In 2021, Latin America 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 the Inter-American Development Bank.
Most regions around the world are experiencing strong growth in remittances overall. The World Bank estimates showed remittance flows in 2021 increasing by 21.6% in Latin America and the Caribbean, 9.7% in the Middle East and North Africa, 8% in South Asia, 6.2% in sub-Saharan Africa and 5.3% in Europe and Central Asia.
The remittances sector is expected to grow further thanks to stronger economy following the COVID-19 pandemic, together with migrants’ determination to support their families in times of need, especially Latinos that saw a strong depreciation of their home-country currencies.
Players like Inter&Co (NASDAQ: INTR), Remitly Global Inc. (NASDAQ: RELY), PayPal Holdings Inc. (NASDAQ: PYPL) and Euronet Worldwide Inc. (NASDAQ: EEFT) subsidiary Ria Money Transfer are all expected to lead this growth.
An Acquisition That Could Change The Industry?
With USEND already an important player in the industry among immigrants, Inter&Co’s acquisition could change the remittance market. Over the years, the American fintech carved a niche for itself as a digital money-transfer platform that lets users, mainly Brazilians, send money abroad securely and quickly through the app.
The USEND acquisition marked Inter&Co’s entry step into the U.S. market, and will allow it to create a robust global platform offering cheaper, fairer, and more efficient products and services. As a Super App it will start by serving the Latin immigrant market, which is underserved in terms of banking and comprised of nearly 40 million people.
The former app recently rebranded to Inter Global to ramp up the digital bank’s presence in the US market. Inter Global currently serves a growing client base of more than 150,000 customers across 40 states in the U.S. alone, offering transfers originating in the United States, Brazil and Canada to more than 60 destinations.
The company’s footprint seems to resonate with Inter&Co’s leading Brazilian Super App, which offers financial and non-financial services to more than 22 million customers.
Inter&Co offers a complete suite of services in banking, investments, credit and insurance, in addition to a virtual mall that brings together the best retailers in Brazil and the U.S. The company’s US digital account allows individuals and companies to make transfers in U.S. dollars quickly, safely and 100% online, as well as process payments from several international platforms in Brazil, including Pix, the instant payment platform developed by the Brazilian Central Bank.
With this acquisition and rebranding, Inter&Co hopes to accelerate and strengthen its position as a new player among U.S. fintech companies. The plans include the rollout of its Super App capabilities and products to U.S. clients, including debit cards, gift cards with cashback, and ACH/Wire transfers to any account in the US, serving as a hub for the needs its customers have in a world without borders.
“The integration of the two companies will result in a platform that offers both financial and non-financial products to immigrant clients living abroad, Brazilian clients wanting to access international products, and the U.S. population, in general, seeking to gain the benefits from a Super App,” said Inter&Co CEO João Vitor Menin.
For consumers, Inter&Co and its remittance business Inter Global are regulated financial institutions in their countries of origin, offering superior governance and end-to-end security to all transactions.
“Our digital account will allow our clients to buy air tickets, transfer U.S. dollars to the international account and pay expenses on the trip, all in a single app. And these are just the first steps. Our planning includes an international account for U.S. residents scheduled to be launched soon,” Mr. Menin concluded.
Inter&Co has a broad credit portfolio of BRL$19.5 billion, shareholders’ equity of BRL$7.1 billion, and BRL$40.9 billion in total assets.
Inter&Co is the holding company of Inter Group and indirectly holds all of Banco Inter’s shares. Inter is a digital bank that simplifies people’s lives, where everything is integrated in a single app. In Brazil, under the Inter brand, the company offers a complete suite of services in banking, investments, credit and insurance, in addition to a virtual mall that brings together the best retailers in Brazil and the US. The company’s US digital account, under the Inter Global brand, allows individuals and companies to make transfers in U.S. dollars quickly, safely and 100% online, as well as process payments from several international platforms. It also offers debit cards, gift cards with cashback, and ACH/Wire transfers to any account in the US, serving as a hub for the needs its customers have in a world without borders. Inter&Co is listed on Nasdaq under the ticker INTR.
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This material may contain forward-looking statements regarding Inter, anticipated synergies, growth plans, projected results and future strategies. While these forward-looking statements reflect our Management’s good faith beliefs, they involve known and unknown risks and uncertainties that could cause the company’s results or accrued results to differ materially from those anticipated and discussed herein. These statements are not guarantees of future performance. These risks and uncertainties include, but are not limited to, our ability to realize the amount of projected synergies and the projected schedule, in addition to economic, competitive, governmental and technological factors affecting the Bank, the markets, products and prices and other factors. In addition, this presentation contains managerial numbers that may differ from those presented in our financial statements. The calculation methodology for these managerial numbers is presented in Inter’s quarterly earnings release. Statements contained in this report that are not facts or historical information may be forward-looking statements under the terms of the Private Securities Litigation Reform Act of 1995. These forwardlooking statements may, among other things, beliefs related to the creation of value and any other 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 these expressions, may identify forward looking statements. These forward-looking statements are based on Inter's expectations and beliefs about future events and involve risks and uncertainties that could cause actual results to differ materially from current ones. Any forward-looking statement made by us in this document is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. For additional information that about factors that may lead to results that are different from our estimates, please refer to sections “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” of Inter&Co Annual Report on Form 20-F. The numbers for our key metrics (Unit Economics), which include active users , average revenue per active user (ARPAC), cost to serve per active cliente (CTSAC) and cross selling index (CSI), are calculated using Inter’s internal data. Whether based on what we believe to be reasonable estimates, there are challenges inherent in measuring the use of our products. In addition, we continually seek to improve estimates of our user base, which may change due to improvements or changes in methodology, in processes for calculating these metrics and, from time to time, we may discover inaccuracies and make adjustments to improve accuracy, including adjustments that may result in recalculating our historical metrics. The financial information, unless otherwise stated, is presented in millions of reais, in accordance with the consolidated financial statements, in IFRS.
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