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Fintech is changing the way we pay and support our migrant workers – and it’s about time


Almost 5 per cent of the world’s labour force is made up of international migrant workers who are employed in industries as varied as shipping, construction, healthcare, and hospitality. In all, they represent around 60% of the total number of migrants across the globe and, as of 2019 – the last year for which we have full figures – this equalled a total of 169 million people

To put this into perspective, if migrant workers were a country, they would make up the 8th most populous country in the world, equivalent to the size of Bangladesh and bigger than Russia and Mexico. In fact, the number of these workers is equal to the populations of the UK, France and Spain combined.  

Yet despite their size and impact on global labour, migrant workers tend to be neglected by advances in new financial technologies and services. Due to their importance in the global economy, this is a concerning trend.

Migrant workers – excluded and underserved

Just like native workers, migrant workers rely on financial services and products to make everyday transactions and payments, including the sending of remittances to family and friends. Data suggests that such migrant workers are among those who remain financially underserved and unbanked. 

For example, the Global Findex database suggests that around 3 billion people in vulnerable groups globally are financially underserved and 1.7 billion are unbanked. Many migrant workers are part of this vulnerable group. 

study from the World Bank found that, globally, the average cost of sending $200 was 6 per cent in the fourth quarter of 2021. This is double the UN’s Sustainable Development Goal target of 3 per cent. However, such margins can reach as high as 10 or 15 per cent of the transaction amount, depending on the countries in question. 

Any employer with a predominantly migrant workforce will have encountered some of the challenging problems that accompany the salary payment process. The reason for this lies in the antiquated systems upon which international salary payments rely.  

Often, industries employing migrant workforces are still dominated by expensive, slow, and untransparent payment processes, driven by local and domestic banks and intermediaries. In reality, the salary payment system is still powered by outdated SWIFT systems which sometimes cost up to $50 or more per transaction. Many times, companies resort to manual entry of bank details for these SWIFT transfers which raises administrative costs considerably. 

All of this doesn’t even begin to touch upon the challenges faced by migrant workers who want to do relatively simple things such as send money home or exchange it for a specific local currency. These tasks often involve high FX rates and transfer fees which eat into their wages. 

Harnessing fintech to change the status quo 

These hurdles for both employees and employers all make cross-border payments for shipping and other international migrant workers ripe for digital disruption. The volume of global cross-border payments is expected to reach $1.6 trillion this year, and there is a global customer base of more than 169 million migrant workers in need of new products to help give them more control over their financial life. This is the kind of market need, global reach and growth potential innovators dream about. 

Yet existing hurdles are also the very reason why fintech firms, both startups and incumbents, have historically been reluctant to enter this space. It’s also why migrant workers have received so little attention from the recent fintech boom. Until now. 

The European Centre for Development Policy Management believes the answer lies in improving financial inclusion for migrant workers. By combining expertise in both finance and digital technology, we’re bringing fintech to industries that have been bypassed by innovation. In the process, we hope to facilitate greater financial inclusion that improves the way we pay, and support, migrant workers.

By Justus Schmueser – co-founder at Kadmos, a Berlin-based fintech company on a mission to make the salary journey of millions of migrant workers more transparent, convenient, and less expensive. Born out of the need for shipping companies and seafarers to find a more effective, affordable, and safe method for the salary payment process. Kadmos does so by providing a secure salary payments platform for shipping companies that facilitates the efficient paying of their crews. 

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