Migrants and financial services : which opportunities for financial innovation?

Since the middle of the 1990’s, international migration started to grow rapidly in most developed countries, with features indeed unique from several viewpoints: size, complexity, diversity and social implications . The implementation of effective policies to ensure immigrant integration, to attract the required skills to satisfy domestic needs and to fight against irregular entry and employment has become premium in the policy agenda of many countries over the past decades. An interesting aspect is that of financial inclusion of migrants, i.e. access to the mainstream financial sector by immigrants. However this is still a largely unexplored area although some countries have experienced benchmark initiatives in promoting financial inclusion and, more specifically, in migrants’ financial inclusion, sometimes through financial innovations. This chapter discusses the potential of migrants as banking customers and analyzes areas of innovation in order to better serve this market segment. The first part of the chapter provides an overview of the dimension of this untapped marked segment and follows on by introducing the issue of financial exclusion and the position of migrants as clusters at risk of financial exclusion. We then outline the migration phases and personal variables as key elements to evaluate customer relationship issues in the context of migrant life cycles. The following sections look at various product and financial innovations that can be used to target this market segment. The final section provides the conclusion.