Migrants or expats? Technology doesn’t discriminate, and neither should we
In 2018, why do we still differentiate between “migrants” and “expats”? Migrants are often thought of as poor people arriving in Western countries, expats as native sons and daughters retired to the Costa del Sol or plying their trade for tax-free dirhams in Dubai.
This distinction is rooted in hierarchy, privilege and even racism. It has led to a bitterly unfair two-tier economy, one in which “expats” can easily access financial services across borders, while “migrants” often struggle to open a basic bank account or loan.
“It is the developing world, not the West, that is leading the way”
The low level of digitisation of European financial services must be a surprise to many new arrivals. In the UK, for instance, mobile money is still a relatively new phenomenon. Only 14% of UK consumers regularly use their smartphone to pay for goods, compared to around 50% in India, Thailand and Indonesia. Kenyans have been using feature phones to make payments since before the iPhone existed, and are often surprised to find mobile money still in its infancy in wealthier Europe.
It’s not just mobile money in which the developing world is innovating. Microfinance initiatives have long been funding businesses in Africa that would otherwise be locked out of the financial system. In Kenya, blockchain technology is being used to provide access to credit and improve the efficiency of energy distribution. It is the developing world, not the West, that is leading the way. Yet when people from developing countries arrive in the West, ready to contribute to the economy, set up businesses and innovate, we label them as “migrants” and freeze them out of the financial system.
Follow the money
While traditional banks have largely ignored the economic potential of migrants (other than to rake in up to 10% of the $500B that they send in remittances each year), fintech innovators and investors have not. Venture capital funding for fintech hit a record $27.4B in 2017, and is supporting a wave of innovative digital financial services.
Startup banks like Monese, Tandem and N26 have made opening a bank account as easy as ordering a pizza. Peer-to-peer lending platforms like Zopa and Funding Circle are creating investment opportunities that would have died on a bank manager’s desk a few years ago. Our own service, Azimo, offers fast, safe digital money transfers from Europe to over 190 countries at a fraction of the cost of the traditional incumbents. These services do not discriminate based on where you’re from or what job you have. They do not distinguish between “migrants” and “expats”. Azimo, for instance, offers cash pickup and home delivery as payout options for its digital money transfer, meaning that a beneficiary of a transfer does not need a bank account and is therefore not excluded, no matter where they are in the world.
The financial inclusion of foreign-born nationals benefits everyone. The individual benefits from the ability to rent a property, secure a loan, or get seed capital to start a business. Society benefits from new arrivals who feel included and who can contribute to their communities. The economy benefits from higher productivity and increased tax receipts. Businesses benefit from a larger and more diverse market for their goods and services.
Digital services also enable increased transparency and safety, thanks to smart tracking. Big data allows companies to tailor their products and pricing to individual needs. Governments can tackle money laundering because digital money can be traced in a way that cash cannot.
No more distinctions
Azimo’s mission is to democratise financial services. Services like ours ease the harsh and unfair distinction between migrants and expats, and promote financial inclusion. Locking people out of financial services and then criticising them for being poor or less productive is a bit like throwing a glass of water over them and then criticising them for being wet. We should be enabling foreign-born nationals to contribute to the economy, because financial inclusion is an approach that will benefit us all.
This article is also published on linkedin.