Last week,
Larry Jilk commented on the growth of banks catering to foreign-born customers and depositors around Philadelphia, especially in the Korean community. At the same time, larger banks are beginning to recognize the need to provide more economical and transparent services for immigrants sending money abroad.
Enter Wells Fargo & Co. (NYSE: WFC), the San Francisco-based finances firm, which recently unveiled a new service intended to simplify the process. The company’s ExpressSend money transfer program promises to 1) decrease or eliminate transfer fees, 2) make remaining charges transparent and self-explanatory, 3) provide users with different transmission and collections methods (e.g. someone can transfer funds from a savings account and collect in cash, or visa versa), and 4) speed up the whole process (same day delivery to Latin America and next day to Asia).
But will this really work? And will it work around Philly? First, a little background: For years immigrants have wired portions of their earnings overseas to relatives in their home countries, where $20, $50 or $100 could go a long way. The international remittance market is worth about $230 billion a year, according to the World Bank. In some countries remittances account for more than 30 percent of the national GDP. Remittances, by the way, also warrant their own public information site, an international conference, and a blog. Despite all this attention, sending money internationally often entails complicated payment structures, heavy fees, and limited transfer options.
Will this appeal to Philadelphia’s immigrants, numbering at least 155,000, and will it succeed in the intense local retail banking market? One the one hand, ExpressSend’s fee transparency will give remittance senders a means of comparing different money transfer programs and choosing the best option. Until now, immigrants have typically relied on whatever is available in their local neighborhood or a company based on brand recognition (e.g. Western Union.) ExpressSend’s multiple transfer options will also allow immigrants to transfer money to recipients who lack bank accounts thus opening up the service to a wider range of customers.
On the other hand, Wells Fargo, at least in the case of Asians, will be going up against those other local banks like Royal Asia Bank or Woori Bank that already offer low-fee remittance services to depositors. And peculiar to Philly, Wells Fargo’s branches are located mostly in Center City, the Northeast and the suburbs, which seems to miss the regional concentrations in Upper Darby, South Philadelphia, Chinatown of folks from its seven target countries (Mexico, El Salvador, Guatemala, India, the Philippines, Vietnam and China). And then there are Philly’s sizeable Cambodian, Liberian, Sudanese, Ethiopian, and Russian populations, which could be left out. So is there a market for moving their money, too? Perhaps Wells Fargo might expand services to these countries or set up branches closer to people from the nations it serves.
Still, this does look like a business model that is gathering steam: Nationality-based local retail banking capitalizing on globalized financial markets, all fueled by immigration. Will other banking giants jump into the game?
- David Alff is a communications associate at the non-profit Welcoming Center for New Pennsylvanians, a labor-business support organization.
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