Financial tech startups compete for overlooked U.S. immigrant market
By Gabriel Stargardter
MEXICO CITY May 24 (Reuters) - For two decades, Noe Sanchez sent money from California to his father in Mexico City through storefront outlets of traditional remittance firms such as Western Union.
Now he grabs his smartphone and uses Remitly, one of several new competing mobile apps promoting cheap and quick international transfers. Sanchez quickly got over his initial unease of sending money through an unfamiliar company.
"If it goes badly, I'll cancel it and try another," said Sanchez, a 44-year-old Mexican technical support professional in Oakland.
Founded in 2011 and backed by Amazon.com Inc Chief Executive Jeff Bezos's venture capital arm, Remitly is among a vanguard of financial technology, or fintech, companies targeting what they view as an underserved immigrant market - traditionally disregarded as high-risk and low-margin.
The upstart firms - along with expanding digital and mobile options from Western Union Co and MoneyGram International Inc - are helping immigrants deepen their roots in the United States at a time when incendiary anti-immigration rhetoric dominates national politics.
Presumptive Republican presidential nominee Donald Trump recently attacked remittances from illegal immigrants as a form of "welfare" for Mexicans. Trump threatened to impound such money transfers unless Mexico agreed to pay up to $10 billion for his proposed wall on the southern U.S. border.
Many emerging companies in the fast-growing fintech sector, by contrast, view financial services for immigrants as an untapped source of revenue. They include remittance apps, such as Remitly, TransferWise and Xoom - an early player bought last year by PayPal Holdings Inc for $890 million - along with companies such as Lendup and Oportun, which lend to high-risk borrowers.
"We're part of a community of companies that is helping (immigrant) customers understand the landscape of financial services" in the U.S., said Raul Vazquez, chief executive of Oportun. Continuación...