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In 2021, LatinAmerica and the Caribbean (LAC) received $127.6 billion in remittances, constituting an annual growth of 26%— the highest registered in the past two decades, according to theInter-American Development Bank.
Most regions around the world are experiencingstrong growth in remittances overall. The World Bank estimates showed remittance flows in 2021 increasing by 21.6% in Latin Americaand the Caribbean, 9.7% in the Middle East and North Africa, 8% inSouth Asia, 6.2% in sub-Saharan Africa and 5.3% in Europe and CentralAsia.
Theremittances sector is expected to grow further thanks to strongereconomy following the COVID-19 pandemic, together with migrants’determination to support their families in times of need, especiallyLatinos that saw a strong depreciation of their home-countrycurrencies.
Players like Inter&Co (NASDAQ: INTR), RemitlyGlobal Inc. (NASDAQ: RELY), PayPal Holdings Inc. (NASDAQ:PYPL) and Euronet Worldwide Inc. (NASDAQ: EEFT) subsidiary RiaMoney Transfer are all expected to lead this growth.
AnAcquisition That Could Change The Industry?
With USEND already animportant player in the industry among immigrants, Inter&Co’sacquisition could change the remittance market. Over the years, theAmerican fintech carved a niche for itself as a digital money-transferplatform that lets users, mainly Brazilians, send money abroadsecurely and quickly through the app.
The USEND acquisition marked Inter&Co’s entrystep into the U.S. market, and will allow it to create a robust globalplatform offering cheaper, fairer, and more efficient products andservices. As a Super App it will start by serving the Latin immigrantmarket, which is underserved in terms of banking and comprised ofnearly 40 million people.
The former app recently rebranded to InterGlobal to ramp up the digital bank’s presence in the USmarket. Inter Global currently serves a growing client base of morethan 150,000 customers across 40 states in the U.S. alone, offeringtransfers originating in the United States, Brazil and Canada to morethan 60 destinations.
The company’s footprint seems to resonate withInter&Co’s leading Brazilian Super App, which offers financialand non-financial services to more than 22 million customers.
Inter&Co offers acomplete suite of services in banking, investments, credit andinsurance, in addition to a virtual mall that brings together the bestretailers in Brazil and the U.S. The company’s US digital accountallows individuals and companies to make transfers in U.S. dollarsquickly, safely and 100% online, as well as process payments fromseveral international platforms in Brazil, including Pix, the instantpayment platform developed by the Brazilian Central Bank.
With this acquisitionand rebranding, Inter&Co hopes toaccelerate and strengthen its position as a new player among U.S.fintech companies. The plans include the rollout of its SuperApp capabilities and products to U.S. clients, including debitcards, gift cards with cashback, and ACH/Wire transfers to any accountin the US, serving as a hub for the needs its customers have in aworld without borders.
“The integration of the two companies will result in aplatform that offers both financial and non-financial products toimmigrant clients living abroad, Brazilian clients wanting to accessinternational products, and the U.S. population, in general, seekingto gain the benefits from a Super App,” said Inter&Co CEO JoãoVitor Menin.
Forconsumers, Inter&Co and its remittance business Inter Global areregulated financial institutions in their countries of origin,offering superior governance and end-to-end security to alltransactions.
“Our digital account will allow our clients to buy airtickets, transfer U.S. dollars to the international account and payexpenses on the trip, all in a single app. And these are just thefirst steps. Our planning includes an international account for U.S.residents scheduled to be launched soon,” Mr. Menin concluded.
Inter&Co has a broadcredit portfolio of BRL$19.5 billion, shareholders’ equity ofBRL$7.1 billion, and BRL$40.9 billion in totalassets.
Inter&Co is the holding company of Inter Groupand indirectly holds all of Banco Inter’s shares. Inter is a digitalbank that simplifies people’s lives, where everything is integratedin a single app. In Brazil, under the Inter brand, the company offersa complete suite of services in banking, investments, credit andinsurance, in addition to a virtual mall that brings together the bestretailers in Brazil and the US. The company’s US digital account,under the Inter Global brand, allows individuals and companies to maketransfers in U.S. dollars quickly, safely and 100% online, as well asprocess payments from several international platforms. It also offersdebit cards, gift cards with cashback, and ACH/Wire transfers to anyaccount in the US, serving as a hub for the needs its customers havein a world without borders. Inter&Co is listed on Nasdaq under theticker INTR.
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This material maycontain forward-looking statements regarding Inter, anticipatedsynergies, growth plans, projected results and future strategies.While these forward-looking statements reflect our Management’s goodfaith beliefs, they involve known and unknown risks and uncertaintiesthat could cause the company’s results or accrued results to differmaterially from those anticipated and discussed herein. Thesestatements are not guarantees of future performance. These risks anduncertainties include, but are not limited to, our ability to realizethe amount of projected synergies and the projected schedule, inaddition to economic, competitive, governmental and technologicalfactors affecting the Bank, the markets, products and prices and otherfactors. In addition, this presentation contains managerial numbersthat may differ from those presented in our financial statements. Thecalculation methodology for these managerial numbers is presented inInter’s quarterly earnings release. Statements contained in thisreport that are not facts or historical information may beforward-looking statements under the terms of the Private SecuritiesLitigation Reform Act of 1995. These forwardlooking statements may,among other things, beliefs related to the creation of value and anyother statements regarding Inter. In some cases, terms such as“estimate”, “project”, “predict”, “plan”,“believe”, “can”, “expectation”, “anticipate”,“intend”, “aimed”, “potential”, “may”,“will/shall” and similar terms, or the negative of theseexpressions, may identify forward looking statements. Theseforward-looking statements are based on Inter's expectations andbeliefs about future events and involve risks and uncertainties thatcould cause actual results to differ materially from current ones. Anyforward-looking statement made by us in this document is based only oninformation currently available to us and speaks only as of the dateon which it is made. We undertake no obligation to publicly update anyforward-looking statement, whether written or oral, that may be madefrom time to time, whether as a result of new information, futuredevelopments or otherwise. For additional information that aboutfactors that may lead to results that are different from ourestimates, please refer to sections “Cautionary Statement ConcerningForward-Looking Statements” and “Risk Factors” of Inter&CoAnnual Report on Form 20-F. The numbers for our key metrics (UnitEconomics), which include active users , average revenue per activeuser (ARPAC), cost to serve per active cliente (CTSAC) and crossselling index (CSI), are calculated using Inter’s internal data.Whether based on what we believe to be reasonable estimates, there arechallenges inherent in measuring the use of our products. In addition,we continually seek to improve estimates of our user base, which maychange due to improvements or changes in methodology, in processes forcalculating these metrics and, from time to time, we may discoverinaccuracies and make adjustments to improve accuracy, includingadjustments that may result in recalculating our historical metrics.The financial information, unless otherwise stated, is presented inmillions of reais, in accordance with the consolidated financialstatements, in IFRS.
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