Remittances as an Opportunity for MFIs
This paper identifies factors that are important for MFIs that provide remittances. It builds an analysis framework to enable remittance business developers to ask the right questions and address the right issues when developing remittance services for MFIs.
Some recent articles and reports focus on the potential benefits for MFIs that offer remittances as a new financial service. They range from more or less academic viewpoints to very practical information. The paper analyzes literature on remittance services by MFIs and the macroeconomic determinants of remittances. Factors that MFIs providing remittance services must consider are:
- Geographical location;
- Institutional capacity;
- Market position;
- Macroeconomic factors such as market, polices and regulations and the general socioeconomic situation.
These factors are interdependent, and vary in importance depending on the specific situation of the MFI and the market that it is targeting. Finally, MFIs can use the framework presented in this paper to develop a remittances business model and determine the fit with their strategy.
