For a long time, the United States has been marketed as a country where people can make their dreams come true through hard work and persistence. Whether someone’s dream is to start a company that will change the world, get access to high-quality education and research facilities, or grant a decent future to one’s family, for centuries people have been coming from all over the globe to build their own destiny.
The U.S. and its people benefit
from immigration: Immigrants boost the economy and society by bringing their skills, knowledge and capability in a great variety of realms, from tech and healthcare to beauty services and retail. They earn money and pay taxes and bills. According to one report
, the spending power of the immigrants in the United States equals $1.3 trillion.
Immigrants have the assets, but due to lack of credit score, language barriers and gaps in understanding the U.S. financial system, they stay underserved by traditional banks. At the same time, according
to the Pew Research Center, there are more immigrants in America than in any other country — meaning there is already a vast market full of creditworthy customers who need financial products that meet their needs and wants. And this segment is only going to grow.
There is also the concern
that the American population is aging while the fertility rate is low
. Over time there will be far fewer people who pay into social security and many more who will instead collect these benefits — this is where creating financial solutions for immigrants comes in. In fact, financial inclusion for immigrants could help with the well-being of the nation in the foreseeable future.The Gig Economy
The fast growth of the gig economy is another factor making immigrants high-potential customers for fintech companies. The gig economy refers to the carrying out of short-term tasks and providing payment for each task. This could include taxi services, food delivery, products of craft, guided tours for travelers, business consulting, short-term design projects and more. In the gig economy, providers and consumers are often connected through apps or platforms.
Many gig workers
are immigrants, and the more the gig economy grows, the more opportunities they have to earn income. Being totally free agents or chasing an extra buck as casual earners, they need financial services just like any other Americans. Mastercard and Kaiser Associates forecasted
in 2019 that the size of global gig economy transactions will grow by 17% and reach $455 billion by 2023 (in 2018 it reached $204 billion). As a result, the demand for fintech solutions will likely increase.Fintech Opportunities
Though the rivalry on the market has already heated up, there is still space for new players. But it is not an easy game because there are a lot of nuances in creating banking products for those who have made America their new home. There is already a problem with financial literacy
in the U.S., and for immigrants, understanding the necessary basics of the American economic system can be a much more complicated task than for those who were born here. Lack of language proficiency can contribute to the challenge, making it important for fintech startups to think through the strategies of adapting their products to multicultural and multilingual audiences.
At the same time, immigrants are not a monolithic unity, and tech companies should put a lot of effort into deeper research to better identify their customers’ needs. This may lead to a more segmented market, and it could be a chance for small startup teams to develop unilateral solutions that are later acquired by bigger companies. Besides, I think it is very likely that traditional banks will be more intensively looking for partnerships with fintech providers in order to keep up with the inevitable rise of standards for financial products.
There is a common misperception of immigrants as non-compliant individuals who live in the U.S. illegally, but many immigrants are legal, decent workers and good earners, which makes them highly attractive customers for fintech companies. The market for financial products for immigrants is growing by leaps and bounds right now, but it still has a lot of prospects ahead.