April 1, 2024 • 24 mins
In this enlightening episode of Crosstalks: Conversations that Drive Innovation, we host Hugo Cuevas-Mohr, a seasoned payments expert and author of the 2023 book, Sending Money, Forex, Remittances, Migration, and the Fintech Revolution. Episode 11 navigates the transformative journey of family remittances with the advent of Electronic Fund Transfers (EFTs) and how this initiated the financial inclusion of millions of remittances senders and receivers.
Dive into a fascinating tale narrated by Hugo, taking us back to the late 80s with the anecdote of an elderly woman faced with receiving her first EFT. This incident led to Hugo's profound realization about the importance of customer education and habit transformation. The episode emphasizes the remarkable role EFTs played in bringing rapid technology-driven transformation, especially for the unbanked clients from marginalized communities and rural areas.
The discussion deepens into the role of the agents and intermediaries in fostering customer trust, eventually streamlining the laborious physical processes into quick and easy digital transactions. We also delve into the necessity of remittance best practice consolidation across different locations, facilitating an industry shift, despite the limited initial interaction between early market players, banks, and regulators.
Further, Hugo provides valuable insights into the initial licensing of remittance companies, the formalization of Money Transfer Operators (MTOs) in Latin America, and the consequent evolution in Asia and Africa, reflecting the extensive adoption of new technology at different paces and scales across these regions.
Listen to engaging stories unraveling the early struggles of remittance senders and receivers. Understand financial inclusion and evolution of remittance as a significant milestone in their lives. Discover the origins of the remittance market in various regions like the Dominican Republic, Brazil, Peru, Chile, and other parts of Latin America. Learn about the experiences of the early pioneers in dealing with a predominantly informal market and building trust among their customers.
Stay tuned till the end to delve into the changing dynamics of the remittance industry, explore the future landscape of the sector, and get a sneak peek into 'Sending Money', a remarkable book based on these experiences.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Music.
(00:06):
Welcome to Crosstex, Conversations that Drive Innovation.
In this podcast, we featured well-known payments expert, Hugo Cuevas-Moore.
This series is based on his 2023 book, Sending Money, Forex,
Remittances, Migration, and the Fintech Revolution.
Crosstex is published by Crosstex, a conference and consultancy service company
(00:26):
based in Miami, Florida. Thank you for listening.
Hi, this is episode 11 of Sending Money.
And in this episode and the next episode, number 12, I will discuss the beginning
of remittance senders and recipients, or beneficiaries,
journey into financial inclusion with the advent of EFTs or electronic fund
(00:52):
transfers that we discussed in the previous episode.
And I will begin with an anecdote. It was probably a year in 1988 or 1989 when
one day an elderly lady refused to receive the $200 that her son had sent her from Los Angeles.
(01:14):
And in her frustration, she was causing a disturbance at the cashier window
in our main office in Cali, Colombia.
I went out to calm her down and convince her to follow me inside so she could explain what was wrong.
She was a tiny woman in her 80s and she started talking and complaining,
(01:36):
but it took me a while to understand her discontent. She insisted that we wanted to cheat her.
She argued that the The bills we were giving her were not the same ones his
son has sent her, she told me.
My son marks each bill with signs that we only, both of us know. We have a code.
(02:00):
I was finally enlightened.
The bills we were giving her were not the same ones his son had sent her.
Of course, that was absolutely true. And I explained that to her.
And she was happy that she had discovered this supposed deception.
So I tried to explain the process in a way that she could comprehend.
(02:23):
I said, you know, your son has changed how he's sending you money.
So it gets you faster. her. Now he takes the bills to an office closer to where he lives, an agent.
And that office sends us your phone number and the amount that we have to give you.
So it's the same amount of money, but not the same bills.
(02:44):
You know, I elaborated. Then she asked me where his son's dollars were.
I didn't know how to explain to her that the person in the agency will put them
back, Like, we'll put them in the bank and we'll get her money later.
She thought we were advancing the money while his son's dollars arrived,
which I said was not the case.
(03:05):
Anyway, the only way she left with her new bills was by me marking them so that
she will have the confidence to take them with her and return to her office
if she could not cash them.
Because she wanted to cash them with someone she knew in her neighborhood.
She left peacefully. I did try to exchange those dollars for pesos so she could
(03:30):
use them, but I understood it was too much to ask.
So in this first stage of the beginning of EFTs, managing this process and getting
people to trust this new way was,
in my opinion, a key aspect of what we now accept as normal in transmitting money,
(03:51):
whether domestically or internationally.
When I hear discussions about financial inclusion and financial literacy,
I refer to these and And a number of other anecdotes I have as cornerstones
in building the trust we needed from these beneficiaries to accept this change.
(04:12):
Because the most complex aspect involved the essential transformation of customers'
habits and expectations.
And the use of technology as a tool for transformation was huge and impacted
companies, companies, communities,
countries, impacted the service and therefore the users who adapted to this
(04:33):
transition, the first of many transformations to come to the remittance industry.
We have adapted to technological changes and now accepting much faster with
few questions and almost no wonder anymore.
The paradigm shift was striking because it occurred with people of humble origins,
(04:55):
often from marginalized neighborhoods or remote rural areas with a bias and
a total distrust of institutions.
It was the start of their financial inclusion.
The many anecdotes this industry has from different countries are important
to understand what the industry did to change habits and bring about the needed transformation.
(05:21):
It is what fintechs do nowadays, break molds. The change in the money sent from
MOs or money orders or by people traveling with cash caused a disconnection
between sender and beneficiary.
The transactions intermediaries became the ethnic agents on the sending side,
(05:42):
which were essential to establishing the trust needed in the beginning of that
financial transaction. action.
Agents were the face on the sending side.
In ethnic neighborhoods, in many U.S. cities, as well as London,
Madrid, etc., same as Buenos Aires and other Latin American cities,
the agents that originated these remittances had to explain how EFTs worked.
(06:07):
At the time, it was difficult for the sender to get on the phone and explain
the change to the family they they were sending money to.
And as opposed to the 10 or 15 days that couriers could take,
the time was immediately reduced to two or three days, then to 24 hours or less.
(06:29):
On the receiving side, the beneficiary had to adjust to the requirement of going
to an office, providing identification,
except for the countries where home delivery was provided, like Dominican Republic,
Nicaragua, Vietnam, etc.
With EFTs, the formalization of MTOs in Latin America was a process that began
(06:53):
in the late 1980s and 1990s, and licensing came after companies were already
in existence for some years.
Now, this shift happened in different phases and different times in Latin America,
and the evolution in Asia and Africa was similar.
Everywhere there was little or no dialogue between the early participants in
(07:17):
the industry, the banks, the regulators, and the policymakers.
Some early associations of remittance providers did their best to gather the
companies in operation and represent them, but this sector's informality made it very challenging.
In our case, UDC, Universal de Cambios, or TITAN's case, Ria Envía,
(07:42):
a remittance company in New York, became our first EFT correspondent.
Jesus Perez Antaya, the company's co-founder, came to our offices in Cali and
explained the system to this family Casa de Cambios, the system that was not
that foreign to the company,
(08:02):
that had managed a different clientele, larger payments, as Casas de Cambio
did in Latin America back then.
As many other people do, Eric Cuesta, an early employee of RIA in New York,
fondly remembers Don Jesús, who passed away in 2018.
He told me in an interview for the book, Don Jesús Pérez was a missionary.
(08:27):
I believe he was the father of remittances. He was one of the first to start this business.
He was a Cuban, a banker in Cuba, and here in the U.S. when he arrived, he was a money changer.
Don Jesus worked in the foreign exchange business, and when he saw so many Latin
Americas arriving in New York, he decided to organize a service to send money transfers.
(08:51):
Licensing was new in the state, and he saw this as a good sign.
Other MTOs also appeared between 1987 and 1998.
They also went looking for correspondence south of the Rio Grande.
And UDC in Colombia began dispersing remittances in 1987.
The company realized that they needed to purchase a computer to manage increased
(09:16):
volume of transactions.
And I came into the company when they asked me to purchase that computer and
develop a very simple system to keep track of orders.
The system was a simple table with rows and columns that revolutionized the
company because it managed the information. It was a very crude version of what Excel does today.
(09:38):
From the incoming money transfers list that were received by Telex first,
we typed the available data into the table.
We were able to sort it, organize the information, so the operators who made
phone calls to notify beneficiaries that the payments had arrived could input information.
Now, without today's cell phones and a high percentage of people not having
(10:01):
a landline in their homes, contacting the customer was not easy.
Now, keeping track of how the individual was notified, who was notified,
who received the information, when and at what time was very important.
We also printed lists of payments for their cashiers to prepare envelopes with
the dollars in cash to be handed to the customers when they came to pick up their money next day.
(10:27):
Operators prepared these envelopes at night to ensure we had all the dollars needed.
But even if we exchanged dollars all day, it was never enough.
The preparation and alphabetical sorting of these envelopes,
the calls, the provision of funds was a very intense task to handle,
but it had to be done before the client arrived to the office so it could be done efficiently.
(10:52):
Cashiers had to manually keep track of paid transfers, the time,
the date, take information from the ID presented, and we needed to input this data in the computer.
As the number of clients increased, technology kept on presenting us with solutions
so we could grow while keeping controls in place.
With the arrival of the fax, cheap and easy to use compared to the telex and
(11:17):
the appearance of new MTOs in many cities in the US and later in other countries
where migrants were settling,
the money transfers we were handling skyrocketed in such a way that it was almost
impossible for us to plan accordingly.
They need for more offices to pay remittances, they need for better methods and controls,
(11:39):
the increased use of computers, they need better software to simplify the operation,
the cash flow, both in the country and the management of credit lines and credit
risk with correspondence.
All of this became the main aspect of the business.
And if any dollars were openly but not freely, in the 1980s in Colombia,
(12:02):
the foreign currency exchange was controlled.
And in some countries, authorities tried, and some continue to try,
prohibitive measures against the trading of foreign currency,
pushing businesses to operate in great markets.
Bob Lopez shared his history of his family business for the Sending Money book,
(12:24):
and I'm going to read it to you.
My dad and my uncle had a casa de cambio in the Dominican Republic that exchanged dollars.
People came with the dollars they received from tourists, but the volume began
to increase, and my uncle said one day, Oye, where all these dollars people bring coming from?
They started asking customers and discovered that the money was being brought
(12:47):
by individuals from New York every week, every two weeks.
My uncle decided to start doing the same.
When the fax machines appeared, they decided to open an office in New York so
that people could go to this office and take the money.
And that was in 1987, I think, and those Consorcio Oriental began in the U.S.
(13:10):
In Brazil, the formalization of the remittance market took much longer than
any other country in the region.
In a later episode, I will go into more detail about the transformation of this market.
Geraldo Magella, who worked 30 years with Brazil's central bank.
Remembers the years before 2005 2005 when the central bank had to authorize
(13:37):
every international money transfer,
a reason why there were so many alternative methods to move money in and out
of Brazil, the famous black or gray market.
Let me read what Geraldo told me for the book.
I worked in one of Brazil's central bank offices that authorized people to buy foreign currency.
(14:02):
I remember the case of a man who came to ask for an authorization.
He needed to buy $100 to send to his son, who was alone in Chile and had an accident.
I helped that father write the formal request that was needed,
and I went to my boss and he didn't authorize it.
It was for medical treatment and he did not approve it. The father was crying at my desk. It was 1981.
(14:29):
Can you imagine? People needed to go to the central bank for an authorization,
buy the currency, and give Hercules the money.
Of course, no wonder there was a huge parallel market in Brazil for so many
years, serving people like this father that Magella remembers in the interview. you.
(14:49):
Rocio Maltino, founder with her other family members of a company in Peru and
Chile called Argent Pair, told me in an interview how their family remittance services began.
It all started when my brother Lombardo Maltino, may he rest in peace,
went to study in Argentina.
(15:11):
And when he he traveled from Buenos Aires to Lima to visit us,
his friend always sent money with him to give to the families.
That is why we got together at that time. It was the year 1990 because we,
as a family, saw a need for Peruvians to send letters,
parcels, packages, and money home, taking advantage of the trips people we knew
(15:35):
were doing back and forth.
The situation in Peru became very complicated with the Fujimori government,
and many in Peru left at that time.
Little by little, we integrated the rest of our brothers and sisters.
Some went to open offices in other countries. In my case, I opened the office
(15:56):
in Chile, where I still live.
Building trust was the number one priority for customers to shift their habits
and come to get their payments.
From the beneficiaries, mostly from poor neighborhoods, being called from a
downtown office to pick up money sent by a relative, made them feel distrustful and vulnerable.
(16:19):
And trust-building began from the initial phone contact to inform the beneficiary
that a remittance from abroad was available.
Then came the process of making them feel welcome in a safe,
clean, and friendly space.
Accommodating this customer politely as they entered the office,
(16:39):
asking courteously for for proof of identity, while ensuring payment to the
correct person, was not left to chance.
The vulnerability of these customers could generate hostile attitudes in a matter of seconds.
So we had to work with our employees to generate empathy with these clients,
(16:59):
who were unaccustomed to being in an office, signing forms,
encouraging them to be patient, understanding their mistrust,
and even their hostility.
As we grew, we had to recruit new personnel. Some came with banking experience,
which in practice proved to be good in terms of operational skills.
(17:19):
But deep down, their presumptuous attitude inherited while working as bank tellers was hard to change.
Bank tellers in the third world, even if they come from middle or lower class
backgrounds, feel that the seat at the teller's desk is like a throne,
and from there they can treat everyone one as vassals.
In Colombia, that was especially true in the 80s and 90s. They felt entitled to,
(17:46):
One of the interesting things we found very early on was the question beneficiaries
asked when they were notified by phone or when the remittance was being paid at the office.
People will ask, is my son okay? It was easy for our staff to say, I have no idea, ma'am.
I only have your name, phone number, and your son's name.
(18:07):
And that was true, and it could have been said politely, but that was perceived
as being rude. I remember trying different answers to create the empathy we always sought.
A cashier came up with the following response.
Listen, he must be very well because he sent you this money.
One can tell he loves you very much.
(18:29):
Logically, the response will generate a thank you and a sense of reassurance.
This simple phrase became a motto in our company. And it is not a minor detail.
The search for empathy was our mission. Leading us to create dozens of subtle
ways to handle the situations that arose in those early days.
All the pioneering companies in the industry developed a search for empathy
(18:53):
with the customers, whether on the sending or receiving side of a remittance corridor.
Countless times I have discussed this issue of empathy in financial services.
All ethnic remittance companies felt it was a duty to forge it, to nurture it.
Agents knew how to inspire confidence in their core nationals to send their money.
(19:15):
And we, on the paying side, had to close the empathy cycle effectively.
So finding and training good people to deal with this new clientele became a necessity.
We also needed younger people who would feel at ease with the new technology tools we were using.
When we began paying remittances, there was no measure of the scale of the service,
(19:38):
nor the size of the market, and even less what it will become so soon.
We had an office on the third floor of a small building in downtown Cali,
accessible via a narrow staircase or an old elevator that was run by an operator.
But this new clientele growing by the day began to irritate the employees and
(19:59):
owners of other offices in the building who felt that it was being degraded
and devalued by the poor clientele we were serving.
In response to the growth, the intense pressure from correspondents abroad,
and to serve beneficiaries in other cities and towns, we started to open branches
nationwide. nationwide.
(20:21):
The first offices we opened were informal.
Trusted friends and relatives rented a central location apartment to distribute
remittances, small offices in discrete buildings, nothing to fancy.
Throughout this first period, the company preferred to rent locales on a second
or third floor because they were much safer for the operation and the people
(20:45):
who left our offices with money felt more secure because they could go into the street unnoticed.
In 1992, when Titán got the country's first Casa de Cambio Plena license,
the company began searching for locales to accommodate the growing number of clients.
Now, newly constructed shopping malls were a good solution, but it was challenging
(21:07):
to convince the management of these centers to let us move in.
Casas de Cambio had a poor image. Remittances were not understood.
The clientele was discriminated. And even the fact that finally a regulation
in Colombia was in place, it was not a convincing argument for those shopping
centers. We finally managed.
(21:28):
From an office in Cali with eight people in 1987,
the transition to Titán in 1992, as a result of the new regulations in Colombia,
We reached close to 435 employees and 73 branches,
handling a volume that exceeded 200,000 remittance orders paid in December of the year 2000.
(21:51):
At that time, we were also handling outgoing remittances, about 6,000 a month,
still cashing money orders and handling foreign exchange operations.
At the same time, we opened offices in neighboring countries,
initially with the support of friends and people we trusted.
We began operating in Venezuela, Panama, Costa Rica, Honduras, Salvador.
(22:13):
We were able to offer payment options to correspondents who,
even if they didn't have much volume to these countries, were important for
us to offset the funds they sent to Colombia for payments.
We became what is now called an aggregator for the region. We also decided to
operate our own office in Miami first, then Boston, since it was important for
(22:35):
the company to secure a certain market share at its origin.
Correspondents were demanding more credit and this was becoming an ever-increasing risk.
As the MTOs in the US and Europe grew and competition in the payment markets
increased, commissions and fees were shrinking.
Having a network in the US was also a way for T10 to pay remittances in those markets,
(23:01):
something that ethnic MTOs in the US would not do, apart from Western Union
and MoneyGram, because most MTOs only concentrated in outgoing remittances from the US or Europe.
We understood that the remittance market was being increasingly controlled from the sending side.
The originated companies were becoming more powerful, while the paying side
(23:25):
was gradually losing profits.
Being in the two sides of the corridor helped us to learn more about the clientele
and to work even more in the financial inclusion,
in the trust building and empathy that we needed in both sides. of the chain.
(23:47):
Thank you for listening to this episode of Crosstux. Conversations that drive innovation.
The book, Sending Money, is available on Amazon.
For comments, questions, and feedback, use our social media channels,
LinkedIn, Facebook, and YouTube. See you soon.
Music.
Music.
(00:06):
Welcome to Crosstex, Conversations that Drive Innovation.
In this podcast, we featured well-known payments expert, Hugo Cuevas-Moore.
This series is based on his 2023 book, Sending Money, Forex,
Remittances, Migration, and the Fintech Revolution.
Crosstex is published by Crosstex, a conference and consultancy service company
(00:26):
based in Miami, Florida. Thank you for listening.
Hi, this is episode 11 of Sending Money.
And in this episode and the next episode, number 12, I will discuss the beginning
of remittance senders and recipients, or beneficiaries,
journey into financial inclusion with the advent of EFTs or electronic fund
(00:52):
transfers that we discussed in the previous episode.
And I will begin with an anecdote. It was probably a year in 1988 or 1989 when
one day an elderly lady refused to receive the $200 that her son had sent her from Los Angeles.
(01:14):
And in her frustration, she was causing a disturbance at the cashier window
in our main office in Cali, Colombia.
I went out to calm her down and convince her to follow me inside so she could explain what was wrong.
She was a tiny woman in her 80s and she started talking and complaining,
(01:36):
but it took me a while to understand her discontent. She insisted that we wanted to cheat her.
She argued that the The bills we were giving her were not the same ones his
son has sent her, she told me.
My son marks each bill with signs that we only, both of us know. We have a code.
(02:00):
I was finally enlightened.
The bills we were giving her were not the same ones his son had sent her.
Of course, that was absolutely true. And I explained that to her.
And she was happy that she had discovered this supposed deception.
So I tried to explain the process in a way that she could comprehend.
(02:23):
I said, you know, your son has changed how he's sending you money.
So it gets you faster. her. Now he takes the bills to an office closer to where he lives, an agent.
And that office sends us your phone number and the amount that we have to give you.
So it's the same amount of money, but not the same bills.
(02:44):
You know, I elaborated. Then she asked me where his son's dollars were.
I didn't know how to explain to her that the person in the agency will put them
back, Like, we'll put them in the bank and we'll get her money later.
She thought we were advancing the money while his son's dollars arrived,
which I said was not the case.
(03:05):
Anyway, the only way she left with her new bills was by me marking them so that
she will have the confidence to take them with her and return to her office
if she could not cash them.
Because she wanted to cash them with someone she knew in her neighborhood.
She left peacefully. I did try to exchange those dollars for pesos so she could
(03:30):
use them, but I understood it was too much to ask.
So in this first stage of the beginning of EFTs, managing this process and getting
people to trust this new way was,
in my opinion, a key aspect of what we now accept as normal in transmitting money,
(03:51):
whether domestically or internationally.
When I hear discussions about financial inclusion and financial literacy,
I refer to these and And a number of other anecdotes I have as cornerstones
in building the trust we needed from these beneficiaries to accept this change.
(04:12):
Because the most complex aspect involved the essential transformation of customers'
habits and expectations.
And the use of technology as a tool for transformation was huge and impacted
companies, companies, communities,
countries, impacted the service and therefore the users who adapted to this
(04:33):
transition, the first of many transformations to come to the remittance industry.
We have adapted to technological changes and now accepting much faster with
few questions and almost no wonder anymore.
The paradigm shift was striking because it occurred with people of humble origins,
(04:55):
often from marginalized neighborhoods or remote rural areas with a bias and
a total distrust of institutions.
It was the start of their financial inclusion.
The many anecdotes this industry has from different countries are important
to understand what the industry did to change habits and bring about the needed transformation.
(05:21):
It is what fintechs do nowadays, break molds. The change in the money sent from
MOs or money orders or by people traveling with cash caused a disconnection
between sender and beneficiary.
The transactions intermediaries became the ethnic agents on the sending side,
(05:42):
which were essential to establishing the trust needed in the beginning of that
financial transaction. action.
Agents were the face on the sending side.
In ethnic neighborhoods, in many U.S. cities, as well as London,
Madrid, etc., same as Buenos Aires and other Latin American cities,
the agents that originated these remittances had to explain how EFTs worked.
(06:07):
At the time, it was difficult for the sender to get on the phone and explain
the change to the family they they were sending money to.
And as opposed to the 10 or 15 days that couriers could take,
the time was immediately reduced to two or three days, then to 24 hours or less.
(06:29):
On the receiving side, the beneficiary had to adjust to the requirement of going
to an office, providing identification,
except for the countries where home delivery was provided, like Dominican Republic,
Nicaragua, Vietnam, etc.
With EFTs, the formalization of MTOs in Latin America was a process that began
(06:53):
in the late 1980s and 1990s, and licensing came after companies were already
in existence for some years.
Now, this shift happened in different phases and different times in Latin America,
and the evolution in Asia and Africa was similar.
Everywhere there was little or no dialogue between the early participants in
(07:17):
the industry, the banks, the regulators, and the policymakers.
Some early associations of remittance providers did their best to gather the
companies in operation and represent them, but this sector's informality made it very challenging.
In our case, UDC, Universal de Cambios, or TITAN's case, Ria Envía,
(07:42):
a remittance company in New York, became our first EFT correspondent.
Jesus Perez Antaya, the company's co-founder, came to our offices in Cali and
explained the system to this family Casa de Cambios, the system that was not
that foreign to the company,
(08:02):
that had managed a different clientele, larger payments, as Casas de Cambio
did in Latin America back then.
As many other people do, Eric Cuesta, an early employee of RIA in New York,
fondly remembers Don Jesús, who passed away in 2018.
He told me in an interview for the book, Don Jesús Pérez was a missionary.
(08:27):
I believe he was the father of remittances. He was one of the first to start this business.
He was a Cuban, a banker in Cuba, and here in the U.S. when he arrived, he was a money changer.
Don Jesus worked in the foreign exchange business, and when he saw so many Latin
Americas arriving in New York, he decided to organize a service to send money transfers.
(08:51):
Licensing was new in the state, and he saw this as a good sign.
Other MTOs also appeared between 1987 and 1998.
They also went looking for correspondence south of the Rio Grande.
And UDC in Colombia began dispersing remittances in 1987.
The company realized that they needed to purchase a computer to manage increased
(09:16):
volume of transactions.
And I came into the company when they asked me to purchase that computer and
develop a very simple system to keep track of orders.
The system was a simple table with rows and columns that revolutionized the
company because it managed the information. It was a very crude version of what Excel does today.
(09:38):
From the incoming money transfers list that were received by Telex first,
we typed the available data into the table.
We were able to sort it, organize the information, so the operators who made
phone calls to notify beneficiaries that the payments had arrived could input information.
Now, without today's cell phones and a high percentage of people not having
(10:01):
a landline in their homes, contacting the customer was not easy.
Now, keeping track of how the individual was notified, who was notified,
who received the information, when and at what time was very important.
We also printed lists of payments for their cashiers to prepare envelopes with
the dollars in cash to be handed to the customers when they came to pick up their money next day.
(10:27):
Operators prepared these envelopes at night to ensure we had all the dollars needed.
But even if we exchanged dollars all day, it was never enough.
The preparation and alphabetical sorting of these envelopes,
the calls, the provision of funds was a very intense task to handle,
but it had to be done before the client arrived to the office so it could be done efficiently.
(10:52):
Cashiers had to manually keep track of paid transfers, the time,
the date, take information from the ID presented, and we needed to input this data in the computer.
As the number of clients increased, technology kept on presenting us with solutions
so we could grow while keeping controls in place.
With the arrival of the fax, cheap and easy to use compared to the telex and
(11:17):
the appearance of new MTOs in many cities in the US and later in other countries
where migrants were settling,
the money transfers we were handling skyrocketed in such a way that it was almost
impossible for us to plan accordingly.
They need for more offices to pay remittances, they need for better methods and controls,
(11:39):
the increased use of computers, they need better software to simplify the operation,
the cash flow, both in the country and the management of credit lines and credit
risk with correspondence.
All of this became the main aspect of the business.
And if any dollars were openly but not freely, in the 1980s in Colombia,
(12:02):
the foreign currency exchange was controlled.
And in some countries, authorities tried, and some continue to try,
prohibitive measures against the trading of foreign currency,
pushing businesses to operate in great markets.
Bob Lopez shared his history of his family business for the Sending Money book,
(12:24):
and I'm going to read it to you.
My dad and my uncle had a casa de cambio in the Dominican Republic that exchanged dollars.
People came with the dollars they received from tourists, but the volume began
to increase, and my uncle said one day, Oye, where all these dollars people bring coming from?
They started asking customers and discovered that the money was being brought
(12:47):
by individuals from New York every week, every two weeks.
My uncle decided to start doing the same.
When the fax machines appeared, they decided to open an office in New York so
that people could go to this office and take the money.
And that was in 1987, I think, and those Consorcio Oriental began in the U.S.
(13:10):
In Brazil, the formalization of the remittance market took much longer than
any other country in the region.
In a later episode, I will go into more detail about the transformation of this market.
Geraldo Magella, who worked 30 years with Brazil's central bank.
Remembers the years before 2005 2005 when the central bank had to authorize
(13:37):
every international money transfer,
a reason why there were so many alternative methods to move money in and out
of Brazil, the famous black or gray market.
Let me read what Geraldo told me for the book.
I worked in one of Brazil's central bank offices that authorized people to buy foreign currency.
(14:02):
I remember the case of a man who came to ask for an authorization.
He needed to buy $100 to send to his son, who was alone in Chile and had an accident.
I helped that father write the formal request that was needed,
and I went to my boss and he didn't authorize it.
It was for medical treatment and he did not approve it. The father was crying at my desk. It was 1981.
(14:29):
Can you imagine? People needed to go to the central bank for an authorization,
buy the currency, and give Hercules the money.
Of course, no wonder there was a huge parallel market in Brazil for so many
years, serving people like this father that Magella remembers in the interview. you.
(14:49):
Rocio Maltino, founder with her other family members of a company in Peru and
Chile called Argent Pair, told me in an interview how their family remittance services began.
It all started when my brother Lombardo Maltino, may he rest in peace,
went to study in Argentina.
(15:11):
And when he he traveled from Buenos Aires to Lima to visit us,
his friend always sent money with him to give to the families.
That is why we got together at that time. It was the year 1990 because we,
as a family, saw a need for Peruvians to send letters,
parcels, packages, and money home, taking advantage of the trips people we knew
(15:35):
were doing back and forth.
The situation in Peru became very complicated with the Fujimori government,
and many in Peru left at that time.
Little by little, we integrated the rest of our brothers and sisters.
Some went to open offices in other countries. In my case, I opened the office
(15:56):
in Chile, where I still live.
Building trust was the number one priority for customers to shift their habits
and come to get their payments.
From the beneficiaries, mostly from poor neighborhoods, being called from a
downtown office to pick up money sent by a relative, made them feel distrustful and vulnerable.
(16:19):
And trust-building began from the initial phone contact to inform the beneficiary
that a remittance from abroad was available.
Then came the process of making them feel welcome in a safe,
clean, and friendly space.
Accommodating this customer politely as they entered the office,
(16:39):
asking courteously for for proof of identity, while ensuring payment to the
correct person, was not left to chance.
The vulnerability of these customers could generate hostile attitudes in a matter of seconds.
So we had to work with our employees to generate empathy with these clients,
(16:59):
who were unaccustomed to being in an office, signing forms,
encouraging them to be patient, understanding their mistrust,
and even their hostility.
As we grew, we had to recruit new personnel. Some came with banking experience,
which in practice proved to be good in terms of operational skills.
(17:19):
But deep down, their presumptuous attitude inherited while working as bank tellers was hard to change.
Bank tellers in the third world, even if they come from middle or lower class
backgrounds, feel that the seat at the teller's desk is like a throne,
and from there they can treat everyone one as vassals.
In Colombia, that was especially true in the 80s and 90s. They felt entitled to,
(17:46):
One of the interesting things we found very early on was the question beneficiaries
asked when they were notified by phone or when the remittance was being paid at the office.
People will ask, is my son okay? It was easy for our staff to say, I have no idea, ma'am.
I only have your name, phone number, and your son's name.
(18:07):
And that was true, and it could have been said politely, but that was perceived
as being rude. I remember trying different answers to create the empathy we always sought.
A cashier came up with the following response.
Listen, he must be very well because he sent you this money.
One can tell he loves you very much.
(18:29):
Logically, the response will generate a thank you and a sense of reassurance.
This simple phrase became a motto in our company. And it is not a minor detail.
The search for empathy was our mission. Leading us to create dozens of subtle
ways to handle the situations that arose in those early days.
All the pioneering companies in the industry developed a search for empathy
(18:53):
with the customers, whether on the sending or receiving side of a remittance corridor.
Countless times I have discussed this issue of empathy in financial services.
All ethnic remittance companies felt it was a duty to forge it, to nurture it.
Agents knew how to inspire confidence in their core nationals to send their money.
(19:15):
And we, on the paying side, had to close the empathy cycle effectively.
So finding and training good people to deal with this new clientele became a necessity.
We also needed younger people who would feel at ease with the new technology tools we were using.
When we began paying remittances, there was no measure of the scale of the service,
(19:38):
nor the size of the market, and even less what it will become so soon.
We had an office on the third floor of a small building in downtown Cali,
accessible via a narrow staircase or an old elevator that was run by an operator.
But this new clientele growing by the day began to irritate the employees and
(19:59):
owners of other offices in the building who felt that it was being degraded
and devalued by the poor clientele we were serving.
In response to the growth, the intense pressure from correspondents abroad,
and to serve beneficiaries in other cities and towns, we started to open branches
nationwide. nationwide.
(20:21):
The first offices we opened were informal.
Trusted friends and relatives rented a central location apartment to distribute
remittances, small offices in discrete buildings, nothing to fancy.
Throughout this first period, the company preferred to rent locales on a second
or third floor because they were much safer for the operation and the people
(20:45):
who left our offices with money felt more secure because they could go into the street unnoticed.
In 1992, when Titán got the country's first Casa de Cambio Plena license,
the company began searching for locales to accommodate the growing number of clients.
Now, newly constructed shopping malls were a good solution, but it was challenging
(21:07):
to convince the management of these centers to let us move in.
Casas de Cambio had a poor image. Remittances were not understood.
The clientele was discriminated. And even the fact that finally a regulation
in Colombia was in place, it was not a convincing argument for those shopping
centers. We finally managed.
(21:28):
From an office in Cali with eight people in 1987,
the transition to Titán in 1992, as a result of the new regulations in Colombia,
We reached close to 435 employees and 73 branches,
handling a volume that exceeded 200,000 remittance orders paid in December of the year 2000.
(21:51):
At that time, we were also handling outgoing remittances, about 6,000 a month,
still cashing money orders and handling foreign exchange operations.
At the same time, we opened offices in neighboring countries,
initially with the support of friends and people we trusted.
We began operating in Venezuela, Panama, Costa Rica, Honduras, Salvador.
(22:13):
We were able to offer payment options to correspondents who,
even if they didn't have much volume to these countries, were important for
us to offset the funds they sent to Colombia for payments.
We became what is now called an aggregator for the region. We also decided to
operate our own office in Miami first, then Boston, since it was important for
(22:35):
the company to secure a certain market share at its origin.
Correspondents were demanding more credit and this was becoming an ever-increasing risk.
As the MTOs in the US and Europe grew and competition in the payment markets
increased, commissions and fees were shrinking.
Having a network in the US was also a way for T10 to pay remittances in those markets,
(23:01):
something that ethnic MTOs in the US would not do, apart from Western Union
and MoneyGram, because most MTOs only concentrated in outgoing remittances from the US or Europe.
We understood that the remittance market was being increasingly controlled from the sending side.
The originated companies were becoming more powerful, while the paying side
(23:25):
was gradually losing profits.
Being in the two sides of the corridor helped us to learn more about the clientele
and to work even more in the financial inclusion,
in the trust building and empathy that we needed in both sides. of the chain.
(23:47):
Thank you for listening to this episode of Crosstux. Conversations that drive innovation.
The book, Sending Money, is available on Amazon.
For comments, questions, and feedback, use our social media channels,
LinkedIn, Facebook, and YouTube. See you soon.
Music.
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