Unbanked and Underbanked Immigrants Reach for the American Dream
Despite rising political and social obstacles, Remitly reports that nine out of ten immigrants still believe in the American Dream. The majority of immigrants feel that if they work hard, they can attain financial success and provide their families with a better quality of life. However, moving to a new country often presents unexpected challenges. For example, soon after migrating to the U.S., immigrants find themselves unbanked or underbanked in access to financial services.
Financial inclusion specialist Rushd Averroes refers to access to financial services as “one of several essential lifelines” needed by immigrants when they move to a new country. To survive in an unfamiliar place, they need financial services to receive paychecks and pay their bills. Many immigrants also have families back home, who depend on them to send remittances, or funds sent across borders.
Unbanked Immigrants Encounter Unexpected Financial Challenges
When unbanked or underbanked immigrants weigh their options, they find themselves excluded from traditional banking, as they often don’t have an established credit history in the U.S. This can make traditional banking an inefficient and slow process for many immigrants. As a result, many rely on using cash to financially support themselves and their dependents. For instance, in 2014, approximately 355 million account holders globally sent or received remittances in cash.
For many fintech companies, digital payment technology provides a unique opportunity to serve unbanked and underbanked populations, such as immigrants. Migrants around the world have also increasingly turned to mobile payments because of their convenience. Based on a new study from Juniper Research, remittances sent digitally are expected to increase by 44 percent by 2021.
Remitly and Azimo Improve Financial Inclusion with Mobile Apps
A few fintech firms currently provide digital payment services aimed at improving financial inclusion for immigrants. Seattle-based firm Remitly eliminates the complexities associated with transferring money through traditional banks for immigrants by providing them with a mobile app to send remittances. The process is made faster and cheaper by eliminating forms, codes, and agents associated with traditional money transfers. While sending remittances through traditional banks generally takes days to weeks to reach the recipient, money sent through Remitly only takes a few minutes. Remitly also charges lower transaction fees than traditional banks. Sending money abroad through Remitly costs from $0 to $3.99, while traditional banks charge up to 10 percent of the remittance sent.
Another firm that has benefited from immigrants choosing to adopt mobile money transfers is the UK-based firm Azimo. To send a remittance through Azimo, a user only needs to select one of their phone contacts, and the recipient receives a text message with a link to claim the money. Azimo is currently used by 1.5 million registered customers globally and handles $1 billion in money transfers annually.
According to Dora Ziambra, Chief Commercial Officer at Azimo: “One of the few items that refugees almost always carry with them is their mobile phone. Azimo offers a safe and inexpensive way for them to use their mobile phones to send money home where it matters most.” With mobile money transfers, financially adjusting to a new country has become a much smoother transition for immigrants around the world. Fintech firms like Remitly and Azimo have made building a better life and achieving the American Dream more attainable for U.S. immigrants than ever before.
To learn more about new methods of enhancing financial inclusion for the unbanked and underbanked, grab a free copy of our eBook.
- From Underbanked to Understood: The Rise of Alternative Credit Scoring
- Understanding the Credit Scoring Landscape
- SPARK 2017 Expands Into Financial Inclusion
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About Zahra Deinde-Smith
Hi, I'm Zahra Deinde-Smith and I currently work as a Marketing Intern at Urjanet. My passions include history, genealogy, and hair care!