Our relationship with our bank accounts is persistently in flux. Open Banking, PSD2 and rapid advancements in technology mean many of us reach for our phone instead of our wallets to pay the bill or manage bank accounts.
We may take for granted the plethora of neobanks with a variety of enticing offers for customers to bring all their financial needs into one simple app. So why is there still a dearth of migrant focussed banking services in Europe for those coming to Europe?
Every year, tens of millions pack up their belongings and make the arduous and uncertain journey to a new country, often leaving their families with little certainty besides a forwarding address.
Global migration continues to increase with migrants being a considerable growth engine for developing countries (10% of GDP in Philippines and more than 20% in Nepal) and Europe is increasingly their destination of choice with 2.4 million arriving from outside the EU in 2017.
Today, an ongoing discussion on “banking the unbanked” focuses on developing countries and the untapped potential of including up to 1.7 billion into the financial system. However, across Europe, where 40 million remained unbanked in 2017, migrants still rely on up to four financial institutions to service their needs with many handling their finances in cash or through alternative, riskier systems.
From this, you could expect banks and fintechs to be vying for a space in this vast market as Europe fosters the neobank revolution with investment funding seeing an exponential increase.
Last year alone, OakNorth secured a $440 million round with peer Monzo following with $113 million series F round. Regulation on Open Banking and the recent instalments of PSD2 have provided fertile ground for the explosion of the sector.
Nevertheless, leading traditional banks and neobanking platforms still focus on nationals from the EU or developed nations as there remains an assumption of risk regarding financial standards such as cross-border KYC and AML.
Discrimination and misunderstanding often lead the assumption as many migrants may not have had formal relationships with the banking system but are nonetheless skilled workers and entrepreneurs and are adept with their finances.
Some migrants are already using digital banking platforms only to arrive in Europe to find they are not accepted or have to diversify the number of providers to gain the same level of service. These assumptions don’t hold water in 2020 as advancements in technology, regulation and interconnectivity have laid the foundations for compatibility.
Rewire is pioneering this opportunity by offering clients a European account with an IBAN and a connected debit card together with an additional set of tailored services.
This is made possible by Rewire’s propriety digital banking platform, which allows performing cross border banking activity in real time, and offering innovative new banking products by directly integrating with international banks such as BNP Group and Standard Bank of South Africa, in the regions where migrants originate from.
They provide the infrastructure and access to banking products such as saving accounts and credit history and in return Rewire helps them penetrate an under-serviced market alongside other benefits such as a lower cost model and immediate set up of services.
The hesitance to bank migrants in 2020 has no place. We would like to see more players, traditional and fintech, join in this opportunity and help drive a meaningful change for those seeking a better life.
Guy Kashtan is CEO of Rewire