As an immigrant settling in the UK, you will face various financial challenges. Unfamiliar financial systems, international money transfers, and credit history can be overwhelming.
At Remitly, we understand the challenges you may face when moving overseas. In this article, we explore the importance of FinTech companies in the UK and how they offer the best financial solutions to immigrants.
The Importance of Tech Startups in UK FinTech
Traditional banks and banking systems often cater to the needs of locals, which is why they may not always be the best option for immigrants. As a result, immigrants face challenges such as high banking costs, language barriers, and limited access to financial tools and features.
To address this problem, tech startups are increasingly becoming integral to the financial environment. FinTech companies are developing tools that ease financial management.
These tools help immigrants make better financial decisions regarding saving, investing, and overall financial independence.
The startups seek to address several challenges facing locals and immigrants. Here are a few of the most important.
Access to credit
As an immigrant in the UK, your financial history from your home country becomes irrelevant concerning credit. Some FinTech companies seek to address this challenge by enabling migrants to transfer their credit history from their home country to the UK.
Cross-border access to credit data already works for people moving from the United States to the UK. Of course, data privacy issues still make this an uphill task, but many startups that have picked up on it are optimistic things will get easier.
Other startups have products that make it possible for immigrants to gain access to credit, depending on realistic parameters. For instance, Yonder allows UK immigrants to access credit cards without a prior credit history.
Building generational wealth
Many banks offer ways for immigrants to send money to their home countries. However, only a handful have products that help immigrants build generational wealth within the United Kingdom.
Some tech startups have products that allow immigrants to save money and let their descendants use it within the country. These companies equip immigrants with the financial resources they need to succeed in the UK.
For instance, Remitly provides extensive information about topics such as affordable housing in the UK, the best businesses to start, and how to integrate into the UK culture for long-term prosperity.
Getting paid fairly
Immigrants sometimes have to deal with high banking costs. They do not take home an equal amount of money as their native colleagues. Startup FinTech companies seek to correct this imbalance by offering services that level the playing field. That means immigrants and locals pay the same fees to use banking services.
Language barriers
While immigrants to the UK should have some knowledge of the English language, fluency is not always on point. They may fail to understand the nuances and slang associated with the language.
Traditional banking systems do not make it easy for such people to enjoy financial services. Tech startups in the UK FinTech space allow immigrants to access financial services in different languages.
Convenience and security
Convenience and security are another concern for immigrants. Luckily, FinTech companies in the UK have developed products like mobile apps that allow fast access to financial services.
Through mobile apps and online portals, people can transfer money, make payments, receive money, learn about investing opportunities and more.
FinTech companies have also developed several security features to ensure customers do not lose money. Data encryptions, anti-phishing software, and multi-level authentication are among the features that secure money transactions.
Unlike in the past, these startups ensure transactions happen within minutes. Someone living and working in the UK, for example, can send or receive money from across the globe within minutes.
Leading UK Startups for Immigrant Financial Solutions
Several FinTech startups have achieved significant success in providing financial solutions to immigrants in the UK. Here are some of the most notable.
Remitly
Remitly is one of the most reputable FinTech companies in the world. It makes sending and receiving money in over 170 countries convenient for immigrants.
This FinTech service offers some of the most competitive fees in the market. An added advantage is that you can see the costs before completing any transaction.
You can also track your transactions in real time. The company guarantees on-time delivery and refunds the transaction fee if it fails.
Another advantage of using this company’s services is its flexible delivery options. Bank transfers, cash pickups, mobile money, and home delivery are all available.
Monzo
Monzo is an online bank that serves people worldwide. It enables customers, including immigrants, to withdraw money from ATMs in the UK for free.
It also has a feature that allows customers to save money in a separate account. That can be an ideal solution for anyone who wants to save money for future expenses.
Another upside to using this online bank is that it gives comprehensive insights into your financial situation. You get real-time updates on bank balances and transactions. You can also find out if you are eligible for a credit card and break down your bills according to date and time.
Revolut
Revolut is another excellent FinTech company serving immigrants in the UK. It allows you to hold and manage your money in over 30 different currencies without incurring costs.
You can also send and receive money 24 hours a day, even on weekends. Its feature helps you track your spending, and you can set aside money for bills and subscriptions.
As an immigrant seeking to make extra money in the UK, this FinTech company simplifies your work by enabling you to invest in stocks and ETFs. If you open a savings account, you can rest assured that your money will earn significant interest over time.
The service also includes a freelancing account that makes managing income and expenses a breeze.
CreditLadder
CreditLadder is an innovative FinTech startup that can help you build a good credit score. It reports your rent payments to the four credit reference agencies in the country: Equifax, Experian, TransUnion, and Crediva.
The startup uses Open Banking to access and share your payment data with relevant agencies. You don’t have to log in to your account and go through a tedious process of sharing your information—instead, everything is automated.
If you consistently pay your rent on time, this can have a positive impact on your score. You’ll be able to access higher credit limits, and you can also start receiving lower interest rates on credit cards.
Another upside to this service is that you may get cash-back rewards on certain transactions.
The service also facilitates feedback from lenders so you better understand why an application was rejected.
Finally, with a good credit score, you can negotiate better deals with potential lenders.
Pockit
Pockit is a FinTech company that makes financial transactions convenient for immigrants in the UK. As an immigrant, you can simply sign up for an account online or through the mobile app.
The company provides a prepaid MasterCard within two days of signing up. You can use the card to make purchases in stores and online. You can add cash to your card at PayPoints, through a debit card, or via bank transfer.
Additionally, you can withdraw money from any ATM with the MasterCard logo. Pockit is a FinTech startup that helps you build a credit report. Since it has data on your spending, you can use that to submit reports to credit agencies in the UK.
Pockit offers convenience in that you have three methods of paying and sending money: the mobile app, online portal, or prepaid credit card.
The Impact of FinTech Startups on UK immigrants
FinTech startups have a lot of benefits for immigrants in the UK. A few of the positive impacts include:
- Financial literacy. FinTech startups are leading the way in educating immigrants on various issues. They offer advice on things like investing, saving, and diversifying sources of income.
- Convenience and security. These startups offer services and tools to increase convenience. Mobile apps, online portals, and credit cards are among the things that make it easy for immigrants to learn and transact both locally and internationally.
- Credit building. While traditional banks have been unable to help immigrants build credit histories, FinTech startups are doing it. CreditLadder and Pockit are among the best examples of FinTech companies in the UK that make it easier for immigrants to build credit histories and access financial services and products that would otherwise be out of reach.
- Strengthening social connections. FinTech companies make sending money from one country to another affordable and convenient, helping keep families connected. Immigrants working in the UK can send money back home, while those in school or unemployed receive money from home.
The Future of Fintech in the UK
Emerging trends in fintech
Blockchain and cryptocurrency: As the world embraces these new technologies, it is clear that some FinTech companies are exploring ways to integrate them into their services. Blockchain and cryptocurrency technologies may soon become a good option for immigrants in the UK to send and receive money.
AI technology: Artificial Intelligence is another technology that may come in handy in providing financial services to immigrants. This technology may be harnessed to help immigrants learn about investing, saving, and budgeting.
Open banking: This has become a game changer in some countries because it simplifies how financial institutions share data. The trend is likely to continue and even encompass multiple countries, leading to the provision of more personalised services for immigrants.
Challenges facing FinTech companies in the UK
Regulatory compliance: Because FinTech companies offer new services and tools, many countries have not fully adjusted to the sector’s demands. FinTech companies still face difficulties complying with financial laws, especially when serving immigrants.
Trust issues: FinTech companies offer relatively new solutions to financial problems, which means many people are still unaware of the safety and security involved. This makes some immigrants apprehensive about using the services of these startups.
Stiff competition: There has been a notable increase in FinTech startups in the UK. Each one must find ways to beat the competition, which can be a daunting task, especially for startups with little financial muscle.
Summing up
FinTech companies in the UK are changing the way immigrants access financial services. They offer convenience, affordability, and a safe way for immigrants to send and receive money.
They are also making it easy for immigrants to access things like credit, which can be crucial in achieving success. With that in mind, it’s easy to understand why the future of FinTech in the UK is looking very bright.
FAQs
What are FinTech companies, and how do they benefit immigrants in the UK?
FinTech companies use technology to offer financial services. They benefit immigrants by offering banking services such as savings, investment opportunities, and money transfers.
Can FinTech companies help immigrants without credit history in the UK?
Yes, some FinTech companies make it easy for immigrants to build a credit history quickly. A few also offer services such as credit cards to immigrants as long as they can access the immigrant’s financial history from their home country.
Can FinTech companies send money from the UK?
Yes. FinTech companies such as Remitly and Monzo make it possible for immigrants to send and receive money in multiple countries.