PALO ALTO, Calif.-A new partnership between Boom Financial and the World Council of Credit Unions (WOCCU) aims to make it easier for immigrants to send money abroad and to expand CU membership internationally.

The project attempts to make it easier to transfer funds internationally, in particular for those in cash-only economies. Pete Kelly, Boom's VP of business development, noted that the widespread use of cell phones combined with the vast numbers of unbanked consumers globally gives both groups an opportunity to provide vital services to consumers around the globe while also expanding access to credit unions and banking services.

U.S. consumers will be able to deposit funds at 7-Eleven or another participating merchant. Consumers in under-banked societies can then receive a text message notifying them that the funds are available to them at a participating credit union. "The consumer is immediately banked once those funds are sent to them," said Kelly. "The CU itself can disperse all of those funds, but it can also gently nudge them into other financial services."

Saul Wolf, remittances manager at WOCCU, explained that senders can choose where the recipient's money will be held; if the recipient is not yet a CU member, the funds are held in escrow until that process is completed. He said that the process of obtaining the money is very similar to other methods of international person-to-person funds transfers.

"The important thing with Boom-and this is not true of all the different models out there-is that Boom is really acting for the developing world's credit unions as a way to grow their membership and subsequently grow their asset size, which enables them to loan out more money," observed Wolf.

Kelly likened Boom to Paypal, pointing out that if a consumer has a Paypal account, regardless of the consumer's institution, "you know that you have Paypal, this is how you use it, this is the level of service I can expect, regardless of the underlying institution."


Cross-Sales Opportunity

Moreover, CUs dispersing the funds get the opportunity to push other products and gain new members without incurring the cost of marketing and supporting the brand.

WOCCU's role in the partnership will be as a broker and facilitator of the business relationship, providing Boom an avenue into international CU markets. Additionally, WOCCU will offer technical expertise and resources where needed, said Kelly. The two groups are not yet ready to reveal which countries the project will be launched in (that announcement is set to come in about three weeks), but Kelly indicated that there will likely be a heavy focus on places like Latin America, the Philippines, the Caribbean and others with cash-based economies and a strong base of cash-based consumers. Kelly declined to discuss the costs associated with launching the project or any financial relationship between Boom and WOCCU. Wolf did say, however, that the two parties are not exchanging fees and will split any commissions among all parties involved, including WOCCU, Boom and participating CUs. This is Boom's first foray into the credit union market. The company was founded in 2008. Boom accounts carry a $25 annual membership fee and members must pay $2 per deposit, but transfers are free.

Why would WOCCU choose to align itself with a group with no experience in the CU space and that charges fees that recent immigrants might struggle to afford? Wolf acknowledged that from a domestic CU's point of view "it does seem like a head-scratcher." But he noted that there is an expectation within the remittances market that fees will be charged. "That's how that business model works," said Wolf. "And when you compare the pricing compared to standard money-transfer methods today, Boom is much, much cheaper."

Additionally, for immigrant markets looking to send money home, pricing isn't the top priority, he said, citing studies by Manuel Orosco and the Inter-American Dialogue, a Washington D.C.-based think tank.

"They want a service that's fast, trustworthy and that's available everywhere," said Wolf. "I'd say that 90% to 95% of Boom's target market are not members of a U.S. credit union; they're unbanked. The neighborhoods they live in, it's so much easier to find a 7-Eleven than a CU branch. ... A lot of immigrants, frankly, are really afraid and intimidated by any type of formal financial institution, whether it's a bank or a credit union. It's a very different type of product design than what U.S. credit unions would be used to, but that's the point."


Not Many International Options

Wolf added that there aren't many international companies doing this type of work with credit unions. "Even outside of credit unions within just a general financial services sector, there's certainly companies providing mobile banking products and services and solutions internationally, but just from a product design model, I feel like a lot of (Boom's) strategic vision is what we agree with," said Wolf.

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