Fintech Genome

Banking for Refugees

#1

Hey there,

“During SIBOS 2015 in Singapore there was a co-creation session about the refugee crisis (as part of a series on financial inclusion) during which an audacious goal was mooted – to create a Refugee Bank.”

Also, ID2020 the UNs conference in NewYork arrived to the conclusion that a refugee bank is needed.

European Refugee Crisis is one of the more burning issues (for media and civilized countries) but there are more displaced people today (63million) than after the WWII. UNHCR was created as a temporary organization to solve the situation of millions of Europeans.

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#2

Hi @nembal, it will be interesting to see this get discussed at SIBOS in late Sept in Geneva (also home of impact investing and NGOs). A year ago at SIBOS in Singapore, the idea of a Refugee Bank was no more than that - an idea. It looks like you are bringing the idea closer to reality.
I put this in a new Category - Neobanks (aka Digital Challenger Banks).
If you had to select one challenge to making this happen, what would it be?

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Blockchain and Identity
#3

Dear @BernardLunn,
SIBOS sounds as a great venue to discuss the topic with top bankers from all over the world, who has in-depth knowledge on unbanked / unbankable people in their countries. We will try to find ways to get in touch with attendees there.

The biggest challenge for such a bank is regulations. To be able to onboard refugees and anyone regardless their papers will require an approval from the state. Our method is using a persons reputation network and other online identities to create a high degree of confidence in the persons identity.

The identity can be created without the approval of the government however to be able to issue cards and support their financial exclusion we need to work with governments and rely on regulations.

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#4

@BernardLunn and @nembal I have worked with the Burmese / Myanmar refugee communities in Thailand. They could be a candidate pilot group - the Thai government has done some good work to create IDs cards for certain populations of stateless resident in Thailand. Organizations such as http://www.mapfoundationcm.org/ and http://suwannimit.org/ bridge the gap between government, community and the stateless. If someone gets keen to work with them, I can make the introductions. If this type of pilot succeeds, it could provide an example to encourage other countries to test out ID programs for stateless.

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#5

Hi @MichelleKatics good to see you here. This is exactly the sort of productive conversation we hoped to see when we set up Fintech Genome. Any chance you will be at SIBOS in Geneva in late Sept?

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#6

@BernardLunn At the moment, SIBOS not on my schedule. If you hear of any speaking or moderator slots, would love to get it on the calendar! Should be a good one.

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#7

Another question, could FinTech payment and banking product providers collaborate with https://en.wikipedia.org/wiki/E-residency_of_Estonia who can provide E-Residency presumably for refugees? This won’t work for stateless but might be a good pilot enabler for refugees to establish identity for the purpose of KYC etc.

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#8

We don’t have financial inclusion or refugee bank on the Innotribe Sibos program this year. In the main conference, there is a session related to financial inclusion on thursday 29 Sep at 2pm: https://www.sibos.com/conference/conference-programme/emerging-markets-mobile-money-and-financial-inclusion

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#9

@MichelleKatics the Estonian program requires documentation for a full KYC similar to opening a bank account therefore it can not replace that. Estonia has a very high standard for AML due to the common borders with Russia.

I am the founder of project Taqanu, to create an entry banking solution that can on-board people without governmental ID with a use of a reputation based identification. The goal is to create a digital bank that is open for everyone regardless of available documentations.

@Petervan it is indeed a very interesting topic and there is a lot of research have been conducted on the field. Would love to learn more about the outcome of the round table. Will be there by any chance a livestream of such socially impactful topics on the internet? Thanks

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#10

@nembal @vvdugteren you guys seem to be fishing in similar waters and it might be worth connecting.

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#11

Thanks @BernardLunn i have reached ot to @vvdugteren.

@MichelleKatics I would appreciate an introduction. Our initial focus is on the European Refugee Crisis to start with, however we would like to extend our work to other regions. And maybe we could start collaborating with Thailand while the European system is being built, therefore shortening the lengthy processes. I will reach out to you

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#12

@nembal MichelleKatics @vvdugteren what do you think about this discussion about whether Refugees make good Microfinance customers?

http://www.e-mfp.eu/blog/do-refugees-make-bad-microfinance-clients

Banks are all about lending, so it seems to me that this must be the key question?

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#13

Thanks for looping me in, Bernard. What I have missed so far in the wider discussion about finance for refugees, is some attempt at segmentation. The most obvious clients for a business loan would be the people who were entrepreneurs before they fled their home country.

The dynamics of the host country would also be important. Say the host country is a developing economy, the typical challenges for the (micro) finance industry in general, such as information asymmetry (no efficient credit bureau, land registry, tax filings, etc.) and imperfect legal systems (making it hard to enforce covenants in loan agreements) are exacerbated by the fact that refugees typically have even less historical data against which one could lend and obviously bring no or very little collateral. Uncertainty about a refugee’s status and duration of stay creates even more risk for lenders.

However, if one could use a combination of forward-looking credit assessment tools (such as psychometrics and the online ID options suggested earlier in the thread) and perhaps some kind of government-backed guarantee scheme to lower the risk for the lenders in case a refugee leaves the country, it’d become more interesting and cost-efficient to lend to refugees from a financial perspective. Such a guarantee scheme could be financed from funds which would otherwise be used for direct grants to refugees or other financial incentives, and might earn itself back quite quickly if a proper selection is made whom to lend to and when the economic value add they create for their host country is taken into account (perhaps by incentivizing economic activity in specific underserved market segments in the host country).

These entrepreneur refugees would also be the most likely candidates to invest in their home country once the situation there allows for it and help build things back up. For example, in Uganda the Asian, largely middle class, entrepreneurial population was expelled by Idi Amin in the 1970s. Many of them fled to the UK (most were brought in by the British a century before) and set up businesses there. About a dozen years later many returned to Uganda for various reasons, and the ones who had successful businesses in the UK typically also went on to set up successful businesses in Uganda and provide a necessary boost to an economy in ruins. Some interesting examples from young East African refugees turned successful entrepreneurs include Ruparelia (possibly the richest man in Uganda) and Thakkar (a refugee from the Rwandan genocide, who is now buying up African banks together with ex-Barclays CEO Bob Diamond). After dealing with the hardship of fleeing for war or civil unrest, typical business challenges might not seem so hard anymore…

If a guarantee for lenders to deal with the uncertainty of stay is not available, the ideal financier of refugees who wants to provide long term financing would also need to have the flexibility to support refugees as they move from country to country – a role to play for a borderless FinTech solution perhaps? Anyone seeing any practical examples? TechCrunch’s editor Mike Butcher set up Techfugees (he talked about it during Innovate Finance 2016), which is a community of techies who work on solutions for refugees. So far I’m not aware of scalable FinTech solutions developed there though, but they could be a relevant platform.

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#14

@vvdugteren thanks for the Techfugees link, I hadn’t seen it yet!

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#15

@vvdugteren thank you for the great discussion over the phone, and I hope we will reach to the level when we can expand to distant regions. Thank you @BernardLunn for the introduction!

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#16

@BernardLunn @nembal @vvdugteren I notice that most of the refugee banking work, unsurprisingly, seems to be in EU and Levant countries. Do you happen to know who is interested in or working on refugee banking in Singapore? I’m back in Singapore for most of the rest of the year, and they might like to connect with our Thai/Burma border refugee/stateless advocacy colleagues. They will be doing an advocacy visit to Singapore in early November.

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#17

@MichelleKatics Interesting question. Where do Refugees go in Asia. I don’t think Singapore allows Refugees in - correct me if I am wrong. Maybe Australia. Looping in my Aussie pals @Jessica and @AlanS in case they have input.

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#18

@BernardLunn we have a combination of refugee, IDP (internally displaced), and stateless populations, mainly along the poorer southeast asian border areas, at its worst in conflict and former conflict zones. There are 8 or 9 refugee camps in Thailand,, IDP camps inside Myanmar, and there are quasi-stateless Rohingya along the Myanmar/Bangladesh borders. Malaysia and Thailand I believe receive some of the the largest volumes of refugee arrivals in SE asia itself, and of course Australia. There are not refugee arrivals in Singapore but I look to the good FinTech folks here in case there are digital identity or banking solutions for those populations. These populations may be smaller, regulator-friendlier testbeds for some of the refugee banking and identity solutions folks would like to try in the EU.

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#19

Interesting idea! The Technology bit I am working on, the difficulty will be getting the Regulators to agree that this group of people are a suitable testbed. One way we can make it easier is to restrict the electronic wallet to a relatively small amount say USD 300. Which would be a useful amount for a Refuge but a hindrance for criminal activity like Money Laundering ect… If you can help liaise with the local Regulators we could set something up.

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#20

There is one Fintech based on the Isle of Man that has been focused on developing such apps using blockchain technology. Credits, has been working with the government on the Isle of Man to develop “The Federated Know your Customer” app that was demoed at the recent Misys World Trade Symposium. This sits on the cloud and has the four elements mentioned above. Credits is also in conversations with the UK government for use cases in regulatory reporting and healthcare. Credits has not been at all focused on creating some cryptocurrency or some decentralized app. They have been thinking differently, in that they are focused on solving specific problems in the infrastructure of capital markets. Digital ID has been their first use case.

More in https://dailyfintech.com/2016/12/13/capital-markets-and-ids/

I have invited Nick Williamson, CEO of Credits into this conversation.

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