Migrant workers are on the front line of the fight against coronavirus in Europe.
Between 2015 and 2019, the world watched as more than four million people fled violence and persecution in countries like Syria and Afghanistan to seek refugee status in the European Union. Three years later, the cameras are gone, and many of those families have settled down to live their lives in migrant communities in countries like Belgium, Germany, Portugal and Spain.
Europeans rely on these communities every day to keep life going during the pandemic: refugees are more likely to work in food service, health and other front-line jobs. But they are still one of the most marginalized and excluded populations on the continent.
One of the hardest parts of integration is financial inclusion: integrating refugees into the formal financial systems of their new homes. Europe’s supposedly sophisticated financial system is largely excluding refugees, who often lack formal identification or don’t speak the language. A recent survey of European banks found that many believe they are not “equipped to deal with the specific needs of refugees”.
Without a bank account, they find it harder to perform tasks that most of us take for granted, such as sending funds to relatives, receiving a pay check or obtaining a loan. This has become even more pressing during the past few months, as many businesses have recently gone “cashless” and banks have tightened their purse strings.
Fintech and Refugees: Barriers to Scale
There is a tremendous opportunity for fintech to help refugees integrate into their countries’ formal financial systems, as a step toward integrating more fully into society. Our new report, Breaking Down Barriers: Fintech Solutions for Refugees, highlights the potential for innovation, and some of the barriers facing fintech innovators.
The past few years has seen a wave of European fintech startups addressing financial inclusion. That includes digital identity tools to create a “digital ID” for refugees who have lost their identification (Gravity); blockchain technology that can help simplify the remittance process for people without a bank account (BankeNu); and alternative lending products that consider factors besides collateral or credit history (Wajenzi).
However, in the course of running an accelerator last year called Fintech Solutions for Refugees, we learned that most of the companies were serving unbanked populations and marginalized communities in emerging markets like the Middle East and North Africa, rather than in their home region of Europe.
We set out to find out why. Over the past few months we interviewed dozens of entrepreneurs and startup ecosystem leaders who identified three barriers that European fintechs face around working with refugee populations. They include difficulty forming partnerships with refugee outreach organizations; burdensome regulations and licensing requirements; and a general struggle to find investors looking to invest in this space.
Our report offers actionable recommendations for how to break down those barriers, focused on four audiences:
Banks and other financial institutions, that can partner with fintechs, and incorporate ideas from fintech startups into their business models
Government leaders, who set the regulatory environment for fintech to thrive or not
Entrepreneurs, who don’t always have experience with marginalized populations
Investors, who provide critical capital but don’t always have financial health innovation on their radar
There is so much potential for technology to empower refugees. Techfugees has a running spreadsheet of startups and nonprofits using tech to help refugee populations during coronavirus. The Refugee Investment Network continues to define the field and drive investor attention. As the world emerges from this crisis, it is more important than ever to support innovations that will create a more equitable world - and build economies that are more resilient to the next crisis.