Capitalizing on Remittances: FINCA Latin America and Remittance Product Design

This presentation examines the role of remittances in poverty alleviation and international development. It also analyzes the role of FINCA in the remittance market.

An increase in remittances leads to increases in education expenditure, home ownership and bank accounts. FINCA's activities in the remittances market include transfer services, and links to educational loans and savings incentives. The study reveals that:

• Higher remittances show higher daily per capita expenditure, education expenditure and discretionary expenditure;
• Clients with remittances are more likely to have savings and checking accounts, access to credit prior to becoming FINCA clients, homes and electronic goods;
• Strong correlation is observed between remittances and poverty reduction;
• Remittances increase savings and formalized banking.

Study findings imply that FINCA needs to increase the formalization of remittance transfers, and develop unique products such as educational loans or incentive-driven savings of remittances. It should offer remittances as core suite of products in the short term. In the medium term, FINCA should sign pay-out agreements with appropriate money transfer organizations. Finally, in the log run, it should develop branded proprietary wire transfer solutions.