How FinTech is helping migrant workers impacted by Covid-19 crisis

The Covid-19 outbreak has exposed flaws in our fundamental processes and systems. Many governments and businesses have been caught unprepared for a pandemic of this magnitude. Workers, especially blue-collar and whitecollar at the bottom rung of the corporate ladder, are struggling to make ends meet amidst furloughs and layoffs. A global recession is already here, and the world is waiting with bated breath for an effective vaccine that would end this once in a generation crisis. In many countries, lockdowns and social distancing are proving effective short term control measures, still not preventing subsequent recurrence and having a high toll on the real economy.

South-East Asia is facing a migrant labour crisis

Migration is especially rampant in the South-east Asian (SEA) region. Richer SEA countries such as Singapore, Thailand, and Malaysia receive a constant influx of migrants from other SEA countries. More than 6.84 million workers migrate to these countries to improve their living conditions and support their families back home. In return, the host countries are heavily dependent on the foreign workforce for economic development.

However, national healthcare and social security provisions do not inherently consider migrant workers. Singapore, for instance, fared considerably well in the early months of the outbreak with its ‘smart lockdown.’ However, it had not planned well for its 1 million migrant workers, that live in a parallel ecosystem and economy. As a result, the country saw a surge in infections. In many SEA countries, the migrant workforce has turned to a potential peril for public healthcare and social security systems.

How is FinTech addressing the needs of migrant workers during Covid-19?

Benefits received in the home country might not translate to ‘cash on hand.’ With access to traditional cash remittances becoming scarce, digital remittances have become a necessity. Many Fintech companies in the e-remittance space exclusively target SEA migrant workers with a range of services. Notable players gaining traction during Covid-19 include Ireland-based Ding.com, Thailand-based SCB Easy, and Cambodia-based Wing2World.

Often, migrant workers are the only tech-savvy ones in their family. Without access to cash, a worker’s family might find it challenging to take care of bills or purchases. With the Hong Kong-based TNG Wallet, SEA users can purchase groceries for their families. Philippines-based Denarii Cash links user accounts directly to bill payments. Migrant workers can subscribe to a freemium model and pay taxes, government fees, and more. Malaysia-based MyCash Online also allows users to pay bills on its finTech marketplace.

During these uncertain times, getting paid is a concern. Migrants are heavily dependent on their jobs, and hence prone to exploitation. Due to language barriers, they also can face discrimination in society. Singapore-based companies Remsea and MatchMove digitize payrolls and ensure that migrant workers are paid on time. Singapore-based Everex and Myanmar-based Shwe Bank use blockchain to track migrant workers’ remittances between Myanmar and Thailand. Thailand-based Lightnet uses smart contracts and distributed ledgers to power remittances.

The growing preference for digital remittances could increase the regulatory burdens on the remittance industry. RegTech (regulatory technology) addresses this issue and complements the remittance process. For example, Singapore-based telco SingTel reported more than half a million users for its remittance platform ‘Dash.’ To ensure end-to-end compliance of its remittances, SingTel partnered with RegTech company EastNets. EastNets will also help SingTel with other regulatory issues such as anti-money laundering.

Many finTech platforms offer social protection to help migrant workers build economic resilience that includes insurance and other protection services. Israel-based Rewire partnered with the Philippines government to enable direct digital payments to social security system. To improve the financial literacy of migrant workers, Rise – termed ‘migrants’ first wealth management platform’ – provides AI assistance to educate on its financial products and services.

SEA-focused companies could also take a leaf from their global counterparts on providing employment opportunities via finTech. India-based fintech PayNearby has built a job registry for migrant workers to stay updated on the job market. India-based Payworld and Peru-based Tienda Piago provide a platform for migrant workers to act as retailers. The platforms foster small businesses that might not have access to a vast consumer base, especially during lockdowns.

How can FinTech help address the needs of underserved populations?

Access to financial services can increase savings and help the poor withstand economic shocks during a pandemic. However, 1.7 billion adults are currently unbanked, more than half of them being women. More often than not, the poor do not meet a traditional bank’s credit rating criteria. They might lack the property or credit history to be deemed creditworthy. FinTech platforms can use a variety of approaches, such as artificial intelligence, machine learning, and big data analytics, to identify data points beyond the ‘usual suspects.’ Gender-differentiated algorithms can take gender-based discrimination into account while evaluating women and removing bias due to lack of data. Blockchain-powered digital records can keep property information intact.

For instance, Tanzania-based M-Pawa looks at mobile phone data and money usage to assess creditworthiness. Kenya-based Safaricom’s M-pesa only requires a mobile phone to set up a bank account. The easy-to-use platform has helped more than 190,000 Kenyans access bank accounts.

The underbanked cannot avail of the safety nets or social protection provided by the government during a crisis. With no savings on hand, essential services such as electricity, water, sanitation, health, and education might seem expensive. Peru-based PowerMundo has demonstrated that underserved populations can access necessities such as solar energy-powered electricity using pay-as-you-go models. Mobile-enabled health insurance, distributed via a vast agent network, can prove affordable and useful for the informal population, as seen in Rwanda. In Ghana, beneficiaries of AirtelTigo’s savings program were able to purchase subsidized toilets. By partnering with Singapore-based pensionTech pinBox solutions, the Rwandan government was able to provide a universal pension scheme to its citizens. Remittances, as mentioned before, have allowed for timely support to reach the affected during a crisis or a natural hazard.

With the advent of Coronavirus, digitization has become more critical than ever. Proponents think that finTech will thrive after the crisis. However, as of now, the industry is bearing the brunt of decreased sales. The pandemic shows that achieving financial inclusion via finTech is dependent on some key aspects. Realizing the full benefits of finTech would require improved documentation of the poor, access to technological infrastructure, and better integration of supply chains.

While the world is busy tackling the crisis, progress towards solving many pressing challenges has slowed down or reversed. With the United Nations’ Sustainable Development Goals, 197 countries across the globe set ambitious targets to eliminate extreme poverty and ensure the availability of basic needs, services, and human rights to all.

However, fulfilling the 2030 United Nations’ Sustainable Development Goals agenda of ‘leaving no one behind’ requires considerable efforts from all stakeholders.

FinTech emerges as a promising solution that offers a sustainable, long-lasting approach to providing access to financial services, education and solving problems of financial inclusion. In a world that is not intrinsically accommodating of the poor, vulnerable migrant workers, refugees, or minorities, inclusive FinTech will be a force of change delivering a real impact.