Migrant tech refers to technological innovations in the financial services arena that cater for the specific needs of migrants. According to a 2017 FDIC report, 51% of foreign-born noncitizens in the US are either unbanked or underbanked. For many migrants it is difficult to set up a bank account and the process comes with onerous red tape. Migrants often don’t have the right documents to open up bank accounts. They may also not understand what is required if the banking process is different to that of their home country. Some are too intimidated to even enter a bank.
Majority is a banking service founded by native Swede Magnus Larsson who struggled to open a bank account when he moved to the US to study. This experience made him want to help migrant communities make a positive start, especially those whose language and culture were different from that of the US. The service requires minimal documentation, is subscription based and digital only. It offers everything a traditional bank does and allows access to 55,000 ATMs around the country. It also offers international calling for those who want to communicate with friends and family back home. Majority is working closely with Nigerian and Cuban Americans and has appointed brand ambassadors within these communities as guides to the process.
Passbook is a money management app designed specifically for migrants living and working in the United States. It’s partnered with Sunrise Banks which issues the Passbook accounts and provides the banking services. Since its inception in 2011, Passbook has amassed 4 million customers. The app doesn’t charge banking fees and instead earns a percent of the interchange merchants pay when you spend. The debit cards can be used everywhere Visa debit cards are accepted and the app is available to assist via email or telephone 24 hours a day.
Rewire is an Israeli fintech that launched in 2015 tailored for the unique cross-border needs of migrants worldwide. It recently raised $30m to accelerate growth; its customer base tripled in 2020 and it is soon to reach 500,000. Says CEO Guy Kashtan, “At our core, we aim to create financial inclusion. Everything that they do at Rewire is aimed to help migrants to build a more financially-secure future for themselves and their families.” In March 2018 it partnered with Standard Bank South Africa.
It’s not just fintechs that are innovating in this space. Multinational financial institutions are also recognising the potential of this customer segment. New Zealand’s Westpac Banking Corporation has a migrant financial service, allowing individuals to set up an account before they arrive in the country and to get credit card and mortgage approval in advance. Locally, Capitec has a bank account for foreign nationals. You can open an account if you have a permanent residence permit and are employed or if you have a temporary residence permit with a work permit and are employed.
The services offered to migrants are moving beyond basic bank accounts and credit cards to include low-cost money transfers, discounts at local stores, international calling services and customer support in multiple languages. Banks in countries with large immigrant populations, as is the case with South Africa, should consider catering to this largely untapped market, as the fintechs have been doing. According to OECD research, the impact of immigration on gross domestic product (GDP) per capita is positive, and the estimates from an econometric model show that immigrant workers may raise the South African income per capita by up to 5%. It appears to be in the country’s best interest to offer financial services to migrants coming to South Africa.
By Faeeza Khan
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Image credit: Danique Photography