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There are currently more refugees and internally displaced persons (IDPs) worldwide than at any time since World War II, driven mainly by the war in Syria, which has seen waves of people flee to Europe in search of safety. Those who successfully make it to the UK, the Refugee Council reports, struggle to open bank accounts, meaning they cannot access money from the benefits to which they are entitled. Many end up relying on the goodwill of those around them, or end up in debt.
This is an economic issue as well as a humanitarian issue. Many of those seeking refuge in Europe are young and educated; integrating them as swiftly as possible into the economy enables them to contribute as employees, entrepreneurs, taxpayers and consumers. Refugees can even provide a development dividend to their country of origin in the form of remittances.
A new EU law will require banks to offer basic payment accounts to all customers starting in September 2016. This will help enable refugees to receive aid, welfare and money from jobs, but experiences from around the world show that traditional banking products might not be the most suitable option.
“In the past, debit cards have been handed out to refugees in Lebanon with their winter allowance on them,” said Christine Duhaime, founder of the Digital Finance Institute (DFI).
“What we are actually doing there is asking a mother with six children to get on a bus, travel 20 miles to find an ATM, discover that it is out of cash, go to the next town another 20 miles away,” she said. “Some of them never ended up cashing out their winter allowances because they just couldn’t find the way to get there safely with their children.”
At the vast Zaatari refugee camp in Jordan, home to around 90,000 refugees, the UN found that the penetration of smartphones was such that it could leverage social media and SMS technology to disseminate information and assess the population. With mobile phones comes the opportunity for mobile money; could those refugees in Lebanon have received their winter allowance in this way? In theory they could, but there are cultural constraints.
“Mobile payment agents tend to be male, so we are asking women who are Middle Eastern to go to a male agent and give over their telephone numbers and there is no way culturally that they could do that,” Duhaime said. “We need to have an interface in the user’s language. It needs to be simple. We need to make it gender-specific so that were not putting anybody in an uncomfortable situation just by trying to help them out.”
To solve these challenges, the Digital Finance Institute has launched its Banking on Refugees project to develop a cloud-based branchless bank focused on the unique needs of refugees. This involves a test pilot with digital payment solutions for refugees, with biometric identification for government agencies and NGOs that complies with global anti-money laundering laws.
The World Food Programme has another solution with its digital cash card program, which provides food assistance to thousands of displaced Iraqi families and Syrian refugees across Iraq. Known as SCOPE cards, owners can use them to make food purchases at local shops – rather than having to withdraw cash from ATMs. The cards also provide data on what types of food refugees have bought, which can be used to assist with logistics and planning for the WFP, and shop receipts give users and up-to-date tally of their remaining funds.
The thinking around refugee assistance is evolving quickly, from providing them with necessities, to giving them cash to manage their own needs, and now to facilitating that cash transfer through digital solutions that allow savings and financial capability integration.
While creating a scalable solution that enables all of this is a challenge, all of the components are already in place.
“We as a bank platform can provide digital accounts and can handle the KYC [Know Your Customer] process because we are doing it already, while another company along the chain can provide a device, maybe a card with a chip or a mobile phone,” said Andreas Bittner, founder of solarisBank, a fully-licensed digital bank that has developed a banking toolkit that includes several modern banking APIs for fintech companies. solarisBank is currently working on a UNHCR-supported initiative to use technology for humanitarian crises. “All these pieces of the picture exist already; we just have to focus on combining these already-existing competencies to come very quickly to a solution.”
Gaining trust is essential. “The risk is very high that even if something is being developed, it will not be appropriate for a refugee,” said Paula Schwarz, founder of Startup Boat, which works to create tech solutions to challenges refugees face. “You have to think like the customer.”
Schwarz’s focus is on enabling refugees not only to access aid, but to bring their savings over with them from their country of origin.
“When it comes to transferring their own money from Syria, many people still use Western Union,” she said. Since the fees are high, though, migrants and refugees are increasingly looking for other options.
“What is important for a solutions provider is to build credibility, build brand support and gain the trust of the user group with all they have – their life savings – after they have fled a situation of war.”
Featured Image: A shopping center at the Oncupinar Container city including social facilities, school, vocational courses, health services and sport centers where nearly 14,000 Syrian refugees taking shelter in Turkey live, Kilis, January 22, 2014.(Photo by Atilgan Ozdil/Anadolu Agency/Getty Images)