It is an exodus of Biblical proportion. According to the United Nations, nearly one in every two people in Syria has been forced from their home by the internecine war. Of them, some four million people, a fifth of the population, have fled the country.
Many in Europe have reacted negatively to the crowds of refugees crossing the Continent. But refugees aren’t just a burden. They can be a benefit and by serving them banks could do well by doing good. According to several studies immigrants are more likely to start businesses than the native-born and are less likely to commit serious crimes. In the U.S., for example, nearly one in five small-business owners (18%) were born abroad, though immigrants make up just 13% of the population.
But as the refugees seeking help and support are finding, life as a stateless person is anything but simple. Cut off from home, often with no official ID, they are being excluded from society and from access to banks.
“Refugees, as soon as they leave the country, lose their financial access,” says Sibos 2015 speaker Christine Duhaime, executive director of the Vancouver-based Digital Finance Institute, which is trying to tackle the financial exclusion of refugees. “Whatever they have in their bank accounts, they are never going to be able to access again. Especially in situations like Syria, money may still be banks — but those banks are controlled by terrorists.”
Part of the problem, says Duhaime, is the stringent identity and anti-money laundering regulations in place. Without official ID, many refugees can not access the banking system.
“Even if they have ID, they can’t get jobs. And anyway, they don’t have money, so why would anyone want to bank them?”
Syrian Refugee Crisis: The Numbers
Registered Syrian refugees
Number of displaced people in Syria
Population of Syria (2013)
% of Syrian refugees under 18
Number of Syrian refugees in Europe
Sources: UNHCR, syrianrefugees.eu, World Bank, US State Department
The problem of financial exclusion is vast, says Duhaime. “When we talk about two billion people being unbanked, no one ever thought to include in that number what that means for the refugee population. We need to go back to the drawing board and say what is the problem, how do we solve this?
Dragged Down By Banking Regulations
“We have to move beyond this onerous banking regulation just to move money to refugees. The problem is too acute. We are being dragged down by all these banking regulations.”
There are two timescales to the problems, says Paul Makin, head of financial inclusion at UK-based Consult Hyperion, a firm of financial consultants: the acute problem of getting immediate support to refugees; and a longer-term problem of helping refugees either return to their home country, or integrate into their host nation.
While zealous application of regulations such as the identity requirements of Know Your Customer (KYC) and anti-money laundering provisions may have contributed to the financial exclusion problems faced by many refugees, some financial companies are coming up with solutions.
Currently refugees based in official camps are given vouchers to exchange with merchants for supplies. It is expensive and open to abuse. “Sometimes there are as many as 20 agencies getting involved,” says Duhaime. “By the time you have donated one dollar something like only 10¢ ends up in the hands of a refugee.”
Instead, says Makin, use contactless charge cards and issue cheap Android phones (which support NFC) to merchants. Such a scheme, called TeMS and developed by Hyperion, was used in Nigeria in regions with little or no mobile coverage for distributing money to farmers, he said.
Empty contactless cards are issued and securely charged with cash by camp officials. “The refugee can then take that card and use it as a normal contactless payment card at local retailers to buy whatever. You are no longer restricted to the face value of vouchers — you never get change.”
Reaching Those Outside The Camps Is Problematic
“The retailer goes home at night. He can upload the transactions from the smartphone. We get the information on our servers and we can do the reconciliation. We can directly transfer the money to the retailers to reimburse them.”
But, admits Makin, while its system might help reduce the byzantine complexity of distributing aid in camps, refugees outside of camps are harder to reach.
The relatively small number of refugees in camps is a major difference with the Syrian crisis. For example, according to UN figures, of the estimated 1,587,000 refugees living in Turkey, just 217,000 are in camps.
Reaching those living outside the camps requires a completely different approach, says Sibos 2015 speaker Akhtar Badshah, founder of Catalytic Innovators Group, a consulting practice focused on accelerating social impact, and previously the manager of Microsoft’s global philanthropy portfolio.
One existing scheme he highlighted was a collaboration between card issuer MasterCard and aid agency Mercy Corps. In 2013, Mercy Corps, with MasterCard support, piloted two mobile voucher systems to deliver aid more quickly and securely in times of emergency — one in Nepal and one in the eastern Democratic Republic of Congo, where thousands of families have been uprooted by conflict and violence.
Steve Jobs Was The Son Of A Syrian Immigrant
This approach still requires agencies getting to refugees. It would be better to have structures that refugees can tap into themselves, says Badshah. “The other is to figure out different ways in which social entrepreneurs and social innovators may get support from the financial and the banking industry to see how these efforts could be scaled.
“Kopa Kopa is an interesting approach in Kenya where a bunch of social entrepreneurs with investments from social investment funds have kind of created a service which is piggybacking on top of M-Pesa, the mobile financial service in Kenya.
“It is creating a mobile payment system with shops that can accept the M-Pesa credit. These guys process at the back end, keep a bit of money, and now a small ‘mom and pop’ shop can take this money. As these people come part of the system, they also have access to credit that is being offered by Kopa Kopa. The credit is paid off by the transactions that are being done by the merchant.”
This, he suggests, offers a way for refugees, most of whom flee with a mobile phone, to easily access non-traditional financial services. “If you landed up in Jordan and in Jordan they were using mobile payment systems such as Kopa Kopa then I could tap into that as a refugee.”
Perhaps it is worth remembering one previous Syrian immigrant from the city of Homs. A man called Abdul Fattah Jandali who first left in 1952 for the U.S.. Jandali had a son that he had to put up for adoption. His name? Steve Jobs.