Mobile Remittances Create New Banking Model

“Driven by the $250 billion remittance industry, an entirely new banking model is emerging in the Americas. This model will be created by the convergence of a new demographic ”” the 20 million transnational households in the United States who send money back home to their families in Latin America ”” combined with innovations in mobile banking and money-transfer technology, also known as mobile remittances.

The new banking model will emerge first in areas of the United States with large populations of transnational households, then, very quickly, in Latin American countries with strong remittance economies: Mexico, El Salvador and Ecuador, to begin with. This new model merges simple banking services like deposits and checking with free or almost-free remittance transfers. After a relatively brief period of time, for example six months with a problem-free checking account, or three months of direct deposit, the new banks may begin to offer credit cards, savings accounts, money markets, cross-border insurance or mortgage programs based on remittances.”

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