Alliance mandate

Sagicor Group Jamaica chose Omar Brown to head up the remittance and cambio business it acquired last month to anchor what appears to be a new expansion strategy.

The growth plan will see Sagicor Bank utilising Alliance Financial Services Limited’s, ASFL, 110 remittance service subagents to significantly increase the bank’s footprint across Jamaica, while creating more locations for selling insurance and investment products.

At the same time, Brown, as Alliance Financial’s new CEO, has a mandate to double the subagency network within the next two years, and ramp up the flow of foreign exchange handled by the financial services group.

“As you increase the subagents network, what you would expect to see is an increase in our market share in the remittance space. What that means is that as we increase the market share, we increase our access to foreign exchange, providing more foreign currency not only for AFSL, but for the wider Sagicor Group,” he said in an interview with the Financial Gleaner this week.

In the area of remittances, Sagicor will be going up against the GraceKennedy Group, which, as the exclusive agent for Western Union, is seen as the market leader for money transfers.

Alliance Financial, up to the suspension of its remittance and cambio licences last December, had been the primary dealer in Jamaica for global remittance service provider, MoneyGram.

Brown said Sagicor and MoneyGram have renewed the primary-dealer relationship since the acquisition and inked a new five-year deal on April 1, the day Alliance Financial restarted business under Sagicor’s ownership and Brown’s leadership and a week after the Bank of Jamaica had reissued its remittance and cambio licences.

“We plan to grow the MoneyGram business and increase market share for Sagicor Group and for MoneyGram. That will increase our ability to earn foreign exchange and fees from MoneyGram,” Brown said.

In late 2020, Alliance Financial reported that it controlled about 8.4 per cent of the remittance business in Jamaica, accounting at the time for about 30 per cent of all MoneyGram inbound transactions. For the full year 2021, BOJ reported total remittance inflows of US$3.5 billion, with remittance companies accounting for US$3 billion of that amount.

In December 2020, too, AFSL said it also handled approximately seven per cent of the near $4 billion in cambio transactions across the market from January to June 2020.

“The potential of the remittance business that is one of the main reasons Sagicor saw this as a good acquisition for the group. We plan to significantly increase the MoneyGram subagents network. Hopefully, within a year or two we could get to 100 per cent increase,” Brown disclosed.

With the planned growth in subagencies, many of which are supermarkets, wholesale outlets and pharmacies, Sagicor intends to increase its presence and cross-sell its banking, insurance and investment products at these locations.

“For Sagicor Group, that is where the true value comes in over time. Persons are looking for convenience. You are out and about and you look across and you see the Sagicor sign and you can conduct your banking, insurance and investment business there,” Brown said.

The AFSL CEO pointed out that the growth in remittance is expected to channel greater foreign currency flows into the cambio side of the business.

Alliance Financial’s third business line, prepaid cards powered by a relationship with MasterCard, has been integrated into the existing card business of Sagicor Bank.

“We didn’t see it as being efficient to be operating two separate card businesses,” Brown said.

The Alliance prepaid card is expected to continue as a Sagicor-branded product, but Brown pointed out that discussions are still ongoing about details of the card integration and the exact nature of the new or refreshed products that will emerge. Part of the planning under way involves an application that is being made to the central bank, for Sagicor to be admitted to the BOJ regulatory sandbox for fintech start-ups, through which AFSL has launched and operated its card business.

The relationship with MasterCard is also said to be still intact, with talks under way between the global card service provider and Sagicor Bank.

No price has yet been made public for Sagicor’s purchase of Alliance Financial, the major shareholders of which are businessmen Robert and Peter Chin. The last valuation of AFSL during its aborted IPO was about $9.5 billion.

Last December, the Chins were charged as principals of Alliance Investment Management Limited and Alliance Finance Limited, following allegations that the companies had breached the Bank of Jamaica Act, the Banking Services Act and the Proceeds of Crime Act.

huntley.medley@gleanerjm.com