Remittances in Credit Unions: Reaching New Members in Rural Areas

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Remittances in Credit UnionsReaching New
Members in Rural Areas

• Anna Cora Evans
• World Council of Credit Unions
• APEC Symposium on ARS June 4, 2004

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• GLOBAL TRADE ASSOCIATION
• Credit Union Members 118,268,624
• Credit Unions 40,258 Countries 79
• TECHNICAL SERVICES PROVIDER
• 15 multi-year technical assistance programs in 10
  countries
• 2.6 million member-clients
• US1.2 billion deposits
• DATA AS OF DECEMBER 31, 2003

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TECHNICAL SERVICES

• Model Credit Union Building METHODOLOGY
• Lays the foundation for safe remittance
  distribution
• Accounting transparency Prudential disciplines
• Policy reforms Savings mobilization
• Profitability capitalization Management
  capacity
• Credit analysis collections Array of loan
  products
• Second tier services External supervision

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International Remittance Network (IRnet)

• Strategic alliances with money transfer operators
  for distributing remittances abroad
• On the sending side, in addition to 3000 wire
  transfer outlets, senders can remit through 215
  credit unions in 35 US states.
• On the receiving side, 95 credit unions in six
  countries with 564 points of service are
  distributing remittances
• Guatemala, El Salvador, Honduras, Jamaica,
  Mexico and Nicaragua

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Country Example Guatemala

• 25 credit unions affiliated to FENACOAC serve
  507,885 members through 121 points of service -
  95 are rural
• Distributed 354,170 remittances totaling 162.1
  million between 8/01 and 3/04
• Distributing 31,000 remittances per month as of
  March 2004
• Credit unions offer direct deposit of remittances
  into savings accounts

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Five credit unions distribute the majority of
remittances, primarily to non-members.
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Ecosaba Attracting the Unbanked

• -Serves 38,500 members
• -80 of remittance
• receivers are members
• -77 of remittance
• receivers are women
• -14 of new members
• join because of the
• remittance service

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Ecosaba Attracting the Unbanked

• Attracts remittance receivers to join by
• offering incentive to open accounts
• Includes incoming remittances in repayment
  capacity analysis remittances are considered as
  steady income
• The dominant purpose (40) of these
  remittance-backed loans is for housing repair,
  improvement and purchase

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Country Example Mexico

• Caja Popular Mexicana (CPM) serves over 700,000
  member-clients
• CPM piloted remittances in August 2003 and ramped
  up to 300 branches by year-end
• 92 of receivers are women
• 82.5 of receivers are members. Non-member
  receivers are joining at a rate of 5 per month
• CPM distributed 4.7 million through 11,000
  remittances during the first eight months

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Caja Popular Mexicana Service Points

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Remittance Volume by State in Mexico

2002 National Data sources BANXICO, INEGI,
CONDUSEF
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CPM Banking the Unbanked

• Developing remittance-linked savings and
• credit products for launch later this year
• Direct deposit of remittance to savings
• Revolving line of credit a signature loan based
  on applicants receipt history of regular
  remittances

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Country Example Nicaragua

• 12 credit unions affiliated to CCACN with 23
  service points serve 27,000 members
• Began distributing remittances in Oct. 03 through
  credit unions and strategic alliance partner FAMA

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CCACN Challenges of Serving Rural Areas
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Concluding Thoughts

• LOCATION Convenient and accessible service
  points on both the sending and receiving sides
  are essential for extending remittance services
• Efforts to bank the unbanked must focus on BOTH
  the sending and receiving side.
• Unbanked individuals need to trust financial
  institutions in order to join remittance
  receipt builds trust
• Financial institutions need to introduce
  remittance-associated products to encourage
  receivers to join rather than just collect their
  remittances

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THANK YOU FOR LISTENING.QUESTIONS? Anna Cora
Evans World Council of Credit Unionsacevans_at_wocc
u.org 1-202-508-6776