The remittance market is currently valued at $802 billion and could reach $1.2 trillion by 2030. Digital channels are at the heart of this huge market opportunity as they offer faster money transfers, better user experience, greater transparency, better customer service, and more. more.
money transfer is a digital financial services/remittance provider for immigrants and their families. Immigrants typically believe they face expensive and misleading financial services designed to take a disproportionately high share of profits.
Recently, Remitly conducted a survey of its customer base and found that nearly 8 out of 10 customers have experienced negative economic changes (due to inflation, rent/mortgage increases, health care costs, etc.) in the last 12 months. It was found that very few people answered that they were satisfied despite the fact that they were satisfied. They are more likely to send money less (6%) or less frequently (7%), demonstrating the tremendous resilience and determination they have to offer their families abroad.
Matt Oppenheimer has spent the better part of a decade building better financial services for immigrants and their families. As his CEO and co-founder of Remitly, Oppenheimer believes in the economic impact immigrants have on local and global communities and how the financial industry is progressing to provide better and more affordable financial services to immigrants. I explained why I should.
How Fintech Can Increase Immigrant Access to Financial Services
Immigration has a huge impact on the global economy. The money they spend and the taxes they pay make a meaningful contribution to the local economy, but the money they send back home, known as remittances, has a significant impact on economies abroad.
In 2022, the global formal remittance market will valued at approximately $802 billion. By 2030 Estimated to reach $1.2 trillion, with a compound annual growth rate of over 5%. To contextualize the size and importance of this market, according to United nationglobal remittances are more than three times as large as Official Development Assistance (ODA) and Foreign Direct Investment (FDI) combined.
Digital channels are at the heart of this huge market opportunity as they offer faster transfers, better user experience, greater transparency, better customer service, and more. Digital services can also offer more cost-effective rates, returning millions of dollars of purchasing power to immigrants around the world.
As digital remittances take the lead in this market, it’s time for the entire fintech industry to rise to the challenge and think bigger. Fintech has an opportunity to drive change by creating inclusive financial technology that supports immigrants in a truly impactful way.
Economic impact of immigration
In the world, 280 million immigrantsinclude 44.9 million in the US alone More than the population of California. It is no surprise, then, that immigrant communities contribute significantly to the global economy through capital, labor, culture, and more. This contribution promotes economic prosperity for generations and is even considered necessary for most countries, including the United States. the economy would have a very hard time growing without it.
Contribution to capital
research from FWD.us We found that an increase in immigration each year would increase US GDP from $20.94 trillion (current GDP) to $47 trillion (current dollars) by 2050. Research published by UCLA We found that if we provided citizenship to all unlicensed immigrant workers living in the United States, the United States could add $1.5 trillion to the economy and $367 billion to federal and state tax revenues.
This will increase GDP per capita, which in turn improves the standard of living for all Americans. The second-generation immigrant is one of the United States’ most powerful financial and economic contributors, according to a.
There are endless studies showing that the prosperity of immigrants affects the communities in the countries where they live.Research study by FWD.us.
contribution to labor
In some industries in the United States, immigration make up one-third of the workforce This labor force growth is helping the economy meet labor shortages and close the skills gap. It also helps the aging population by increasing the ratio of workers to retirees and strengthening social security benefits.
When it comes to job creation, Research co-authored by MIT economist, found that immigrants are about 80% more likely per capita to start a company compared to U.S.-born citizens. And these companies, on average, have about 1 percent more employees than companies founded by Americans. Also worth noting is the 4 of the top 7 listed companiesWe have an immigrant CEO.
Contribution to culture
Immigrants nostalgic for their homeland thousands of miles away find solace in their new homes through cultural pursuits. At the same time, natural born citizens appreciate and benefit from the new addition of multicultural vibrancy. These contributions come in many forms, including art, cooking, athleticism, and science.
Los Angeles, California, for example, is often considered the United States’ premier foodie destination, with many of the most treasured immigrant-founded or inspired dining experiences. a restaurant, Guelaguetza Opened by immigrant founders Fernando Lopez When Maria Montelvio We offer a wide variety of authentic Oaxacan cuisine to our enthusiastic customers.famous restaurantspark barbecueis located in the heart of Koreatown, jenne Kiman immigrant from Seoul, whose roots inspire her cuisine.
On the opposite coast, New York City, one of the most culturally diverse cities in the United States, 60 million visitors each yearone of its main draws is its dynamic art scene, with an increasing number of immigrant influencers.a report from city future center revealed that between 1990 and 2020, the number of immigrant artists in the city increased by 69%, to about 51,000 at the time of reporting.
These are just a few of the many examples that demonstrate the impact and importance of the cultural contributions immigrants share with the world.
As fintech companies build and develop their products, they must do so with immigration in mind. They need to create comprehensive products and services that address the needs of this diverse population. Not just for the benefit of the global economy, but because it’s the right thing to do.
Economic resilience of immigrants
After the covid-19 pandemic, the world grapples with economic turmoil, causing rising unemployment, supply chain disruptions, product shortages, rising inflation and more.
The turmoil affected everyone on a massive scale,disproportionately large impact About immigration. Facing financial hardship while maintaining the necessary level of support for families back home often means that immigrants have to. reduce It guides you to take on new jobs and increase your working hours.
it is important to understand Remittances have historically proven to be resilient In times of financial crisis because of their discretionary functions and unwavering commitment of immigrants to their loved ones. As such, during times of economic difficulty, migrants not only feel the impact on their personal situation, but also bear the additional responsibility of ensuring continued financial support for their dependent families abroad. I am indebted.
A Unique Opportunity in the Fintech Industry
The fintech industry has a unique opportunity to create comprehensive solutions that positively impact immigrant communities. Opportunities exist as technology drives innovation and adaptability, enabling businesses to offer solutions that address a wide range of customer needs and unique requirements in ways not possible with traditional financial services.
With this in mind, fintech companies must try to understand the institutional barriers that exist within financial services for immigrants in order to leverage technology to seize opportunities.
Traditional players in this space are using outdated technologies that are customer-centric solutions and bottlenecks to change. Fintech companies with digital-first roots, on the other hand, have a head start in innovation and execution, creating superior customer experiences.
Fintech also has the unique advantage of being able to innovate quickly and test new ideas and products quickly as a result of startups and entrepreneurship. While we are seeing significant growth in the financial services industry, where traditional players are doing what they can to adapt to the transition to digital, we predict that fintech will continue to lead innovation in financial services.
A Call to Fintech Players
Immigration is important to the economy. However, they are not taking full advantage of the current financial industry. The main reason is that the enormous economic impact this diverse group of individuals has on the communities they inhabit is often overlooked, and not surprisingly, so is the economic impact on them.
So what is the most important difference in supporting this historically underserved community? Financial operations.
Traditionally, immigrants have faced expensive and misleading financial services. In particular, these services represent a disproportionately high percentage of profits. This makes the stakes in financial services much higher for immigrants with families in low-income countries. This is because they use these funds for basic necessities such as housing, food, and clothing.
Yet immigrants’ resilience and devotion to their families is unwavering, despite how counter-cyclical it can be to their lives. We need to give back to them the great favors they have given us.
Fintech products must be built and developed with immigration in mind. They need to create comprehensive products and services that address the needs of this diverse population. Not just for the benefit of the global economy, but because it’s the right thing to do.