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Billions in Motion: Latino Immigrants, Remittances, and Banking. November 2002. Methodology. 302 participants where interviewed in July and August 2002 in Los Angeles and Miami.
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Billions in Motion: Latino Immigrants, Remittances, and Banking November 2002
Methodology • 302 participants where interviewed in July and August 2002 in Los Angeles and Miami. • All participants where Latin America-born adults residing in the United States that send remittances to their families in their home countries on a regular basis.
Methodology • All interviews were approximately 30 minutes in length and conducted in Spanish by professional researchers. • This study is qualitative in nature and the sample is not meant to be representative of the population of Latin American remitters in the United States.
Major Findings • Remitters have significant concerns about the current system of sending cash remittances to Latin America. The high cost of transferring money, due to flat fees and unfavorable exchange rates, is especially important.
Concerns about Current System • High cost • Unfair exchange rates • Lost time • Slow to arrive • Crime
Other Observations • More than three-quarters of the participants in this study described themselves as lacking knowledge of the available options for sending remittances and indicated they had done little to explore the market. • Remitters place a high importance on sending money to their home countries. A large proportion send money to their families first, even before paying their own bills. A substantial proportion also remits all money that remains after paying their bills. • Most remitters send money to their families for daily living expenses such as food and medicines. Only a few send funds for investment purposes such as building a home or acquiring a business. • Those who remit for purposes of investment maintain greatest control over their money.
How Participants Rank the Importance of Sending Money Home PRIORITY LEVEL
Major Findings • The study found full acceptance of new technology for international cash remittances. Participants responded enthusiastically when informed about modern banking techniques that might be applied to sending money to Latin America.
Description of New Technology • Participants were told of a hypothetical banking product modeled on ones recently launched by several U.S. banks in partnership with banks overseas, primarily in Mexico. This product would allow the use of ATM’s at both ends of a remittance transaction. In effect, the remittance sender would make a deposit at a financial institution in the United States and the recipient would make a withdrawal in the home country.
Reaction to New Technology • 30% of the interviewees had already heard of the new technology available for money transfers through television commercials and mailings. • 100% of the participants of this study said that they easily understood how the new technology would work in their money transfer operations. • 91% of the participants said they were interested in using the new technology to send money to Latin America because of cost and convenience.
Major Findings • The study found that Latin American immigrants face major barriers when attempting to access the U.S. banking system. Participants said that they avoid using financial institutions because they do not have valid identification and because they fear high monthly fees.
The Major Barrier to Opening a Bank Account • Lack of legal status and the documents that come with it are clearly a major obstacle to the opening of bank accounts for a substantial segment of remittance senders. Aside from the difficulties of producing documents, some participants expressed fears that by applying for a bank account they might expose themselves to detention and deportation by the immigration authorities.
A Secondary Obstacle: Negative Image of U.S. Banks • Many participants in this study expressed negative views of U.S. banks primarily due to the cost structures for checking accounts. Typically, consumers must choose between the size of the minimum balance they maintain in an account and the fees they pay for the services they utilize. Maintaining a minimum balance large enough to reduce or eliminate fees is beyond the abilities of many Latin American immigrants. The minimum deposit necessary to open a bank account also contributes to this obstacle.
Major Findings • The study found that consular matriculas can help to resolve the basic problem of undocumented immigrants that want to open a bank account.
Matriculas • For many decades Mexican consulates have issued a simple identity card for Mexican citizens living abroad known as a MatriculaConsular. To obtain it, an individual needs to present a Mexican birth certificate, another official identity document such as a Mexican voter’s registration card or driver license, and something that attests to their address in the United States such as a utility bill. The card bears the individual’s photograph and their U.S. address.
Matriculas • 60% of participants in the study had heard of Consular Matriculas. • 740,000 Mexican Matriculas were issued in the United States during the first nine months of 2002. • 66 banking institutions in the United States now accept the Matricula as a valid identity document. • 801 police departments in the United States now accept the Matricula as a valid identity document. • 13 states in the U.S. now accept the Matricula as a valid document to acquire a driver license.
Matriculas • Currently, only the Mexican government offers a specific identity document for it’s expatriates; however, according to recent news reports several Central American governments are considering whether to offer a similar service to their nationals in the United States. As acceptance of the Mexican matricula increases, other countries with large immigrant populations are likely to find themselves pressured to follow suit.
