After holding an accelerator in Europe for inclusive FinTechs serving refugees, Village Capital has produced a report stating that Europe's financial system excludes refugees lacking formal identification or language skills, who may hold the key to the FinTech future.

The non-profit, which has supported entrepreneurs in 28 countries, conducted interviews with investors, non-governmental organisations, financial institutions, academics, mobile operators and refugees. It found barriers to serving refugee populations inside Europe and provided several recommendations to reduce these barriers:

Governments should specify how financial services providers can tailor due diligence for refugees, for example by detailing exactly which identity documents refugees can use to open accounts; as only half of EU national regulators have issued formal guidelines on the financial inclusion of refugees and IDs from refugee producing countries often remain invalid for Know Your Customer purposes.

Startups should make refugees part of the team to gain insights into a diverse user group with different financial service priorities to other population groups, or gather information through knowledge gathering tools.

Investors should use the Refugee Investment Network’s Refugee Investment Lens to evaluate different types of refugee-focused investment opportunities and consider which type of entity - refugee led, refugee focused, etc - they are interested in supporting.

Allie Burns, chief executive at Village Capital, said: “Between 2015 and 2017, three million people fled violence or persecution to seek refugee status in the European Union, one of the most important questions has become how to integrate refugees into the formal financial systems of their new homes."

The report pointed out that the Coronavirus pandemic will only accelerate these challenges. Many businesses have recently gone cashless to protect the health of workers and customers, which locks out anyone without a credit card. Many banks are now easing lending requirements, which only widens the access gap for refugees who still lack an account.

"There is so much exciting innovation around financial health coming out of Europe — but European FinTechs face barriers around working with refugee populations," continued Burns. "Changing that will require a coordinated effort from investors, financial institutions and government leaders."

Village Capital's next grant-giving accelerator, with PayPal and MetLife Foundation, called Finance Forward Europe, has a deadline for applications of 25 April.

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