Report – Remittances and financial inclusion – analysis of a survey of migrants from Latin America and the Caribbean in Spain

Every year, migrants from Latin American and Caribbean countries in Spain send billions of Euros to their countries of origin. These money transfers not only help many families with important expenses that ensure a better quality of life, but also constitute an important vehicle to improve the quality of life of many families. Financial Inclusion of cross-border households in Spain and abroad.

In view of this context, the specific purpose of the report is to guide the main players who provide the services of sending money in Spain so that they can improve and innovate their products and, ultimately, they contribute to strengthening the financial inclusion of both the Latin American migrant population and that of their families in the receiving and home countries.

The analysis is based on data from an original survey applied between July and September from 2015 to 2,005 migrants from a pre-selection of six nationalities, potential remittance emitters, residents in Spain. These nationalities are Bolivia, Colombia, Ecuador, Paraguay, Peru and the Dominican Republic. The face-to-face interviews of the survey were held at points of acquisition in Madrid, Barcelona and Valencia, capitals of the autonomous Communities with the highest percentage of representation of the pre-selected nationalities.

The contingent of migrants, that is to say, the group of people born in another country who live in Spain, from South America, Central America and the Caribbean has increased significantly since the late 1990s. In the year 2014, the National Institute of Statistics estimated that 2,308,686 people, corresponding to 5% of the total population and 37% of the one born abroad, belonged to this group in Spain.

The recent economic crisis has hit the migrant population more crudely than the native, primarily men. In such a way that the already traditional concentration in positions of lower qualifications and remuneration is now more difficult to find employment. This has generated a slight increase in the return to the country of origin.

At present, the people originating in Ecuador (438,979) constitute the most numerous group and the third most large of all the migrants, behind the originating ones of Morocco (774,549) and Romania (726,142). This country is followed, among Latin Americans, Colombia with 363. 667 people, Argentina with 259,870, Peru with 191,706 and Bolivia with
177,149. Compared to the rest of the migrant groups, Latin Americans stand out for their notable contribution of women.

Payments for remittance sent abroad from Spain increased to 2007 in parallel to the increase in the migrant population in the country. The process was encouraged, in part, by the strength of the euro since its implementation in 2002, but this trend was interrupted from 2008 as a result of the decline in flows, rising unemployment among workers of immigrant origin and the relative weakening of the euro against the dollar. All this reflected the profound economic crisis that affected the global economy in general, and the European and Spanish in particular.

The vast majority of Latin American migrants in Spain have secondary education, but both they and those with higher studies find it difficult to validate their qualifications and access qualified jobs. 22% of the migrants interviewed are unemployed and the services of low qualifications (catering, care of people, domestic personnel, etc.) concentrate to 60% of those who have a job. Therefore, their income is lower than those of the population born in Spain (almost 25% charge less than €600 monthly, compared to 17% among the natives) and their capacity to accumulate capital is limited (55% spent everything in the year before the survey).

With respect to the mode of savings, 32% of the analyzed sample saved something in the bank during the year prior to the survey, while the equivalent percentage in the total population resident in Spain was, in 2014, 48% (2014 global Findex data of the World Bank for Spain).

In spite of the above, in general, there is a notable High level of banking among the LAC migrant population: 86% hold a bank account in Spain, not far from the 98% achieved among the total population. Twenty per cent have a bank account in Spain and in the country of origin. Among LAC migrants who have a bank account, men who have been residing in Spain for more years, who are employed and who have already acquired nationality are more frequent;

Beyond the high level of banking penetration revealed by the possession of a current account, the consumption of Financial Products among Latin American migrants is limited; the most widespread financial service is the Debit Card (61%, compared to 83% among the overall population), followed by the Credit card (25%), the Life insurance (17%) and the Loan (12%).

In 2015 The share of remittances represented 69%, twenty points above the estimated 2007. For their part, non-remittances (24%) justified the fact that they did not send money in the last year because their relatives in the country of origin did not need it.

The Latin American migrants in Spain have, on average, about 10 years residing in the country and most have already regrouped their nuclear family (couple and children). Therefore, the principal recipients of remittances in origin are their parents (55%) and, to a lesser extent, siblings (34%).

The profile of the migrant who is most likely to send money (or be a remittance) is the one that is between 30 and 45 years of age, it has more than 10 years living in the country, has partner in Spain, is employed, has low level of instruction, has bank account (both in Spain and in the country of origin) and has capacity to save , so sending remittances appears strongly associated with the level of banking. Similarly, having a parent, son or daughter, or siblings in the country of origin is a factor that increases the likelihood of sending money, especially if they perceive the economic capacity of these relatives as insufficient.

The average frequency of money transfers is 5 or 6 times a year, with peaks at specific times, such as Christmas, Mother's Day or the start of the school year. The average amount is around €1,000 per year. (€180 per shipment, on average). If the origin is taken into account, Peruvians and Colombians seem to send slightly higher amounts than the average, while Bolivianos and Dominicans are the least dispatched.

Migrants who have been in Spain for more than 7 years, the most educated, those who have a bank account and those who have savings are the most money they send to their country of birth. The quantity sent also increases when the economic situation of the relatives is complicated. On the contrary, when the relatives of the remittance recipients have a bank account, the overall amount sent to them decreases.

More than 70% of senders use only one mode of sending, mostly a single mode. Remittance Company (84%). On the other hand, Only 12% use the bank, which appears as the most common channel for those who have family members with a bank account in the country of origin and also when the migrants themselves have a bank account there. As expected, the combination of both shipping modes (companies and banks) is the most common option between those who combine different modes. The use of postal (Giro) or "trusted" people is absolutely minority.

As for the reasons why respondents say they prefer one mode of delivery over the other, the most common is to refer to the Speed as the most decisive reason of your choice (around 30%) of respondents mention it irrespective of the method chosen), followed by the Security. As can be seen in Figure 13, the Cost is a much more important reason for those who choose the remittance company (15% of those who use it cite it as one of the two main reasons for choosing it as a channel) than for the rest, especially for those who opt for sending by post or through trusted people.

On average, shipping rates represented approximately 3.8% of the amount, which goes up to 5.2% and 4.7% in the event that the channel used has been other trusted persons or the postal order, respectively. As can be seen, the migrants who chose these two channels were precisely those who less valued the cost of shipping to select the preferred channel. By contrast, according to the results of table 14, the most economical channel appears to be the bank transfer through ATM (with associated costs of only 2.7% of the amount of the shipment), followed by the bank transfer carried out in person (3.6%).

It draws attention that, although the method of sending more economical, according to the interviewed, are the transfers through ATM, do not enjoy more acceptance among the remittances Latin American in Spain, especially considering the high level of banking of this population in our country. In fact, as stated in the previous interviews, the banks are trying to push the sending of money through that medium with a lower shipping rate, to be able to compete with the hours of the payment entities. However, despite this and that the cost is one of the reasons mentioned to explain the use of one or another channel, it draws attention to the scarce use it has, which could be due to the lack of information about a system that is relatively new or to the payment agents in the country of destination.

The most sophisticated statistical analyses indicate that there are no significant differences between the different source groups studied regarding the preferred and used shipping mode, with the only exception of Dominicans, who are less likely to use the bank than the remittance company, and Colombians, who are less inclined to use the money order.

By age, younger (under 30) and older (above 60) are the least likely to use a bank for shipments in front of a remittance company, while being more than 45 years old is associated with a greater likelihood of using a more traditional method such as postal money, rather than the remittance company. In the same way, the use of trusted people in front of the remittance company among migrants with lower levels of instruction, lower digital development (basic mobile instead of smartphone) and lower saving capacity is more likely, confirming what was stated during the interviews prior to the survey.

In terms of the mode of reception at origin, the most common is the Cash withdrawal in a banking institution (56%), followed by a Non-bank entity (37%) and the Delivery at home (20%).

Money shipments appear to be the predominant option to cover current expenses of greater magnitude and periodicity, while payments from Spain are more common for the acquisition of low cost services or occasional expenses (travel, airline tickets, etc).

The  New technologies are having a low impact on the money transfer sector among Latin Americans in Spain and their incorporation into the remittance market depends fundamentally on the country to which the money is sent, due to the extent and depth of new technologies in the receiving country. For example, remote payments are particularly frequent among Dominicans and Paraguayans, but also among those who have been living in Spain for more years and among those who do not have higher education or Spanish nationality.

On the other hand, in relation to money remittances, not only the Use of the Internet and in particular of the Mobile phone, they represent a channel still to be developed between this population, but also the sending and withdrawal in ATMs. Although the cost of ATM shipments is the cheapest of all explored, according to respondents, its use remains very minor; The same is true of retirement by family members at home.

Finally, as mentioned above, the level of bankarisation of the migrant population in Spain is already very high; however, it is worth highlighting the Banking opportunities of this population in their respective countries of origin. It is not only of those who do not have a bank account in any country but, above all, those who have an account in Spain does not have it in origin, 67% of the total sample, what makes their potential interest in opening up bank accounts very likely if sufficiently advantageous conditions are offered to them and their families who are often elderly and for whom new technologies may not represent an attractive or viable option. eriores to the survey.

In terms of the mode of reception at origin, the most common is the Cash withdrawal in a banking institution (56%), followed by a Non-bank entity (37%) and the Delivery at home (20%).

• The high level of Family reunification in Spain has changed the characteristics of the Remittance flows to countries of origin, as well as the profile of the most common recipients.
• The beneficiaries of remittances in the country of origin are mostly mothers and fathers, that is to say, elderly people, which means an opportunity for the private sector to create transnational products and services that meet the needs of this population, for example, in the areas of health, housing, retirement savings, etc.
• The study did not find differences between men and women in the propensity to send money, unlike what they concluded studies previously. They are elements related to the economic capacity of migrants in Spain and their families in origin who now explain to a greater extent the sending or not of
• The Latin American population demonstrates high levels of Financial Inclusion, similar to the Spanish population. Having an account in Spain, and especially in Spain and in the country of origin, is correlated with higher amounts of remittances
• Similarly, although financial inclusion is associated with a greater propensity to save formally, not all those who have a bank account use it to accumulate savings. In fact, The savings rate among Latin Americans is 28 points below the rates of the population born in Spain... a closing gap?
• If the recipients in Origin have a bank account, the use of a bank as a channel for transfers is more likely. However, only 20% of recipients receive their remittance as a deposit on account, although 56% receive them as a cash collection within a bank. Here there is a opportunity to extend products and services to recipients.
• The remittances that have bank accounts, not only in Spain but also in their country of origin, are the most prone to use the banks as a shipping channel and also those that send larger
• All this suggests the possibility of promoting the Banking in Origin also for migrants residing in Spain, offering them products there that are more advantageous than those offered in their country of residence, in order to save, develop activities and/or make expenses and investments in their countries.
• Money transfer companies continue to dominate the market and are preferred by migrants, regardless of their level of bankisation. However, they are not always the cheapest. ATM remittances, for example, still show little diffusion among the migrant population, despite being the method that reflects the lowest cost.

• The use of smartphones and online products as a method for sending money continues to be residual for the time being. However, migrants' access to new technologies is very high, so there is an opportunity to promote new channels for sending money through technology already in place.