preference and loyalty
  • Educate all staff on service features and cultural differences
  • Offer employee incentives to increase remittance volumes
smart marketing and outreach efforts
Smart Marketing and Outreach Efforts
  • Target marketing to the community
    • Foreign-language radio, television and publications important
    • Participate in fairs, festivals, community events
    • Utilize familiar customs, music, cuisine, etc.
    • Promote special offerings for high-volume remittance times
      • Ex. Mother’s Day and religious holidays
  • Partner with chambers of commerce and consulates
  • Research migration corridors to connect both sides of the transaction
  • Financial education plays important role in success of program
    • Take advantage of existing materials such as FDIC Money Smart in English and Spanish
  • Understanding the Global Remittance Market
  • Remittances and Financial Institutions
  • Is your bank or credit union immigrant friendly?
  • Ensuring Success
  • Take-Home Tips / Other Resources
take home tips
Take-Home Tips
  • Remittances can be big business for FIs
    • Do your homework and understand your market
  • Challenges exist, but opportunities abound
  • Connect with the immigrant population
  • Financial education is vital to success
  • Offer targeted financial services
  • Take advantage of available resources
contact information
Contact Information

Elena Whisler

Federal Reserve Bank of Atlanta


other resources
Other Resources
  • Appleseed’s report on Banking in a Global
  • US Census Bureau –
  • World Bank –
  • International Fund for Agricultural Development
  • Inter-American Development Bank (IADB)
  • FedACH International exchange rates page