CHARLOTTE - Bank of America Corp. wants to send more money to Mexico but the pitch is proving to be a bit more difficult than expected.
SafeSend, its year-old money-transfer service, has not been attracting as many users as Bank of America had anticipated, so it has been tweaking the service in the hopes of reaching a bigger share of the Mexican-American population.
Carla Rizzati, SafeSend's marketing manager, said getting noncustomers to use the card-based service has been particularly challenging since the company began offering the service last May.
"We keep a very close tab on our data, and we had noticed quite clearly that we were not able to attract as many noncustomers as we were able to attract customers," Ms. Rizzati said in an interview.
As a result, B of A is making several changes, including reducing fees to noncustomers. Last week it cut that fee to $10 per transfer, from $15, in line with what its customers pay. That followed a move late last year to raise SafeSend's limits to $1,000 per transfer, from $500, and to $2,000 a month, from $1,000.
The Charlotte-based company also is expected to work more closely with Grupo Financiero Santander Serfin, Mexico's third-largest bank, in which it took a 24.9% stake last month. With 926 branches and 1,770 automated teller machines, Santander Serfin could help improve the delivery of SafeSend cards and payments south of the border.
Ms. Rizzati said the price cut "not only simplifies the product, but it's also a selling point to attract noncustomers." She would not discuss SafeSend's transaction volume or customer figures but did say that recent experience has shown that for every three SafeSend accounts the bank opens, one brings in a new checking account.
Those numbers are still relatively small, according to outsiders' estimates. Gwenn Bezard, a senior analyst at the New York research firm Celent Communications LLC, estimates that Bank of America has 5,000 to 10,000 SafeSend customers - far fewer than Western Union, the First Data Corp. unit that has 30% of the market.
Mexicans living in the United States remit an estimated $10 billion a year to Mexico, producing $1 billion to $2 billion of transfer fees, according to Bank of America. Though Western Union holds a large chunk of the market, it faces growing competition from independent transfer services and banks hungry for a share of the millions of dollars of remittance fees. Citigroup Inc. and Wells Fargo & Co. have services similar to SafeSend, and U.S. Bancorp has one on the way this quarter.
When the stake in Santander Serfin was announced in December, Bank of America's chief financial officer, James H. Hance Jr., told American Banker that it had begun negotiating with the Mexican bank last spring because it wanted a money-transfer partner. He also said that his company planned to "rethink" SafeSend.
Ms. Rizzati said that, "with the partnership with Santander Serfin, we have several opportunities to improve the customer experience on the Mexican side," but she would not give specifics.
Bank of America sees Hispanics important not just as a market segment, but as a driver for overall growth. Kenneth D. Lewis, its chairman and chief executive, has said he expects 80% of its growth in retail banking to come from that demographic.
According to Ms. Rizzati, B of A believes "we cannot be the first bank of choice in the U.S. without being the first bank of choice for Hispanics."
Since last year it has stepped up marketing to U.S. Hispanics, three-quarters of whom live in its branch territory, which covers 23 states and the District of Columbia. It has focused particularly on Mexican-Americans, 74% of whom live in B of A's markets in California, Nevada, Arizona, New Mexico, and Texas.
Last year B of A spent $40 million on a multicultural advertising campaign to promote SafeSend and other services, and soon it plans to introduce a campaign targeting Hispanics. This week it joined with Yahoo en Espanol on a new financial services site that will offer U.S. Hispanic customers access to Spanish-language information on checking, certificates of deposit, mortgages, online banking, and other products and services.
Money transfers are Bank of America's entree to the Hispanic market, especially to individuals without bank accounts, Ms. Rizzati said. "We don't want SafeSend to be a transactional product. We want it to be a relationship-building product."
People sign up for SafeSend by telephone, online, or at branches in 12 southern and western cities with large Mexican-American populations. To qualify, a potential user must have a valid credit card or bank debit card. For those who do not have a bank account, Bank of America offers a basic checking account with a debit card.
SafeSend cardholders can make transfers by telephone or online. Transfer recipients also get a SafeSend card, by mail or courier, so they can get their money at ATMs in Mexico.
Mr. Bezard, the Celent analyst, said large banks are in "the early stages" of cracking the money-transfer market, in part because they typically are more interested in attracting retail banking customers than in selling money-transfer services.
"The main challenge for the banks is probably themselves," he said. "SafeSend has been designed for people who have a bank account or for people who are willing to open a bank account. But many new immigrants don't want or can't afford a bank account."
