Advancing Financial Inclusion Through Fast Digital ID Verification

People around the world are on the move. Time Magazine estimates that 6 million Americans live abroad, the Australian government figures one million of its citizens live aboard, while refugees number around 60 million worldwide.

Dilip Ratha, lead economist at the world bank, thinks the 250 million the bank counts as international migrants is, at 3.4 percent of the world population, too low.

“Compared to the growth of international trade and investment flows, the increase in international migration is negligible. The world needs more migration, for growth, for reducing poverty, for sharing prosperity. But it can’t, because “we” don’t want too many of “them”. Even if that makes both us and them poorer, our societies less interesting, and not necessarily safer.”

People are moving in all directions. The New Yorker did a piece on the growing Chinese population in Vancouver and said “A study by the Bank of China and the Hurun Report found that sixty per cent of the country’s rich people were either in the process of moving abroad or considering doing so.”

But the New York Times said many children of Chinese and Indian immigrants parents are moving back to their parents’ homeland for new opportunities, often to the consternation of their parents.

Margareth Tran …”after graduating from Cornell University in 2009 at the height of the recession, she could not find work on Wall Street, a long-held ambition. She moved to Shanghai and found a job at a management consulting firm.

Samir N. Kapadia left a consulting firm in Washington to move to Mumbai because “Markets are opening, people are coming up with ideas every day, there’s so much opportunity to mold and create,…People here are running much faster than the people in Washington.”

And, of course, millions of Middle Eastern refugees have been flowing out of Syria into adjacent countries, to Germany and other European nations and to Canada to escape war and start new lives.

Mobile Capabilities Remove Financial Barriers

Individuals on the move and the nations receiving them need a way to establish valid identities, issue credentials and make it possible for new arrivals to open bank accounts, find a place to live. They also need a mobile phone account to communicate with resettlement agencies, with family members who may be scattered across multiple countries and increasingly to be able to send and receive money.

For refugees, a validated credential is critical for qualifying for assistance. The Financial Times reports that Germany is planning to roll out compulsory computerized ID cards for refugees. The plastic photo and fingerprint ID cards will be issued by the first German official a refugee registers with, and the information will be linked to a centralized computer system.

Trulioo has a centralized identity verification solution that is interoperable and transparent, with one use case being able to provide governments and organizations a secure way to verify individuals who are new to a country and have thin or nonexistent files. Its GlobalGateway API is connected to more than 100 fully vetted, transparent and compliant data sources in over 40 countries to provide instant ID verification for 4 billion people.

The need for low-cost remittances is pressing. In 2014, the Overseas Development Institute called for the UK Financial Conduct Authority to investigate $1.8 billion in alleged excessive charges annually on remittances to Africa. The reports points a finger to the “duopoly” of two major international money transfer companies for instigating financial exclusion and calls for increased competition in the industry to tackle the imbalance of opportunity. As media buzz and high valuations for cashless remittances continue to flourish, payment volumes will continue to grow and the emerging mobile money networks will continue to spread like wildfire in countries like Kenya and Tanzania.

“We focus on a global ID verification from a consumer perspective,” said Jon Jones, president of Trulioo, “and we do it on a global scale through a trusted framework that incorporates traditional and non-traditional data assets. With verified identities in emerging markets, more financial opportunities become available to underserved groups.”

A trusted identity card is also a first step to helping refugees become integrated into the new country — through language and culture courses, education for those of student age, and apprenticeships and jobs for adults.

Refugees and jobs

“Refugees can only be accepted in a community if they have jobs,” said Hamdi Ulkaya, the Kurdish founder and CEO of Greek yogurt maker Chobani based in upstate New York. Ulukaya has 600 refugees working at his company’s plants in New York and Idaho. He has also founded Tent, an organization seeking corporate partners to bring both funding and expertise to the refugee problem.

Airbnb, Henry Schein, IKEA Foundation, Johnson & Johnson, LinkedIn, MasterCard, Pearson and UPS have signed on.

“If a refugee has a job, they are no longer a refugee,” Ulukaya said.

Tent promotes “the enormous and all too often overlooked potential of their refugees to shape a brighter future for their families and themselves.” The Economist agrees, saying that “it is vitally important to get refugees assimilated by getting them into work — they will more than pay their own way and will help Europe compensate for an aging workforce.”

Gillian Tett US editor and columnist at the Financial Times, wrote that “what makes Ulukaya’s move unusual — and admirable — is his unashamed embrace of the refugee cause.”

They may pay their own way, but not right away. BusinessWeek cites Joakim Ruist, an economist at the University of Gothenburg, who says it takes refugees on average 7 years to become self-supporting, and many never do.

But the combination of state support and charitable aid for refugees may give the Germany economy a boost, Peter Coy at BusinessWeek suggests, citing a study by the German Institute for Economic Research in Berlin. Refugees who get government aid will spend it, mostly on domestic goods and services, adding .1 to .2 percent to the country’s GDP.

About Tom Groenfeldt

I write - mostly about finance and technology, sometimes about art, occasionally about politics and the intersection of politics and economics. My work appears on and and occasionally in The American Banker and Banking Technology in London.
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