Citigroup’s Strategy in the Remittance Market

“We are creating a very sophisticated platform to run our remittance products on.” Jack Jared, Head of Global Payments, Citigroup, talks about the company's increasing interest in the money transfer market.

Q: What are Citigroup's targets in the money transfer market? What do you hope to achieve?

A: “We want to be a major player in the workers' remittance business over the next 3-5 years. I would define a major player as a participant in the largest corridors on a global basis plus the most innovative technologies that have been deployed in the younger generations of users. “We are working towards creating a remittance product in a box that we can give to any financial institution anywhere in the world. They can deploy it through any technological means they want – websites, call centres, tellers – with a very strong regulatory and control function therefore banks who do not want to incur these high costs can get involved. A sort of 'bank in a box'.”

“We are working towards creating a remittance product in a box that we can give to any financial institution anywhere in the world. They can deploy it through any technological means they want – websites, call centres, tellers – with a very strong regulatory and control function therefore banks who do not want to incur these high costs can get involved. A sort of 'bank in a box'.”

Q: Do you feel mobile or e-payments will be the way of the future?

A: “It's a good question. We are betting on a number of different ideas at the same time. We've got a full project against mobile payments. We have a large project against prepaid cards – we just acquired the largest prepaid card company in the US. There are many potential solutions in different parts of the world. For every method there are pros and cons, which is why there is going to be a combination of solutions over time.

“The mobile phone is becoming the camera, access to internet – everything is on one device. It needs a few more devices to make it secure, such as digital ID. In general, it is the device that younger generation aspires to and understands. You still need banking services behind it –it is a technological front for other types of services.”

Q: What challenges lie in the way for the whole money transfer industry?

A: “The challenge will be to get a series of cost effective services to the consumers that are secure, easy to use, and transparent. I went on record two years ago and said there is no reason we can't make payments from anywhere to anywhere for $10 and a 150-basis point spread on foreign exchange. It is still absolutely true. There are some players that can offer large volume payments at low prices and a whole host of other providers who offer value added services. The concept of retail and wholesale still exists in this business.”

Q: What corridors will Citigroup focus on?

A: “Anything coming out of the US, it is our home base and we already have a big presence in the US-Mexico corridor with a partnership with a large Mexican bank Banamex. We have heavily invested in the corridor to China – we recently acquired a large Chinese bank. Citi is expecting to be a major player in India and the Philippines, as also all of Latin America. In Western Europe, we will be more involved in mobile payments until we can offer 'bank in a box'. European banks are very slow in getting on board with this business. We are extremely active in the Middle East – Saudi Arabia to Pakistan, to the Philippines, to Egypt, and increasingly to Africa. Also, we are looking now at the 'south-south' migrant flows – Nigeria to Central Africa, to Mali, to Somalia. Western to Eastern Europe is growing – we are involved with a number of European banks, but plan to work almost entirely through tie ups.”