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The Role of Microfinance Institutions in the Remittance Market An MFI-to-MFI Model

The Role of Microfinance Institutions in the Remittance Market An MFI-to-MFI Model. Demographics. Latin America Large and growing population High unemployment and skewed income distribution. United States 50 million Hispanics in US (largest minority group)

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The Role of Microfinance Institutions in the Remittance Market An MFI-to-MFI Model

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  1. The Role of Microfinance Institutions in the Remittance Market An MFI-to-MFI Model

  2. Demographics • Latin America • Large and growing population • High unemployment and skewed income distribution • United States • 50 million Hispanics in US (largest minority group) • Hispanic population in US increases by 5,000 each day • 22 million Latin America-born citizens live in US

  3. Migration Effects • Latin America • Similar to women on the homefront who did work of men during WWII: women make big contributions but experience great suffering • Remittances are largest source of hard currency and often exceed export income • United States • Entrepreneurial; work multiple hourly jobs • Maintain close financial ties with family • $62B sent to Latin America in 2005 (more than U.S. FDA) – $300B sent globally

  4. LatinFinancial Market • Developing Countries • Growing microfinance industry serving poor people • Microfinance profitability, efficiency and portfolio quality competitive with banks • 2006 Nobel Peace Prize awarded to microfinance • MFIs ideally suited to serve remittance recipient market

  5. U.S. Financial Market • United States • 40M unbanked (63% Hispanic) • Expensive, fragmented industry of mom-and-pop and non-financial providers • Little/no access to credit • Low penetration of banks and new technologies in MTO-dominated immigrant market

  6. Microfinance Int’l Corp. • Overview • For-profit led by 27-year Bank of Tokyo veteran • MFI-to-MFI model • Non-bank supervised by financial commissioners • Specialized to serve bi-national families on both ends of remittance chain • United States • HQ in Washington, DC • 9 MFIC-owned branches • Bank and MTO partners • Latin America/Worldwide • Distribution in 85 countries • Financing for MFIs • Transnational products

  7. Settlement Platform • IT built off Cooperative Open Banking Information System (COBIS) used by 70 banks in 13 countries • Consists of Internet technology and worldwide network • Built our own settlement network of financial institutions

  8. Alante Financial • One-stop shop offering integrated, affordable, value-added services and products and professional, bi-lingual service • Loans and Insurance • Unsecured term loans & credit lines; car loans • Domestic and international mortgages/business loans • Domestic and international health/life insurance products • Transactional Services • Money transfer • Check cashing • Bill pay, money orders • Phone cards • Help building credit history

  9. Money Transfer Pricing

  10. Turn-key remittance platform for MFIs, banks, credit unions, money transmitters & postal networks • Compliance • Strong regulatory support and built-in compliance features • System built post 9/11 • Distribution • Latin America, North America, Asia, Europe, Africa, India • MFIs & Banks • Unique Advantages • Marketing & cross-sale support • Extendable as a central processing platform for national and international networks of banks, credit unions, post offices • Technology • Built on banking software used by 70 Latin banks • Secure web-based interfaces & real-time payout

  11. MFI Market Entry Issues

  12. Products for MFIs & Banks Value-Added, Full-Service Partner to MFIs & Banks • Technical Assistance • Support with marketing, compliance, training, product development • Co-Branches • Co-branching opportunities with Alante Financial to expand products and services • Loans • Institutional loans for MFIs in our remittance network to support portfolio growth • Transnational Services • Market channel for MFIs to cross-sell loans and mortgages to remitters in U.S.

  13. For More Information • mfi-corp.com / alantefinancial.com / ariasfs.com • Jennifer Isern, William Donges & Jeremy Smith, Guide to Making Money Transfers Work for Microfinance Institutions: A Technical Guide to Developing and Delivering Money Transfers (CGAP, December 2006) • Manuel Orozco and Eve Hamilton, Remittances and MFI Intermediation: Issues and Lessons, July 2005

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