How fintech can support migrants and help boost economic activity
With the Bank of England now predicting that inflation could reach as high as 11% this year, the cost-of-living crisis has cast a shadow over every income bracket.
But low-income households – which include many migrant workers and their families – are feeling the effects disproportionately.
This could not come at a worse time. The UK is dealing with an acute labour shortage after around 1.3 million foreign workers fled the UK at the height of the Covid-19 pandemic. Then followed the ‘Great Resignation’, which saw millions of workers resign en masse as they sought out new career paths. Sectors from hospitality and retail to food and drink, manufacturing, construction and transport – already crippled by recurring lockdowns – all took a major hit as they struggled to find enough staff.
And, sadly, migrants’ crucial role in supporting our economies is still overlooked. Instead, many people revert to the negative view of migrants as a drain on the economy and a barrier to local employment. But if we put the right support in place – if we enable migrants to actively participate in economic activities, through financial services that address their unique cross-border needs – then not only are they better placed to support families back home, they will also have a positive impact on the economy of their host nation.
Migrants help bolster the workforce by flowing towards industries where there is a relative need for workers, such as the supply chain sector – arguably one of the most affected sectors in the current inflation storm. And they do this while spending their earnings locally and contributing to their economies back home. But they need the right financial tools to be able to do this effectively. Banking across borders is traditionally a very expensive process, but even more so with the faltering pound.
Unfortunately, the tide is still working against migrant workers. Inflation has eroded the value of remittances and the ability of migrants to support their families and loved ones. This is damaging both to the host and home countries and means a depleted pool of resources and workers.
As a result, access to cross-border financial solutions has become more important than ever. Fintech solutions mean that once complicated, expensive processes can now be completed at the swipe of a finger. Migrant workers, who sometimes lack the financial knowledge needed to make use of traditional banking products, can access debit cards, local payment accounts (IBAN) and insurance products – all in their native language – which saves time and hard-earned money.
With issues around inflation only set to worsen, a shift in perceptions is needed so that migrant workers are more widely recognised for the value they can bring to the economy. Fintech has an important role to play in helping underbanked populations play a more active part in the economy. As well as boosting economic activity at home and abroad, the fintech industry can help migrants and other financially underserved populations better manage their finances and plan for the future.
About the author
Guy Kashtan is a co-founder and CEO of cross-border financial services platform Rewire.
Prior to Rewire, Guy worked at Microsoft as a programme manager on the Cortana team.