How fintech can support migrants and help increase economic activity

by James · July 25, 2022

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 group.

Access to cross-border financial solutions has become more important than ever

But low-income households – which include many migrant workers and their families – feel the effects disproportionately.

This could not come at a worse time. The UK has an acute labor 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 new career paths. Sectors from hospitality and retail to food and drink, manufacturing, construction and transport – already crippled by recurring shutdowns – all took a big hit as they struggled to find enough staff.

And unfortunately, the crucial role of migrants in supporting our economies remains overlooked. Instead, many return to the negative view of migrants as a burden on the economy and a barrier to local employment. But if we put the right supports in place – if we enable migrants to actively participate in economic activities, through financial services that meet their unique cross-border needs – then they are not only better positioned to support families back home, they will also have a positive impact on the economy of the host nation.

Migrants help bolster the labor force by flocking to 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 inflationary storm. And they do this while spending their earnings locally and contribute to their finances at 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 fluctuating pound.

Unfortunately, the tide is still working against migrant workers. Inflation has eroded the value of remittances and migrants’ ability to support their families and loved ones. This is harmful to both 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 with a simple swipe of a finger. Migrant workers, who sometimes lack the financial knowledge needed to use traditional banking products, can access debit cards, local payment accounts (IBANs) and insurance products – all in their native language – saving time and hard-earned money.

With issues surrounding inflation only set to worsen, a shift in perceptions is needed so that migrant workers are more recognized for the value they can bring to the economy. Fintech has an important role to play in helping underbanked populations play a more active role in the economy. In addition to increasing economic activity at home and abroad, the fintech industry can help migrants and other economically underserved populations better manage their finances and plan for the future.

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