Remittances and Microfinance in Latin America and the Caribbean: Steps Forward on a Long Road Ahead
This report investigates MFIs' participation in remittance markets, and presents findings from a study of 166 MFIs and credit unions from Mexico, El Salvador, Nicaragua and Paraguay.
Findings indicate that one third of the institutions included in the study participate in the remittance market as payers for large money transfer operators. The report discusses various experiences in money transfers and stages of "bancarization." Factors that characterize an MFI's operation in money transfers include financial position, branch spread, rural presence and MTO partnership. Institutions most exposed to migration are also the most active in operating money transfers and providing financial services.
The study makes recommendations to improve MFIs potential to enter or strengthen their position in the remittance market. They include:
- Adopting more competitive strategies to improve market position;
- Modifying internal information systems to adapt to money transfer platforms;
- Adopting financial literacy strategies;
- Designing and marketing remittance related financial products;
- Implementing modern payment methods through card or mobile-based transfers by "bancarizing" merchants and MFI clients.
