Indus American Bank makes instant transfersISELIN – New JerseyÂs South Asian-American community can quickly send money to family and friends back home, thanks to a partnership between Iselin-based Indus American Bank and Xoom Corp., a technology company headquartered in San Francisco.
Indus American Bank, which targets the stateÂs South Asian-American population, is offering what it calls a Âmoney transfer engine. It enables customers here to deposit money directly into banks in India or Sri Lanka, or send remittances to other authorized money-handling businesses in those countries.
ÂThis is an underserved market and the potential to serve it is tremendous, says Kevin Lenihan, president of Indus American Bank, which has branches in Iselin and Parsippany and plans to open another in Jersey City this summer. ÂWe thought it [instant cash transfers] was a service that our customers would be very much interested in.Â
Transfers cannot exceed $2,500 per day or $10,000 a month. The service is free to new customers for the first three months and then costs $30 per transfer. Lenihan says the bank can send cash to Sri Lanka and roughly 2,000 locations in India and plans to add banks in Bangladesh and Pakistan later this year.
According to World Bank, officially recorded remittances exceeded $232 billion in 2005. The United States was the leading source of remittances the previous year, with $39 billion in outward remittances.
South Asian-Americans are the largest Asian ethnic group in New Jersey with an estimated 180,957 residents, according to the 2000 U.S. Census Bureau. This amounts to more than one-third of the stateÂs Asian population.
Indus American Bank, a wholly owned subsidiary of Iselin-based IA Bancorp Inc., has about $55 million in assets and 2,600 client accounts. Lenihan says the bank was started in 2004 by a group of South Asian-American businessmen who raised $12 million supplied by roughly 125 shareholders.
Last October, the bank hooked up with Xoom to offer its overseas cash transfer service. ÂThey [Xoom] were able to quickly install the software at our site, and we were able to simply point and click, Lenihan says.
Gene Gutierrez, senior vice president for XoomÂs new business development, says Indus American Bank is the companyÂs first New Jersey-based bank partner. Gutierrez says Xoom is talking with other financial institutions here and in other states, including Massachusetts and Iowa.
In 2001, XoomÂs first year, the company set up electronic ties with 19 countries and roughly 14,000 distribution points. It now has ties with 50 countries and nearly 25,000 distribution points. Gutierrez says the network will expand to 68 countries and 38,000 distribution locations by the end of the year.
ÂWe asked, ÂHow can we make it very simple for customers to send, and for someone to pick up, remittance funds? says Gutierrez. ÂThe best way is to establish strategic partnerships with not only banks, but even retailers in those countries, since the latter Âcan offer extended hours and Saturday-Sunday capability as well.Â
According to Lenihan, Indus American Bank plans to open five new branches by 2011 and recently acquired a location in Port Chester, N.Y., with access to the growing South Asian-American population there. ÂWe have an aggressive business plan to open up branches in the tri-state area, which has the largest percentage of Asian Indians living in the U.S., he says. ÂWeÂre serving, in some cases, under-banked immigrants who may or may not be in the banking system.Â
ÂThey understand that this is a special consumer, says Andrea Hoffman, founder and CEO of Hamburg-based Hoffman Management & Consulting. ÂServicing niche markets or ethnic groups in ways that are meaningful to them is going to big business.Â
Indus American Bank isnÂt alone in enabling a specific ethnic group to provide out-of-country access to funds deposited in New Jersey. Other institutions include Banco Popular, which serves the Hispanic community and offers a dual debit card that permits the second user to access the account at ATM machines worldwide. Illinois-based Banco Popular operates 14 branches in New Jersey.
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