The surge in remittance flows over the past decade has, perhaps unsurprisingly, drawn an equal leap in interest from a growing number of banks and money transfer agencies.
Since 2000, more than 100 banking institutions have entered the market where 7% of all migrants use banks for transfers. But getting migrants to open bank accounts and use them for their transfers, while setting up bank accounts for those who receive remittances, is key for improving the economic effects of remittances. Migrants with bank accounts send larger amounts of remittances, says Manuel Orozco of the Inter-American Dialogue.
Today, only 11% of all remittances are sent through banking institutions. Banks across the region are working hard to open up the enormous market of the remittance trade. But attracting millions of people unfamiliar with banks is a daunting effort in financial literacy. Governments and banks across the region must now undertake a public education campaign on financial services, if the benefits are to be properly realized.
Ultimately such moves could grant families access to savings accounts and other financial services. Moreover, banks could cross-sell services to remittance recipients if they were account holders.
BTS service
BBVA Bancomer Transfer Services (BTS) is one of the biggest players in the business. The bank handles 45% of the 63 million transactions from the United States to Mexico every year. In 2006, BTS business with Mexico grew by nearly 12%, and in the rest of Latin America the company expanded its electronic services by more than 49%.
Sending funds home is becoming easier for migrants because money can be wired from any of 50,000 points of sale that BTS has created across the US by teaming up with 200 financial service companies and banks.
“The US-Mexico corridor is now one of the most efficient remittances corridors in the world,” says Moises Jaimes, director of BTS.
BTS is making the transfers fast and cheap with its new product, Bancomer Transfer Card, that establishes a bank account for the recipient in Mexico and allows funds to be withdrawn from an ATM or accessed via debit card within 24 hours of the wire transfer. —L.C.