Wells Fargo adds China, Vietnam to remittance service
By JULIANA BARBASSA, Associated Press Writer
Monday, October 23, 2006
(10-23) 18:02 PDT
San Francisco (AP)–Immigrants from China and Vietnam can wire money to relatives back home directly through a bank starting Tuesday, bypassing potentially more expensive remittance companies or the riskier option of handing cash to traveling friends.
Wells Fargo & Co. became the first U.S. bank to tap this slice of the lucrative international money-transfer market. The bank partnered with the Agricultural Bank of China and the Industrial and Commercial Bank of Vietnam to allow customers in the United States to make direct account-to-account transfers to their countries of origin.
The bank also increased the options available for sending money to the Philippines, letting customers here deposit cash into accounts abroad, a process similar to what it already offers immigrants sending money back to Mexico, El Salvador, Guatemala and India.
The new service lets the bank better serve the immigrant customers it already has, and attract those who might have accounts elsewhere or who have not established a bank account at all, said Daniel Ayala, head of global remittance services for the bank.
The new service also lets the bank tap into some of the largest and fastest growing remittance corridors in the world, along which billions of dollars flow every year.
Between 2003 and 2004, international money transfers grew 9.3 percent, from $213 billion to $232 billion, according to the World Bank. It's expected to continue growing about 10 percent a year through 2008.
And China, Vietnam and the Philippines take in some of the largest percentages of that money, accounting for about 30 percent of the approximately $85 billion projected to be sent to Asia by the end of 2006, said Dan Schatt, analyst with Celent, a global financial services research and consulting firm.
Traditionally, banks have controlled a very small part about 5 percent of that market, lacking the skills to market to different ethnic groups, and simply not being present in many of the immigrant communities that send and receive money, Schatt said.
Now banks are seeing greater potential in their immigrant customers, and are trying to offer them targeted services such as money transferring for a lower cost or no cost to bring them in and retain their business, Schatt said.
For $8, someone in the U.S. can send $1,000 to China or $3,000 to Vietnam through Wells Fargo. Wiring money home traditionally costs much more an average of, on the low end, 3.9 percent of the total amount sent to Equador to 12 percent of the total sent to Cuba, according to a survey done by Manuel Orozco with Inter-American Dialogue, a policy research center.
The entry of banks like Wells Fargo into the industry also benefits immigrants, offering them more options to connect with family back home, lowering the cost of remitting money through competition, and helping regulate and increase the security of the process, Schatt said.
Also, banks are under a federal mandate to reinvest in the communities they serve, unlike money transfer companies, said Viviana Renella with TIGRA, an Oakland-based immigrant advocacy group focused on reinvestment of money generated by the remittance industry.
“I hope this will lead other banks to take a second look at immigrant communities,” said Renella.