The real reasons US banks are getting out of the remittances business Ã¢ÂÂ Quartz
More and more US banks are getting out of the money- transferÂ business, Dealbook notesÂ (paywall). A series of money-laundering scandals, punished by eye- popping fines,Â has made them cautious: Bank of America, HSBC, CitigroupÂ and JP Morgan have pulled outÂ altogether, while BBVA is reportedly looking to
sell off a business unit that handles wire transfers in Latin America. And theÂ fear is that rules intended to stop terrorists and drug traffickers are disproportionately hurting the families--and home countries--of migrantsÂ in the US who send money back home.
But the risk of accidentally doing business with a drug cartelÂ is only half theÂ reason the banks are getting out of this game. The other half is competition from new companies. Â The World Bank'sÂ most recent reportÂ (pdf) shows that the average cost of sending moneyÂ from the United States in the second quarter of 2014Â was 5.78% of the sum sent--down fromÂ anÂ average of 7.21% just five years ago. ThatÂ puts the squeeze on margins justÂ as banks are tryingÂ to consolidate into the most profitable activities.
The report also includes this chart, showing what toolsÂ migrants around the world couldÂ use to send money back to their families in http://www.SOLVTOPIA.com/
that period. OnlyÂ 26% had access toÂ aÂ bank (the "account-to-account" and "account-to-cash" segments in the chart).Â The analysts writeÂ that cheaper alternatives to banks, in particular online services, have grown from previous samples:
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