MADRID: Oscar Rojas, a native of Medellín, Colombia, walked into his local Dinero Express branch in Madrid on Monday, Nov. 27, at 10:30 a.m. He fed €202 into a specially adapted automated teller machine and sent it to his wife, María Patricia, who lives in Colombia with their 12-year-old son. Within 15 minutes, the Colombian peso equivalent was available for collection at a bank's ATMs in Medellín.
Rojas emigrated five years ago and is employed doing odd jobs for a fruit company. "One has to take advantage of the bonanza available in Spain," he said. He has just had his residence permit renewed and said that the next step was to buy an apartment and bring over his family.
Dinero Express was founded by the Spanish bank BBVA, which sees money transfers as one of its major strategic focuses. It also offers other services for immigrants, like mini- loans for as little as €300, or $400, which can be requested online, with a response within a few hours. The minimum balance to open an account is €5.
In the last few years, banks including BBVA, the Indian bank Icici, Bank of America and HSBC have become aware of the importance of money transfers as the point where they can first make contact with immigrants, whose needs develop in line with their wealth. During the first couple years, according to a study by the Spanish business school Instituto de Empresa, the main needs of immigrants are for money transfers and calls home, while in the subsequent three, they are looking for consumer credit.
Five years later — just like Rojas — they look for mortgages and car loans, which are more profitable for banks.
In 2005, recorded money transfers through official channels like Western Union and banks exceeded $230 billion, according to the World Bank, while a 2005 International Monetary Fund report stated that "unrecorded flows through informal channels are believed to be at least 50 percent higher than recorded flows."
Formal money transfers are expected to grow at a 10 percent cumulative average rate, according to Celent Communications, a consultant for financial institutions, as more people move across borders. Western Union estimated that in 2050, over 280 million people would live outside their country of origin, a significant leap from the 191 million people who now do so.
Spain, which had been a net exporter of people in the impoverished 1950s and in the 1960s, has in recent years become a net recipient. There are now an estimated four million immigrants living in Spain, mainly from Latin America, North Africa and some Eastern European countries like Romania. In 2006, they will send an estimated €5.5 billion to their families, said Miguel Ángel Muñoz, the head of immigrant banking in Spain for BBVA.
Around 75 percent of transfers in Spain still go through traditional companies, like Moneygram and Western Union, which focus on the service and hold 90 percent of the global market. But some banks are trying to make inroads by charging less, offering incentives and aiming to provide better service.
The Dinero Express formula — it was founded in 2005 and will have 100 branches by the end of this year — offers immigrants subsidized phone calls to their homeland at the giveaway rate of 5 cents a minute. Recently, the company installed phone cabins with two stools and two receivers, so group conversations would be possible. It also has a deal with DHL to send packages and an arrangement with the employment agency Adecco to help immigrants find jobs. Muñoz said that 46 percent of those who had left their resumes in Dinero Express had found jobs.
BBVA, meanwhile, has been buying banks, like Laredo National Bank and State National Bank in Texas and Valley Bank in California, to capitalize on its leading position in money transfers to Mexico, where it owns BBVA Bancomer. About 40 percent of all Mexican money transfers flow through BBVA on their way to six million families, the bank said.
Analysts are positive about its positioning. "BBVA's strategy in the U.S. is to exploit the competitive advantages of the BBVA Bancomer brand amongst the population of Mexican origin, with the aim then being to extend it to the entire Hispanic community and, ultimately, to the whole of the U.S. market," said María Cabanyes at the rating agency Moody's Investor Services.
It is doubtful that María Patricia Rojas picked up her money when, because of the time difference between Spain and Colombia, it arrived at 4:45 a.m. Neither would her husband want to call so early. That is one of the reasons, along with their working hours, why most Latin American immigrants come to Dinero Express between 6 p.m. and 10 p.m., when its offices are still open — the sort of hours typical Spanish banks don't keep.
Karina Robinson is senior editor of The Banker. E-mail: biz@iht.com
http://www.iht.com/articles/2006/12/18/business/bankcol19.php ¶ 4:16 AM
