LatAm remittance-based products attract international attention
The market for remittances is expected to grow by almost 10% in 2022, driven by diaspora-linked savings.
Growing volumes of Latin American remittance flows continue to encourage local and international fintechs to enter the market, with Revolut and Wise being the latest global payment companies to offer digital remittances in the region.
These fintechs have been successful in cutting fees to gain market share in an industry that the World Bank estimates was worth $131 billion in 2021. The World Bank also expects LatAm remittances to grow by more than 9% this year – and with the average cost of fees for a $200 remittance at 5.6%, there is still room for competition to compress margins.
However, one regional bank has launched an effort to win back market share of remittances by basing a new growth strategy around the segment.
Banreservas – the state bank of the Dominican Republic – is due to open a new representative office in Madrid in November and will follow that with offices in New York and Miami in the first quarter of 2023. The branches will have multiple product and service functions, but the core of the strategy is to offer remittance-based banking services to the large diaspora of Dominicans living in these areas.