Wells Fargo Offers Zero Transaction Fees Through Its ExpressSend Remittance Service

Implications: Implications: Banks market share of remittance business is only 16%, while more than 50% of total volume of remittances are distributed by financial institutions overseas. Countries with the highest remittance flows are the U.S. with over $39 billion, followed by Saudi Arabia - $14 billion, Switzerland - $13 billion, Germany - $10 billion and Russia with $6 billion. Mexico's remittance market surpasses $22+ billion and Latin America and Caribbean combined remittance markets is $48 billion. In the U.S. 69% of all Latinos send remittances and 75% of those Latino remittances originate from the U.S. and 44% of all Latinos lack a bank account in the U.S., which is more than enough stimulus for banks to focus on this growing industry. Other factors fueling the growth is strong immigration flows and the purchasing power of the Asian and Latino segments which is expected to grow 397% and 412% respectively and will outpace the country's average buying power growth of 177% by 2010. 

Analysis: Comments/Perspective:

Although non-banks such as Western Union, MoneyGram, Vigo, Dolex and the mom and pop retail stores dominate the remittance/money transfer industry which is estimated at $265+ billion, thats not stopping banks like Wells Fargo, Citi, Bank of America and others from entering the market to capture share, put pricing pressure on its competitors and attempt to expand their reach and products and services to its customers and the "unbanked/underserved" customer, who may not have a bank account or use limited banking services. Wells Fargo and other banks are strategically leveraging their payments expertise and network to provide low priced solutions that are relationship driven to position themselves as a dominant player in the remittance industry.

1.  Wells Fargo's ExpressSend service offers zero transaction fees to customers remitting money to its Top Seven remittance markets including Mexico, El Salvador, Guatemala, China, Vietnam, India and the Philippines. Banks are beefing up their efforts to enter the industry as a shift occurs in the market to banks as remittance providers, due to increased regulatory compliance and has pushed the less efficient remittance companies out of the market, while other remittance companies are consolidating and some companies have moved to  offering remittance services online

2.  The giants in the remittance industry, Western Union, MoneyGram, Vigo and Dolex offer larger and more convenient networks, including language translation, convenient retail locations and extended operating hours, whereas consumers awareness of banks focusing on the remittance business is limited and banks distribution network in the U.S. is primarily limited to bank branches, however, Wells Fargo is working to change this model by offering remitters the ability to transfer funds not only at the branch, but at the ATM, by telephone and online

Wells Fargo's ExpressSend offers a overnight sweep account that allows remitters to send funds to family and friends and beneficiaries/recipients can claim funds by check, at the ATM or online. The beneficiary will not be required to have a checking or savings account to receive funds. ExpressSend has the potential to allow Wells Fargo to cross sell products and services to their customers, increase household acquisition, grow referrals and retention of customers, build long term relationships and expand into other products.