International remittance from Latin American immigrants to their home country is a huge business. In 2012 remittances to Mexico alone totaled more than $21 billion. Most recipients of international remittances are lower income households who are largely unbanked.
Solutions for sending money abroad have varied from Western Union and MoneyGram to smaller startup companies.
Viamericas (www.viamericas.com), a Bethesda, Maryland-based company, is one of the more innovative companies that have emerged to provide services for international remittances in Latin America and the Caribbean.
International money transfers using Check21
Viamericas had been using a Check21 system provided by a nationwide bank to fund remittances. The Check Clearing for the 21st Century Act (Check21) of 2003 provides guidelines and standards in check truncation. Check truncation is the practice of using an electronic image of a check to substitute for a physical check when presenting to the receiving bank for settlement.
With its fast rate of growth Viamericas knew it would grow out of its bank-provided solution, and had to develop their own solution. But their network of nationwide independent agents had grown accustomed to their current system, presenting a challenge: how to create an alternative solution that was acceptable to their agents.
Developing a secure system to rival large banks
Viamericas needed to develop a system that satisfied their agents’ usability requirements, provided the functionality of larger bank solutions, as well as additional functionality that allowed them to become more competitive.
They turned to Softjourn, a development firm specializing in designing and developing secure financial applications, with headquarters in the United States and development facilities in the Ukraine.
Softjourn designed, developed and tested a centralized server application and a client check truncation application. They also worked with Viamerica’s current Check21 solution provider to design, develop and test the sending of electronic cash letters and the receiving of electronic returns files between the bank and Viamericas.
The new solution also included functionality which was not available with the current solution, such as the ability to put checks on hold automatically, based on system-wide restrictions established at the central Viamericas location.
An integral part of the new solution was to research, test, and recommend the appropriate recognition software to be used for the final solution. Initially Softjourn created a long list of potential OCR (Optical Character Recognition) vendors; including open source vendors and large-scale commercial products. The Check21 application being developed was to replace the one that Viamerica’s was paying for on a subscription basis, from their bank. That solution included high-end OCR recognition including recognizing CAR – Courtesy Amount Recognition (the amount in characters) and LAR – Legal Amount Recognition (the hand written amount). The solution Softjourn chose also had to take in to account that almost 50% of the checks processed by the new system were going to be hand written, so the OCR software would have to be able to recognize the amounts on a lot of different checks. Having a .NET version was also a requirement as the new Check21 system was being written in .NET.
Some of the vendors evaluated included:
http://www.altova.com/download/authentic/xml_db_form_editor_desktop.html
http://www.dart.com/products.aspx
http://www.infragistics.com/dotnet.aspx
http://www.leadtools.com/SDK/Raster/Raster-Products-n.htm
http://www.visionshape.com/Evalrequest.aspx
As well as several higher-end solutions:
http://www.miteksystems.com/products_quickstrokes.asp
www.a2ia.com
www.orbograph.com
www.byteway.it
Evaluation included installing all of the different products, creating test image files based on real check images, supplied by our client, and comparing the results.
After initial results and creating a short list of possible vendors, Softjourn recommended the QuickStrokes Banking Edition, from Mitek. The product included ICR (Intelligent Character Recognition), OCR, MICR (Magnetic Ink Character Recognition), CAR and Business LAR. It did not include hand-printed LAR and was therefore less expensive. Mitek did have a QuickStrokes Premier Banking Edition which could read the LAR field, but in most cases it was not necessary. Recognition results averaged 92% with the Premier edition and 78% with the regular Banking edition.
Using bank functionality to compete with banks
Check truncation systems are usually the realm of banks, but smaller firms, such as Viamericas, can also use this functionality.
Softjourn helped Viamericas develop their own system, allowing them to compete more effectively against their competitors and larger banks.
Luis Gonzalez, CFO of Viamericas, said: “This project puts our company in a competitive advantage with regards to our competitors because we were able to emulate what large banks are doing quickly and effectively even before some of them launch their own product, providing unbanked customers with the means to use financial services.”
Their agents also liked the solution.
Esteban Bernal, Viamericas’ VP of Engineering, said: “Our agents like working with the new Viacheck system over our old solution. Their work is consolidated on a couple of screens making it much easier for them to use.”
Conclusion
The United Nations estimates that 191 million immigrants send money to relatives back home. The World Bank estimates that $550 billion was remitted globally in 2008.
This is a huge market with a huge opportunity for financial services providers, and advances in technological solutions making it easier to securely transfer and process money abroad, has enabled more firms to take part in this lucrative market.
But financial processing applications are complex. If you want your share of the billions traveling back and forth across borders, you need the right partner to help you.