30th December 2020

From the way we communicate with friends and coworkers to the way we buy food and entertain oneself, technology has changed our lives. However, this revolution is not only being led by consumer technology. The way we invest, use, and move cash is also affected by financial technology (or fintech). It helps level the playing field as technology is not exclusive to the richest one percent.

There are 164 million migrant workers in the world today, many of whom are leaving home in search of income because jobs are scarce at home or there is inadequate pay for the available jobs. Usually, they work very hard to raise money which will give better lives to their families. Worldwide, an estimated 800 million people are directly helped by remittances from friends and family overseas. These loved ones are, in many cases, unbanked, which adds another layer of difficulty. Advances in FinTech, however, give more power over their finances to migrant workers and make it easier to handle, invest, and share their money. Fintech is helping foreign workers access better financial services.

Better accessibility for migrant workers

A well-known and valued facet of the Western world is the reliability and 'anytime-anywhere' accessibility of the digital economy. With the use of a few taps of a screen, we can switch resources between accounts, deposit checks with our devices, and even split the bill at dinner. However, it is very different for individuals in various countries around the world to embrace FinTech as a new and exciting territory. A cash-based economy is a norm for many in developed countries, and online banking is a new uncharted region.

In Malaysia, migrant workers are frequently exempt from many conventional banks because the basic criteria for a bank account can not be met. It is also challenging for many to send money home, with numerous obstacles going beyond cultural differences and acclimatizing to new environments. Additionally, many have little experience in using technology to manage their money. An easier approach is now at hand.

Employers may digitally pay their international employees wages, providing both the employer and the worker with better protection and productivity. Users will have access to the funds in their e-wallet at ATMs through the use of applications, as well as the ability to make digital payments for fund transfers, QR payments, and purchasing mobile reloads.

Disrupting the status quo with efficiency

For instance, money transfer services, once ruled by banks, are now a fintech-dominated market. Without the need for physical infrastructure like conventional banks, consumers are now capable of sending money overseas. Anything that customers need to do can all be done with only a few taps on a mobile app. Fintech has taken business from banks and major financial institutions in doing so and has, all via an app, created a new norm.

Orthodox brick-and-mortar banks, using the same example of money remittance, have become the monopoly in international money transfer as they’re the only institutions that provided international financial services in the past. This has allowed them to give users high and non-competitive FX prices. Moreover, banks could charge many secret fees as they’re profit-driven and foreign workers had little choice but to follow as it was a necessity to send money home.

Technology has the potential to drastically decrease remittance costs.

Sending money home has never been easier

Fintech innovations and rapid smartphone adoption are now addressing the needs of migrant workers in countries worldwide. This is particularly evident in the luxury cruise industry, where employees are paid on a prepaid card via direct deposit and can control their money from a whitelisted onboard mobile app that is built to operate in a low-bandwidth technological environment. With a few simple clicks on a mobile app, Fintech has made it possible to send money home from anywhere, only minutes after getting paid. Family members will then pick up the money minutes after it is sent by the crew member and, if requested, in cash.

This is only one of many examples highlighting the influence that fintech innovation has had on remittances and, as a consequence, worldwide economies. And while technology is the engine, remittances have also provided the opportunity for migrant workers to be financially inclusive, motivated, and regulated.

Greater convenience for those without bank accounts

In recent years, the number of people worldwide without bank accounts have been steadily falling. There are several ways for financial institutions and banks involved can engage with unbanked or underbanked customers.

Lowest-income households are often more likely to not have bank accounts. In nations that have a large portion of the population without a conventional bank account, however, there is more equality among the unbanked. In Pakistan, for instance, the wealthiest households make up more than half of the unbanked population.

Globally, younger individuals are more likely to not have bank accounts or to be underserved by banks. In 2017, about 30 percent of unbanked individuals were between the ages of 15 and 24.

Fintech startups are creating technologies that bypass banks for lean, open, and inclusive technology. Their emphasis was (although not exclusively) on the communities of low-income and refugees, including foreign workers, immigrants, and former convicts. Additionally, "digital nomads," freelancers, and other gig economy employees who are less likely to have stable income or properties, have also been served by Fintech startups.

There’s no need for staff to spend their day off checking their bank account as payment is done online. On those days, they can relax. It also makes it very easy for them, with many staff staying in dorms, to stick to social distancing methods.

Social responsibility should be prioritized

Payment is becoming increasingly complex among cultures that are predominantly dependent on cash and are potentially tech-averse. Technological experience is extremely different around the world and can elicit a range of feelings, from confusion to insecurity and even fear. It is not an easy task to develop a Fintech solution that meets the regulatory requirements of multiple countries, crosses language barriers, and addresses the specific needs of multiple nationalities and economies. And bringing the product to the market entails the social responsibility of educating end-users about how to use this technology safely and responsibly so that they can avoid confusion and take advantage of the independence that fintech can offer.

Fintech's rapid growth has also established a need for suppliers to take a more attentive and inclusive approach to the production and marketing of goods. This means simplifying technical terms, which might mislead or frustrate a person new to digital commerce. Fintechs should also take the time to immerse themselves in cultures and get a first-hand understanding of how money works in the regions they choose to represent. Fintech products should be simple to use and tailored for customers who may be less technologically comfortable.

EVOLET is a digital wallet app for migrant workers.

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