According to Misha Esipov, founder and Chief executive of Nova Credit, there is a growing need for financial services that welcome immigrants to the UK.
We’re entering an extraordinary, difficult economic situation that many people working in the fintech business have never encountered before.
There is a growing sense that a recession is inevitable, one that will be exacerbated by high-interest rates, record inflation, global upheaval, and an affordability crisis that could linger for years.
Though it may seem counterintuitive, immigration to the UK is increasing despite this gloomy backdrop. People still travel to the UK to start or develop their professional or academic careers.
Government statistics indicate a return to pre-Covid immigration levels even with the Brexit restrictions as the border limitations brought on by Covid begin to fade.
Four out of five visitors stay in the UK for more than five years, and people from all over the world choose to come here to work or study for several years. The bulk of these immigrants are educated, skilled, or professionals, adding to and enhancing the fabric of our culture and economy.
It is encouraging to see the resurgence of this citizenry of creditworthy, credit-hungry, and credit-active individuals at a time when many British people are battering down the hatches on their spending and UK banks are imposing stricter stress tests and availability tests on their clients.
An underserved market
There is a growing market for immigrant-inclusive financial services that feels virtually unheard of compared to the rest of Europe as we apply for authorization with the FCA to operate in the UK.
The UK is nurturing fintech, which is moving ahead in Europe to improve the financial well-being of immigrants to the region. Examples include Prodigy Finance, whose loans help international students settle more safely into their new colleges or professional schools, Yonder’s credit card, which doesn’t require a credit score, Revolut, and Wise.
Due to the desirable and uncommon convergence of financial, technology, and intellectual quality, London has been dubbed the “fintech capital of the world” for more than ten years. The heterogeneous immigrant population of London is layered on top of this. London is the primary residence for one in three immigrants to the UK.
A thriving innovation ecosystem focused on immigration is emerging due to this close proximity to financial innovation and practical understanding of the difficulties newcomers encounter.
Not only that, though. Because our companies in UK fintech are so close to the major players in the financial services industry, they naturally understand that financial inclusion is a requirement for a long-term growth plan rather than merely a nice-to-have.
Currently, there are 10 million immigrants living in the UK. That figure is rising as more than 700,000 credit-worthy people are given long-term visas to work, study, and contribute to the nation’s economy. The financial services sector must prioritize figuring out the best way to serve this growing community of people who are historically denied access to basic financial services.
Businesses like those mentioned above realize that ongoing growth and market share accretion are essential to financial services lenders’ capacity to compete nationally and worldwide, even as their products flourish and extend to reach a larger pool of people with financial inclusion.
Like practically every other form of business, lenders are always looking for new markets to serve because that is where and how growth is accomplished. One such market, however, is steadfastly out of reach: the immigrant population. Fintechs are driving change in this area.
The population of creditworthy immigrants is only growing while other borrower markets shrink. The rewards could be substantial for those in the financial services industry who can or do serve this community—possibly greater today than at any other time in recent memory.
Immigration is a “niche” market area, according to Skeptics, and this fact will constrain players in the financial services industry that serve it. But if you go past the exaggeration and examine the facts, two undeniable truths might disprove such pessimism.
First of all, immigration is a universal reality. People have been moving between nations and cultures for economic, social, and cultural reasons for as long as there has been civilization.
Consider the UK alone, where immigration will be responsible for the nation’s net population growth by 2035. In the UK, four out of five people have lived there for at least five years; the same number are in the prime of their working lives, and their mean salary is higher than that of a person born here.
There aren’t many other disadvantaged groups that are obvious to most lenders.
Second, it’s challenging to develop financial services for immigrants. Although the entrance is difficult, there are several rewards. The ability to adapt and develop methods to end financial exclusion for additional underserved, creditworthy markets exists for those who successfully achieve financial parity for immigrants in the countries in which they live.
Now is the time for unprecedented innovation in financial services geared at immigrants. Fintech can and must conquer this weirdly emerging industry where established firms have thus far been unable to tread since it is quick on its feet and disruptive by nature.