Financial Technologies Trust

Remittance trust

“Remittances represent a lifeline to struggling economies.”

Lennart Båge, the president of IFAD, UN’s International Fund for Agricultural Development

For those of us who live and work in one country, it is commonplace to pay bills after receiving our paycheck. But for hundreds of millions of migrant workers who have left their families behind in their home country, this is no trivial task. The current options to send money home are still costly, inconvenient and time consuming.
Money sent home by migrant workers represents the second largest inflow of currency to many developing countries. Globally, more than 215 million people have emigrated from their homeland transferring a staggering EUR 360 billion back to their home country in 2011. This figure is growing at an 8% annual rate according to the World Bank.
For our investors, there is an opportunity to disrupt the current model, thanks to innovative technological solutions that are emerging. In addition, these new models offer unique opportunities for businesses all along the post-pay value chain.
The UNO Financial Technologies Trust seeks capital growth by investing in new solutions that will revolutionize how migrant workers provide money for their families and pay bills for loved ones living in their home country.  
 

Remittances Can Make a Big Impacttrust_global_remmitance_thumb

Many European countries such as Spain and Italy relied on remittances from their immigrants during the 19th and 20th centuries. Today, remittances are playing a crucial role in the economies of developing countries, in some it makes up one third of their GDP. In the case of Latin America and the Caribbean for example, the EUR 48 billion that flow into the countries as remittances is higher than the total sum of foreign investment and official development aid combined. The EUR 29 billion that flow across Africa annually is 50% higher than the total official development aid received by all countries. Mexico alone received over USD 24 billion in remittances, 95% of which come from the United States. These huge sums of money transferred around the world, require a service provider to complete the transaction for a fee.  
 

A Market Ready for Disruptive Innovations

At present, migrant workers transfer money back to their families through long-standing agents like Western Union or Money Gram. These providers charge relatively high fees and workers can lose additional money because of currency exchange rates. In addition, the process can be quite inefficient as family members back home must travel to their nearest branch office (which can be long distances), to then wait in line to receive the funds in cash. On their way home, they risk being robbed. All this to pay for basic living expenses, including the settlement of utility bills over the counter of the utility supplier.
Lower cost mobile and internet platforms are changing the game fundamentally.  
 

New Technologies Are Emerging Quickly

One example of the type of disruptive company and technology this fund would invest in is BlueKite which was recently acquired by Xoom (www.xoom.com). BlueKite developed proprietary technology that allows migrants to pay bills directly for utilities (i.e. electricity, water, internet service) via mobile devices, the internet or a clerk-assisted in-store version. Their unique integration of a proprietary payment platform with the accounting system of service providers enables customers to view up to the minute balances and pay bills immediately. A key advantage of the direct payment of bills is that it reduces the likelihood of the receiver spending the money inappropriately. This technology will revolutionize how migrants pay bills and help their families back home.
This is an excellent opportunity for investors in a fast growing market with a hugely profitable business. The rapid growth is due to the recent sharp decline of fees caused by relaxed currency exchange rules and abolition of exclusive contracts, such as Western Union, limiting competition in the past. What makes this model so profitable is the lack of significant infrastructure required with today’s technology.
In addition, players all along the value chain are starting to participate as banks in developing nations sell banking services to customers walking in to collect cash sent from the migrant worker. The World Bank has found that by the time a person walks in for the 3rd or 4th time to receive cash they are likely to open a savings account, which can be a big business. Several banks in Mexico are developing clever mobile solutions that allow people to receive remittances into debit accounts that are accessible via mobile devices. Payments are shown as prepaid credit. There are huge advantages to moving to lower cost mobile platforms. The World Bank estimates that reducing commission charges by 2-5% would increase the flow of remittances by 50-70%.
Lastly, companies are developing innovative ways to exchange remittances for goods and services directly. One innovative company WorldRemit (www.worldremit.com) offers customers in Africa and Asia the opportunity to exchange their remittance for prepaid cellular airtime for a 15% fee. The opportunities are limited only by one’s imagination.
UNO Financial Technologies Trust will provide investors impressive returns through capital investments in game-changing companies, bringing financial innovations to the people who need them most – the more than 200 million migrants transferring EUR 360 billion across borders all over the world.

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