Are you worried about your financial life after relocating? You’re not alone. About 53% of immigrants struggle with financial obligations such as setting up a bank account and managing their finances to pay utility bills, medical expenses, and other needs.
FinTech solutions such as Remitly understand your concerns. We strive to make the shift as smooth as possible by offering services to help manage your finances when living abroad and send money internationally. Dive into this simple guide to understand the world of FinTech.
Defining financial technology (FinTech)
Financial technology (FinTech) is software used to enable and deliver financial services to consumers digitally. Financial payments/services companies like Remitly integrate technology to help customers transact via their computers and mobile phones from any supported location.
As a FinTech customer, you don’t necessarily have to visit a physical location to access financial services. Transactions are digital.
Overview of FinTech’s evolution and role in modern finance
The global pandemic accelerated consumer exposure to digital life. Social distancing rules, isolation, and reduced contact propelled the world into a cashless economy. It’s easy to assume this is when financial and banking services integrated information technology to improve service delivery. However, that’s not the case.
FinTech has been part of the banking and financial sector since the late 19th century, about 1866. Electronic money transfer services previously relied on Morse code and the telegraph. 100 years later, in 1967, the industry evolved.
Barclays Bank disrupted the market with Automatic Teller Machines (ATMs). This was the beginning of FinTech as we know it. Consumers could avoid the bank, and instead visit ATMs in different locations. All they needed was a card with a magnetic strip. ATMs evolved to include microchips as an extra security layer.
The market saw real change in the 20th century when computers evolved from their primitive designs and online banking was invented. Additionally, technology supported a different growth in the financial sector: a shift from traditional banks to Money Service Businesses (MSBs).
The MSB industry experienced accelerated growth from 2008. In 2011, Remitly was founded—and we’ve continuously played a key role in redefining modern finance. Remitly has impacted over 170 countries, including the United Kingdom. You can send money electronically in over 100 currencies from 30 countries, and receive it in 170 countries, 24 hours a day.
The modern finance landscape has also changed. The world has become a global village, allowing people to send money anywhere within minutes. Unfortunately, new societal issues such as money laundering, privacy breaches, and hacking are a concern.
Fortunately, the modern finance scenery is well regulated. At Remitly, we comply with the law, including the European Union’s General Data Protection Regulation (GDPR) and the Financial Conduct Authority (FCA). Our transfer process is quick, affordable, and secure. We’re proud to be named one of the best FinTech companies in the world.
Importance of FinTech for immigrants
Most people relocate in search of a better life. Consequently, making money brings new problems—how to affordably and conveniently spend, save, access credit, and remit to your loved ones. FinTech helps solve these problems in the following ways.
- Build credit history. Establishing credit for the first time in the UK can be difficult. Lenders want to access your credit information to understand your rating. FinTech helps you establish a credit history, increasing chances for a successful loan application.
- Offer an opportunity for financial inclusion. Data from FinTech companies are influencing policy in the UK financial sector, where the system is looking into addressing access to finance for the unbanked based on their remittances.
- Build customer trust. Background checks in FinTech are part of the Know Your Customer (KYC) dance. It helps build trust when customers are seeking financial services while living abroad. At Remitly, we’re legally obligated to run background checks and identity verification as part of onboarding.
Accessing FinTech solutions is the first step in enjoying these benefits.
Key FinTech Solutions for Immigrants
There are key FinTech solutions that will make your life in the UK easier.
Simplifying banking access and financial integration
Remitly, for example, is a digital financial services provider that allows you to send money directly to your family’s bank account or mobile wallet. You can also send the money to familiar cash pick-up locations or have the money delivered to their doorstep.
These are mobile banking solutions. However, Remitly isn’t a bank. It’s a service that simplifies banking access and financial integration by allowing you to connect your bank account, debit card, credit card, or ApplePay to fund your Remitly account and transfer funds to your loved ones.
FinTech solutions such as these allow you to avoid the long queues at the bank and send money without revealing your personal details.
Enhancing credit access and building financial trust
Getting started and settling down as an immigrant may be challenging, especially in the early days. You may need easy access to credit without the hassle of visiting banks to ease the transition. FinTech solutions provide for digital lending and credit. They are convenient, fast, and accessed via a mobile device or computer.
FinTech solutions don’t issue loans. However, once you access funds, you can use the platform to distribute the money according to your needs. Importantly, you shouldn’t use FinTech to pay for goods and services. While it’s possible, you do so at your own risk because you’re sending money to someone you don’t know, potentially exposing yourself to a scam.
What’s more, your account history may be used to help build financial trust when seeking credit.
Using mobile payments and digital wallets
FinTech simplifies banking access, financial integration, and credit access for immigrants. You’ll also build financial trust with the relevant businesses to make your life abroad easier. But how do you interact with this money?
FinTech eliminates cashiers, cash, and cheques from financial transactions. Mobile payments and digital wallets mean you can access money from your bank account, credit card, or debit card from your phone or computer and feed it directly into a digital wallet.
A digital wallet is an online service or application for making electronic payments and storing multiple cards, such as cryptocurrency, electronic tickets, and loyalty cards, among other documents. Mobile payments are made via a portable electronic device such as a mobile phone.
Accessing money with such ease exposes immigrants to risks such as scams, hacking, and poor financial decisions. Fortunately, FinTech companies offer support.
How FinTech Companies Support Immigrants
FinTech’s accessibility is a pro to the service, but it comes with a cost—studies show that immigrants have lower financial literacy than non-immigrants. Therefore, there’s a need for support. Here are three main ways that FinTech companies support immigrants.
Providing financial literacy and educational resources
FinTech companies use digital technology to drive global finance through software and websites, including blogs.
The blog section offers educational resources on making life easier for immigrants, including guides on different cities, and how to thrive in them.
There’s also easy-to-understand information on essential money topics such as:
- Investing
- Budgeting and tools to use
- Return-on-Investment (ROI)
- Cybersecurity
- Scam/fraud techniques
- Credit access
- Debt management
- Money transfer issues, including fees and exchange rates
Offering safe and convenient money transfer services
It’s a legal obligation for FinTech companies to provide safe money transfer services. The UK has a clear legal and policy framework for MSBs. These include:
- The Proceeds of Crime Act 2002 (POCA)
- The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
- Payment Services Regulations 2017
- The Electronic Money Regulations 2011
- General Data Protection Regulation (GDPR)
These laws help protect immigrants and all MSB users from data breaches, fraudulent transactions, and other money vices.
The speed and convenience of the transfer service aren’t regulated. They’re left at the discretion of your money transfer service. These factors make some services better than others, mainly explaining why only half of the listed FinTech companies were profitable in 2022.
With a laid-out legal and regulatory landscape, FinTech companies can innovate within the law’s confines to offer their customers clear value propositions. Some companies are ahead of the rest.
Innovative FinTech companies to watch
FinTech companies that succeed do things differently—a lot of money is invested in growth and innovation. In Ireland, for example, retail banks invested over €3 billion in technology and innovation in the last five years, and €400m was spent on over 100 FinTech companies.
Key FinTech innovations that fuel growth include:
- Artificial Intelligence (AI)
- Open banking
- Electronic payments
- Blockchain
- Digital banking
- Digital payments
- Asset management
- AI chatbots
- Embedded finance
- Hyper automation
- Regulatory technology
- Insurance
- Digital wallets
At Remitly, we’ve invested heavily in innovation to offer top-notch services. We have an AI-powered virtual support assistant,reducing our response time by 75%. We also use machine learning to tackle fraud, an issue that has cost consumers over €9.6 billion.
Unfortunately, as FinTech companies and regulatory authorities work to provide more innovative, secure, and convenient money transfer services, fraudsters are getting more complex.
Overcoming Challenges with FinTech Tools
Global losses from digital fraud were at an all-time high of €46 billion in 2024. Other challenges in the sector were:
- User retention and experience
- AI bias
- Regulatory compliance
- Data privacy
- Data breaches
- Data security
- Cyber security threats
- Financial crime
- Changing laws
Navigating legal and regulatory frameworks
The FinTech regulatory framework is dynamic. FinTech companies must constantly adapt to the changing legal landscape or risk non-compliance. To stay competitive and reduce risk, FinTech companies invest in seminars and workshops, and retain top legal consultants.
Even with the latest legal information and accompanying compliance, FinTech companies face a new issue—sophisticated cybersecurity risks that threaten data security and privacy efforts.
Addressing concerns around data security and privacy
As a response, FinTech companies hire the best IT consultants and invest in cutting-edge technology to keep up with the latest cyber risks. Some interventions to address data security and privacy concerns are:
- Advanced encryption
- Two-factor authentication
- Intrusion detection systems (IDS)
- Biometric verification
- Strict compliance measures
Unfortunately, even with these interventions, some customers fall prey to fraudsters.
Strategies to avoid scams and fraudulent platforms
Customers are lured into scams and fraudulent platforms through methods outside their legitimate MSB platforms. Techniques such as smishing and phishing, where attackers pose as legitimate companies to deceive customers into revealing sensitive information and installing malware are common forms to look out for.
Accordingly, FinTechs invest in consumer education on scams and fraud avoidance. Best practices include:
- Do not share your passwords and One-Time-Pins (OTPs) with anyone, including the bank’s or MSB’s employees.
- Do not log in to FinTech applications via public WI-FI.
- Do not click on links and attachments from suspicious sources in your email or text messages.
- Enable Multi-Factor Authentication (MFA)
- Update your knowledge of signs of an attack
Despite these challenges, the future is promising.
Future Trends in FinTech for Immigrants
The technological landscape in the financial services market evolves fast. But, there are three main areas you should understand.
The role of AI and machine learning in FinTech
AI and machine learning greatly influence your interactions with a financial services provider. They influence data analysis and personalization by evaluating your data, such as spending, to personalize your experience.
For example, through AI and machine learning, a FinTech company can track the specific friends and family members you frequently send money to. When you log in, their details will always be the first you see when sending money.
Emerging technologies: blockchain and cryptocurrency
Blockchain and cryptocurrency take AI and machine learning to a higher level. The decade-old technology eliminates the need for intermediaries, such as banks, and offers tamper-resistant transaction records between the sender and recipient.
These two innovations have created a new model for financial operations known as decentralized finance (DeFi). Unbanked customers can still transact with these, leading to inclusive financial systems.
The expansion of inclusive financial services
According to the World Bank, inclusive financial services have reduced the number of adults without an account to 1.4 billion in 2021, from 2.5 billion 10 years earlier. These services expand access to financial services to the lowest-income customers.
To achieve this, financial service providers should embrace innovation to build creative products with low transactional costs and reach people in remote areas.
FAQs
What is FinTech in simple words?
Financial technology (Fintech )is the use of technology to improve financial services like banking, payments, investments, and lending. It enables and delivers financial services to consumers digitally, allowing cashless transactions anywhere in the world.
What is FinTech for beginners?
FinTech includes digital tools like mobile banking apps, online payment platforms, and cryptocurrency that make managing money safer, easier, and more accessible.
Who is eligible for fintech?
Anyone can use FinTech, with some eligibility criteria like age and residency in effect. You only need a smartphone to download the app or a computer to access the website.
Exploring FinTech in Countries Like the UK
Fintech in the UK is similar to the rest of the world. However, ensure that your service of choice complies with regulations such as the GDPR.
How to safely use FinTech
Avoid fraud and scams by learning about the latest cyberattacks and techniques. Don’t share your passwords and One-Time-Pins (OTPs), avoid clicking suspicious links, don’t log in through public Wi-Fi, and enable Multi-Factor-Authentication (MFA).
