p7_orozco

Remittances to Latin America: experiences, strategies and opportunities to incorporate people into savings and credit institutions : 

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

Slide 2: 

Latin American immigrant economic practices (annual expenses) Consumption Donations Family remittances Capital investment Household economy (US$3000) Community (US$10,000 year) Trade and services retail (US$3,000) Property and other I (US$5,000)

Slide 3: 

Source: Central Banks and National Money Transmiters Association

Remittance recipient households : 

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.

Counter-cyclical nature: Quarterly flows to selected Latin American countries : 

Counter-cyclical nature: Quarterly flows to selected Latin American countries

Latin American Immigrants and bank accounts : 

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.

People with bank accounts in Latin America : 

People with bank accounts in Latin America

Do you have financial obligations (loans)? : 

Do you have financial obligations (loans)?

Remittance Market Composition in Latin America : 

Remittance Market Composition in Latin America

Cost comparison between principal amount sent and sending $200 : 

Cost comparison between principal amount sent and sending $200

Percent cost to send $200 to Latin America : 

Percent cost to send $200 to Latin America

Efforts and initiatives by players to ‘bank the unbanked’ : 

Efforts and initiatives by players to ‘bank the unbanked’ Experiences for the U.S. and Latin America

Banking the unbanked: Experiences in the Americas : 

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

Observed Results : 

Observed Results

Slide 16: 

Remittances, banks and new accounts

Credit unions, remittance and membership : 

Credit unions, remittance and membership

Banking the unbanked: mainstreaming Latinos as financial agents in the U.S. : 

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 Mexico’s 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

Marketing and Success : 

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

The role of donors: promoting financial democracy in Latin America : 

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

The role of donors: promoting financial democracy in Latin America : 

The United States Agency for International Development Mexico: US$500,000 to Cajas Populares Credit Union; US$900,000 annually, 2004-2008 to improve financial services to low income remittance receivers Jamaica: US$280,000 grant to JNBS El Salvador: US$500,000 scholarship fund GDA: US$600,000 alliance promotion with VISA The role of donors: promoting financial democracy in Latin America

Challenges and Opportunites : 

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

Slide 24: 

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