Remittances for Development

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Remittances for Development Opportunities and
Limitations
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Microfinance International Corp.
Founded in 2003 by Atsumasa Tochisako, former
General Rep. of the Bank of Tokyo-Mitsubishi in
Washington, to support grassroots development in
Latin America. The company offers a settlement
platform for MFIs that combines efficient banking
technology with treasury operations and allows
MFIs to process transfers and other transactions
and interact with the commercial banking
system. Since June 2004, the platform is operated
in a remittance pilot with 5 MFIs in El Salvador.

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Opportunities
Remittances outsize FDI, ODA and in many
countries are the largest source of hard currency
income. Channeled and processed appropriately,
they can strengthen the financial sector in
rural/poor areas, provide a source of capital and
fuel grassroots economic development. Transfers
can prove income for Remitters and Recipients,
build credit worthiness, create savings and help
build financial security in other ways.
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Limitations
Remittances are usually send when needed, and in
consequence, mainly consumed. As private funds,
they cannot easily be diverted to development
projects. 60 of remitters are unbanked and often
not able to provide appropriate documentation.
80 of recipients are unbanked. Remittances are
mainly channeled outside the financial sector.
Many commercial banks are not interested to offer
services other than remittances to recipients.
MFIs often do not have the infrastructure or
operational capabilities to process remittances.
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(Atsumasa Tochisako, Founder)
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Our Solution
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Based on COBIS and Microbanx, successful banking
and Microfinance software. Offers MFIs online
functionality for payment processing, transaction
and customer administration, reconciliation,
management of their funds and interaction with US
banking system. Efficient centralized treasury
services maximize float, allow overnight
investment and ensure compliance monitoring (AML,
CTF, OFAC). Internet-access, centrally operated
hardware and simple licensing eliminates the need
for MFIs to make upfront investments in hardware
or software.
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Designed to allow lending to smaller, rural MFIs
that do not have easy access to secondary or
development funding. Float generated from
transaction processing will provide a pool of
capital or function security to reduce cost of
capital for MFIs. Knowledge generatde about MFIs
from operating the settlement platform will
reduce the need for costly Due Diligence while
funds processed in settlement operations provide
security assets.
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One-stop shop offering remittances, check
cashing, small loans, establishment of credit
history, and financial education. Allows us to
control service, ensure compliance and maximize
float. Functions as a marketing channel for
partnering MFIs and provides information on their
services. Transfers are exclusively channeled
through participating MFIs. May in the future
bring US banks and Latin immigrants together.
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Experiences from Pilot
Remittances at Mi Pueblo shop have outgrown
average remittance agents after 5 weeks.
Salvadorians in Washington have shown to be very
interested in Microfinance services here and
there. Remittance float on average has been 35
of remittance volume. MFIs provide excellent
customer service. Cross selling of other products
has been successful (one MFI sold other products
to 45 of recipients ). MFIs need support in
handling of cash and technology.