Credit Union Remittance Services in Guatemala: Expanding the Access of Low-Income Remittance Recipients to Financial Institutions

Can credit unions succeed in inducting poor remittance recipients into the formal financial system?
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This paper presents the results of a survey that examines the role of credit unions as providers of remittance distribution services. It argues that through the provision of remittance services, credit unions can bank the unbanked, opening the doors of the formal financial system to unbanked remittance recipients. The survey:

  • Examines five credit unions in Guatemala;
  • Aims to:
    • Identify the users of the remittance services provided by the credit unions;
    • Determine the amount and frequency of services and their usage by the recipients;
    • Understand the recipient's participation in savings and credit markets.

The survey finds that women are the main recipients:

  • They have low levels of education and diverse ethnic backgrounds;
  • Most of them are homemakers or involved in agriculture;
  • Remittances are their primary source of income;
  • Their perception of credit union remittance services is very positive.

The survey also finds that:

  • Credit unions play an important role in mobilizing savings;
  • Recipients deposit a portion of their incoming remittances into savings accounts;
  • Recipients use the remittances to cover basic needs;
  • Credit unions in rural areas are more successful in recruiting members and mobilizing savings from remittance recipients.

The report concludes that credit unions need to capitalize on the positive perceptions and trustful relationships they have established with remittance recipients to bring them into the formal financial sector by creating and cross-selling additional financial products.

About this Publication

By Mesbah-Khavari, D., Evans, A. & Klaehn, J.