1. Microfinance Institutions in the Remittance Market An MFI-to-MFI Model
The Role of
Microfinance
Institutions in the
Remittance Market
An MFI-to-MFI Model

2. Demographics Latin America Large and growing population
High unemployment and skewed income distribution
United States
50 million Hispanics in US (largest minority group)
Hispanic population in US increases by 5,000 each day
22 million Latin America-born citizens live in US

3. Migration Effects Latin America
Similar to women on the homefront who did work of men during WWII: women make big contributions but experience great suffering
Remittances are largest source of hard currency and often exceed export income
United States
Entrepreneurial; work multiple hourly jobs
Maintain close financial ties with family
$62B sent to Latin America in 2005 (more than U.S. FDA) – $300B sent globally

4. Latin Financial Market
Developing Countries
Growing microfinance industry serving poor people
Microfinance profitability, efficiency and portfolio quality competitive with banks
2006 Nobel Peace Prize awarded to microfinance
MFIs ideally suited to serve remittance recipient market

5. U.S. Financial Market United States 40M unbanked (63% Hispanic)
Expensive, fragmented industry of mom-and-pop and non- financial providers
Little/no access to credit
Low penetration of banks and new technologies in MTO- dominated immigrant market

6. Microfinance Int’l Corp.
Overview
For-profit led by 27-year Bank of Tokyo veteran
MFI-to-MFI model
Non-bank supervised by financial commissioners
Specialized to serve bi-national families on both ends of remittance chain
United States
HQ in Washington, DC
9 MFIC-owned branches
Bank and MTO partners
Latin America/Worldwide
Distribution in 85 countries
Financing for MFIs
Transnational products

7. Settlement Platform
IT built off Cooperative Open Banking Information System (COBIS) used by 70 banks in 13 countries
Consists of Internet technology and worldwide network
Built our own settlement network of financial institutions

8. Transactional Services
Alante Financial
One-stop shop offering integrated, affordable, value-added services and products and professional, bi-lingual service
Loans and Insurance
Unsecured term loans & credit lines; car loans
Domestic and international mortgages/business loans
Domestic and international health/life insurance products
Transactional Services
Money transfer
Check cashing
Bill pay, money orders
Phone cards
Help building credit history

10. Money Transfer Pricing
Transfer Amount
$1 - $200
$ $1500
$ $2000
$ $3000
Alante Financial
$6 – $7
$9 – $10
$13 – $15
$18 – $20
Conventional MTOs
5% – 10%
SWIFT
$40

11. Turn-key remittance platform for MFIs, banks, credit unions, money transmitters & postal networks
Compliance
Strong regulatory support and built-in compliance features
System built post 9/11
Distribution
Latin America, North America, Asia, Europe, Africa, India
MFIs & Banks
Unique Advantages
Marketing & cross-sale support
Extendable as a central processing platform for national and international networks of banks, credit unions, post offices
Technology
Built on banking software used by 70 Latin banks
Secure web-based interfaces & real-time payout

12. MFI Market Entry Issues
Marketing & Data Management
Establishing marketing strategy
Tracking conversion rate from cross-sales
Business Model
Representation offices in foreign country?
Partner with large or small money transmitter?
Work with multiple money transmitters?
Scale & Profitability
Ability to generate profitable transaction volume
Financial capacity & careful liquidity management to handle remittance volumes and potential new loan disbursements
Technology
Efficient, secure, adaptable data transfer to institution’s MIS
Cost of adopting technology and training

13. Products for MFIs & Banks
Value-Added, Full-Service Partner to MFIs & Banks
Technical Assistance
Support with marketing, compliance, training, product development
Co-Branches
Co-branching opportunities with Alante Financial to expand products and services
Loans
Institutional loans for MFIs in our remittance network to support portfolio growth
Transnational Services
Market channel for MFIs to cross-sell loans and mortgages to remitters in U.S.

14. For More Information mfi-corp.com / alantefinancial.com / ariasfs.com
Jennifer Isern, William Donges & Jeremy Smith, Guide to Making Money Transfers Work for Microfinance Institutions: A Technical Guide to Developing and Delivering Money Transfers (CGAP, December 2006)
Manuel Orozco and Eve Hamilton, Remittances and MFI Intermediation: Issues and Lessons, July 2005