Fintech and Migrants: how next-gen Fintechs are helping migrants
In the past 200 years, migrant movement throughout the world has been pivotal to the market, finance, and major regional stability — as well as disruption.
In the US alone, according to the Migration Policy Institute, more than 45 million legal immigrants live in the region as of 2019 — and that’s only taking into account those that have a legal stature.
The way immigrants move, the way they spread out, have defined over a century worth of policy regarding cultural, financial, technological, and industrial advances.
Nevertheless, despite the fact that immigrants not only comprise a large part of the population but are pivotal to the way our nation and our companies create their business models, they still remain woefully underrepresented when it comes to those same financial products and services they help construct.
In this article, we're going to talk about fintech and the migrant community, and how some of those tech-start-ups are trying to help out.
Fintech and Migrants
Did you know that Latinos alone constituted more than half of the US population growth between the years 2010 and 2019? They are among the youngest racial and ethnic groups in the country. Not only that, over 77% of the retail economy owes its growth to the tremendous buying power of this community.
How they spend, what they pay in taxes, how they move money around is critical to the way regional financial structures maintain a careful balance. Still accounting to studies, this very same community - which many government institutions and state agencies consider their lifeblood - is incredibly underbanked.
This means that they have to turn to alternative financial services. As a whole, mainstream companies, and banks have done an incredibly poor job of building - and profiting - from these consumers. To many experts, this is one of the biggest retail and banking fumbles in history.
Why? Simply put, because a huge HUGE segment of the population is willing to pay for products — a huge segment that is going to other institutions, to other associations, and getting their desires met at nefarious interest rates. Someone else is making a profit.
And it’s not only Latinos. And it not only occurs in the US. Immigrants have an incredibly hard time accessing financial products on a global scale. Particularly refugees in Europe from war-torn nations. Yet, what few services they do manage to access - like remittances - drives local economies.
In the US, in 2004, immigrants sent over 148 billion taxable, fee-levied, dollars to their native homes. In India, those same money transfers constitute one of the nation’s biggest markets with a net inflow of over US$63.258 billion.
The rise of remittance services - thanks to migrations - has been pivotal to some of the biggest success stories of some fintech. It is a booming financial service that registers a steady 7,3% annual growth. That’s why, for many fintech, migrants are an untapped, potentially lucrative market segment.
Fintechs that help migrants
The main obstacle most immigrants face is the lack of credit history — a catch-22 scenario in which in order to have a credit history, first need credit. This limits their opportunities to access basic products and services such as renting out an apartment, obtaining a car loan, getting a cellular phone, or even opening up a bank account.
Newcomers are rendered “credit invisible” and given that they have no other choice but to enter into draconian deals with nefarious institutions, with cannibalistic interest rates, that label - in most cases - shifts to the negative as they begin to accrue debt.
Some fintech are now helping to remediate this problem, amongst them:
Welcome Tech is a digital platform, spearheaded by an immigrant - inspired by his parent's hardships - that focuses on bettering the community’s access to banking services.
Studies performed by Welcome tech have determined that immigrants spend upwards of $50 billion annually on predatory financial services in the US — as such, they have started to offer relevant financial tools, products, and educational services tailor-made for this community. Amongst them:
- A digital bank account free of any fees.
- A debit card that’s highly accessible and also free of monthly maintenance.
- Monetary rewards.
- Subscription services.
- Credit services — fair and secure financial options.
- Telemedicine health services.
- Low-cost dental services.
- Members can access affordable medications.
- Financial education services.
- English language skills.
- A robust content library.
This New York City-based fintech that started in 2015 focuses on helping out immigrants that want to have access to key financial services. Nova credit’s main service is that thanks to tech, it can scour the net and find and share the financial history of newcomers wanting to prove their creditworthiness to banks and other institutions — so call alternative credit data that most banks simply disregard.
Along with their partners, they determine an immigrant’s eligibility to different credit cards and banks, give them a recommendation on which one to apply to, and help them start to build up their U.S. Credit history. They can also use an immigrant’s international credit history, to help them apply for different loans, including getting pre-qualified for a U.S. auto loan.
Majority is an all-in-one banking app that allows immigrants to have access to a visa debit card, international money transfer services, as well as advisors and international calling tools — they allow folks to sign up with their government ID from any country and a US address, instead of requiring a Social Security number.
Rewire is an Indian fintech aimed at immigrants — it’s offered at an international scale. It allows them to send money worldwide, open European accounts, and have access to a free debit card.