At a recent Ripple Regional customer event for Middle East and North Africa (MENA), two separate speakers highlighted the ability of fintech innovation to deliver social impact for historically underserved populations. Not only do these insights underscore the need for new digital banking and cross-border payment tools in the regions, but also provided better understanding of how some of these solutions are already improving everyday life for people in the United Arab Emirates (UAE) and China.
A Painful Remittance Experience in the UAE
Katherine Budd is the co-founder of UAE-based NOW Money. Launched three years ago with a vision to spread financial inclusion in the region, NOW Money is a free, digital bank account available to anyone in the UAE. It features 24/7 call center support, mobile top-ups, a debit card and remittance services.
Budd shared the story of Mac, an early user on the platform, to explain how and why fintech innovation is so critical for underserved populations. Mac is a former computer engineer that was earning $30 a month in the Philippines before moving to Dubai to take a job as an office cleaner making $300 a month.
Like most immigrants chasing better money, Mac sends most of his monthly income home to family. Budd says there are 4.5 million others like Mac in the UAE and more than 26 million in the Gulf region. Given that the average immigrant supports 5 people in their home country, Budd estimates a total of 130 million people depend on the remittance corridor out of the region.
This population is largely serviced by cash-based, brick-and-mortar businesses because regional banks do not view customers like Mac as profitable. Budd flashed an image of people waiting in line to send money through one of these stores to highlight the slow, expensive and hassle-filled experience for customers.
New, Mobile-Enabled Remittance Opportunity
Budd and her co-founder were inspired when comparing this painful reality to the 98 percent of people in the UAE that own smartphones. She said that within that number, migrant workers under 40 are even more likely than older, wealthier residents to own one. Budd’s aim was to build a digital, mobile-based banking service for the Gulf region, the world’s second largest remittance market only to the U.S.
Today, NOW Money offers digital remittance directly through its app. Employers pay employees through the free app, enabling customers like Mac to avoid standing in long lines or dealing in cash for their remittances.
Beyond the improvement to remittances, Budd also sees ancillary social benefits to the app. She cited stats that show women with access to bank accounts suffer less domestic abuse. And she said free mobile-based accounts allow people to avoid carrying cash in dangerous areas and can promote the growth of more startup businesses.
China’s Mobile and QR Code Advantage
Kapronasia’s Zennon Kapron reinforced Budd’s comments on fintech innovation powering financial inclusion using examples from a completely different market.
Kapron lived in China for the past 14-years before moving to Singapore in 2018. His firm tracks payments and fintech innovations in the broader Asia Pacific (APAC) region. Based on personal and professional observations, he said significant payment advances in the area have improved everyday life while advancing financial inclusion efforts.
Kapron had outlined some of these same trends at a prior Ripple Regional event in Bangkok. As part of that conversation and again here, he pointed to the high number of Chinese citizens owning smartphones and the rise of QR codes as two reasons the country holds such a lead in payments.
In China, the smartphone is the device of choice with projected peak penetration of 75 percent forecast to arrive in 2020. Kapron said this is one reason that Chinese merchants focus on m-commerce over e-commerce.
QR codes are a ubiquitous payment method in China. Simple and affordable to deploy, mobile platform agnostic, and equally effective in digital or physical formats, QR codes power much of the country’s mobile payments.
Fintech Powered Financial Inclusion
As Budd did for the UAE, Kapron shared examples of how Chinese citizens are using these new app-powered technologies to build new livelihoods or enhance existing ones.
He pointed to a woman living in one of China’s ghost cities whose family was experiencing hard times after her husband was laid off. Together with some friends, the woman launched a business selling baby clothes online. Using new payment technologies to power the business, she now makes $40,000 a year for her family.
Kapron also told the story of a barber famous for his haircuts. Using app-based tools to market, schedule and accept payment so that he didn’t need to carry cash, the man began traveling around the country giving haircuts to grow his earnings.
Regardless of the individual’s story or the region in which they live, the message is clear. The global pace of fintech innovation—whether it’s in cross-border payments or mobile banking—is gaining momentum and people everywhere stand to benefit.
Like Budd and Kapron, Ripple’s vision for Internet of Value is about more than just advancement in technology. It is about driving financial inclusion by making it as easy for anyone in the world to exchange value as it is for them to exchange information today. This shared vision is centered around empowering and improving the financial lives of billions of people across the globe.
