1101. Insights: Why does your financial life reset when you move countries?

0:14Welcome to Fintech Insider Insights. I'm Benjamin Ensor, Director of Research and Strategy at 11FS. Now, moving countries has in many ways never been easier, but moving your financial life with you can be a different story. You can arrive in a new country with a good job, years of financial history, and a record of managing your money responsibly, and yet suddenly find that the financial system knows nothing about you. So that's exactly the problem our partners at Paymentology and Maxim are trying to tackle through a new partnership announced this week. Maxim has launched its UK credit card program, initially focused on the Nigerian diaspora, with Paymentology providing the issuer processing infrastructure behind it.

0:56The aim is to help Africans living across borders build their financial identity and access products designed around how they actually live their lives and spend money. And it leads to a much bigger question for financial services. For decades, diaspora banking has largely been associated with one thing, sending money to communities back home. But people living across borders need far more than just remittances. So on this week's episode of Fintech Insider, in partnership with Paymentology, we're asking, What should financial services designed around people whose lives cross borders look like?

1:31So to help unpack this, I'm delighted to be joined by three experts. First of all, we have a welcome back to the show for Marusha Naidoo, Global Head of Partnerships at Paymentology. Marusha, welcome back to the show. Please could you remind our listeners a little bit about you and a little bit about your role at Paymentology? Perfect. Thanks, Benjamin. I'm so happy to be back as usual. I lead global partnerships at Paymentology, where we work very closely with banks and fintechs to bring new car programs to market and really help them scale across regions. That really gives me a front row into, you know, being able to see the gaps and how, you know, even though payments are so global, a lot of these banks and financial systems still operate very, very locally.

2:18And that's really what we try to change. And one of the things I love about Maxime is, you know, I moved from South Africa to the UK. And so the experience of having to like rebuild your financial history and your credit history and, you know, it resonated so well with me. And so, you know, we really want to understand as a professional, how do we help these types of customers? How do we really create real financial inclusion and create a borderless experience for customers where my identity remains my identity? So, you know, really excited to be here and excited to have this conversation with Ibrahim and Valerie.

2:57Exciting. So, yes, I'm also excited to welcome Ibrahim Oladele, founder of Maxim. Ibrahim, welcome. Could I ask you also to tell our listeners a little bit about you and a little bit about your company? Thank you, Benjamin. Thank you for having me. My name is Ibrahim, founder and CEO of Markzim. Before Markzim, I built and exited Vesicash, a licensed merchant of record platform operating across multiple countries on the continent. So I've spent most of my career on cross-border money infrastructure. My name is a credit-forced bank and card for globally mobile Africans. We are starting with Nigeria as in the UK, like you mentioned, and we run a parallel operation in Nigeria as today.

3:44And basically the goal is to make life easier and create a universally acceptable financial identity for people's lives across multiple countries and multiple jurisdictions. Thank you so much for having me. It's our pleasure. And I'm also delighted to welcome back to the pod, Valerie Contour, founder of Black in Fintech. It's really great to have you on the show again, Valerie. Could you also just remind our listeners a little bit about you and a little bit about Black in Fintech? Hi, Ben. Thank you for having me. So yeah, glad to be back. So my name is Valerie Contour. As Ben said, Black in Fintech is predominantly a network of Black founders, Black operators, Black investors.

4:23And we're really looking to see how do we solve for inclusive innovation and target or leverage fintech to be a force for good for communities that have been underserved by traditional financial services. I guess when it comes to myself, looking at my career, I've only ever worked in credit. So I started off my career at Funding Circle, which is the UK's largest lending platform for small businesses. And I now currently work in credit products at a bank. So really honored to be here and be a part of the conversation. Welcome. Welcome to all three of you. Okay, well, let's start with what happens when your financial life stops at the border.

4:57So, Marusha, what happens when somebody, you know, like you, or like anyone, moves to another country? You know, I think all of us who've visited other countries are often sort of quite pleasantly surprised that, you know, our cards work internationally, and it's actually all a lot easier than it used to be, you know, 20, 30 years ago when people used to have to get traveler's checks and so on. So, as a visitor, it always, it seems quite easy. But if you move countries, it's a different question, right? Absolutely. And then when you think about it, a border can really act like a reset button, right?

5:33And think of it this way. You have a skilled person with a stable income. You know, they have years of financial behavior and history and a reputation back home. And they move to a new country and they expect to have the same facilities. They expect to be able to open up a bank account or rent an apartment. They expect to be able to take out a, you know, a mobile phone contract. But then you land in the country and it's like, you're nobody. You have no credit history. You are completely excluded from all of these different, you know, these different tools or financial services, right? And so when you think about it, you know, a customer is treated as, you know, genuinely risky when, I mean, they're treated as risky, even though in their own country, they're actually these highly skilled, you know, even in cases, entrepreneurs who have businesses back home, but they can't even get a bank account, right?

6:32So when I moved to the UK, I was like, okay, how do I get a bank account? Couldn't go get a bank account from any of the top banks. I literally had to go to a digital bank and say, you know, these are my accounts from South Africa, can you please help me? And it was just the most difficult experience. So that is kind of like what all of, you know, when we look at the diaspora community coming into the UK, this is what they experience. They can't rent an apartment, they can't get an account, they can't get a mobile, you know, a contract, they literally can't do anything. And, you know, you're still waiting for your visas to come through, you're waiting for your, you know, your first pay slip and all of those things.

7:08But the question is, what does a customer do in that time, within that first month. And that, I think, was probably the scariest experience for me when I moved over. And we see this happen every day. So it's actually worse than being a 16-year-old, right? Because when you're a new customer age 16, you're a blank sheet of paper, but you have a sort of identity. I mean, you're saying actually the problem is almost that you almost don't recognize that you have any right to exist. Exactly. We don't fit within the local system, right? We fall outside of that. So how do you make me? How do you include me?

7:42Right? And that's the question. Because it's an identity problem as well as a sort of credit risk. Exactly. Ibrahim, you must be seeing this a lot. This must be part of what has driven you to set up, Maxim. Is that right? Yeah. I mean, I just didn't only say it. I expressed it myself when I moved back in 2021. I was having a chat with Marisha recently. And I was telling her how it took me three months. to even be able to rent the house in the UK, right? And this is me coming from Nigeria as a global talent to the UK. I have a company. We've raised money at that point. My informations were publicly available.

8:26You know, I printed on my statement, tried to show it to all these agents, but still they couldn't confirm my affordability to them according to the framework they use in assessing. and they're not sure I'm not risking, right? Even though I can show them. But what really mattered most at that point to me was just get me, let me just be able to rent a house, right? So eventually I was able to rent a house, but the interesting part of that is I had to pay for six months before so I can guarantee and I can show up with the ability in that regard. So to me, it's more like I was just invisible but to the entire financial framework at that point, even though I have, I'll say, a capable financial record from where I was coming from.

9:17But the most important part of it for me was, it is like that for almost everyone across borders. It is the same experience. Just like Marisha as well, I couldn't open any high street bank. I had to start from the digital banks. And that took me like six months before I could open a digital bank. It took me 26 months to get my first credit card in the UK. Right. So these are like the experience. This is what the experience of an ideal expat or some of the most countries, this is what their experience is like. And basically for us, we've seen enough and we realize, okay, this is a problem that is worth solving for people moving across the foreign countries.

10:02As of today, we have over 20 million people. in this particular situation. So for us, it's very important that we solve this problem for this particular set of people. Thank you. And Valerie, initially it sounds like it's just a credit problem, right? That it's hard to move to a new country and get a credit card or it's hard to move to a new country and get a mortgage, which is not totally surprising. It's not good, but it's not totally surprising. But it's bigger than that, isn't it? Because Ibrahim is saying he's got a really good income, he's running a company, he's got lots of assets, and yet even he can't rent a flat.

10:34He could probably buy a flat outright, but he can't rent one. So it's bigger than just credit, right? Yeah, it's bigger than just credit. And I think sometimes we think about the diasporas people that just send money back home, when actually they have real financial needs. It's beyond just being able to have a credit card. It's actually looking at the realities and being able to understand. They have pay slips. They have probably new savings accounts for that. They need to be able to rent houses. They need to have the full financial picture. So I think it's beyond just being able to have credit, it's being able to have all these different financial needs and having the financial products to support them when they are moving across a different country.

11:10One of the things that I think must be very surprising when you do move countries is that, you know, there are many brands that operate in many countries, right? So, you know, brands like Citi or Standard Chartered or in the past, you know, Barclays, HSBC, etc. were familiar brands. They're operating in multiple countries. And so people would move from a country and they'd move to a new country and the brand that they recognized would be there. And yet there would be no recognition of them by a brand. I mean, so why does the financial identity disappear when someone crosses the border? Ibrahim, you've obviously spent some time looking at this.

11:49What's the root cause of the problem? Is it literally that banks just can't look up credit scores in other countries? Is it they don't want to believe credit scores in other countries? Is it that the rules are stopping them from using publicly available information about who someone is from another country? What do you think are some of the root causes of this sort of disappearance of your identity when you cross borders? Yeah, I think it's by design. The design that currently exists today, the financial infrastructure design that exists today. is national by design, right? So I'm meant to check your credit history, your credit record, your financial identity in Nigeria or in the UK or in the US.

12:35Even though globally, right, it is two major models that the same model that they're using to underwrite in the UK is the same model they're using to underwrite in the US while they're doing it. Right? So we have two major models in the world, which is the Vantage model and the FICO underwriting model. But the point is, it's restricted nationally based on how it's designed. And for us, right, the important part of it is there's this universal model that you can use to underwrite these people. They have their record in different jurisdictions, right? They should be able to talk to each other. Ebron in Nigeria is still Ebron in the UK, right?

13:14I don't need to pay the poverty premium when I move to the UK. even if I'm from Nigeria and I wasn't poor from Nigeria where I'm coming from, right? So, I'd say it's by design, right? By design, credit assessment, credit underwriting is national, right? I think the time is right now because again, we are living in this day and age where global mobility is actually the fundamental driver of the global economy as it is now. Marginal team is cut out in multiple countries around the world, right? And I can say same for a lot of other companies as well that has like people working from all parts of the world.

13:55So that's what the world is now. The technology, the infrastructure that we have also need to move in the direction the world is moving. And that's where Maxim comes to ensure that there is like a unique identity, a unique financial identity for an individual irrespective of where they're from or where they're going basically. Thank you. marocha in in theory um a a bank a property company operating in the uk or france or wherever could use data from other countries whether you know whether that's data from nigeria data from the united states data from whichever market somebody's moving from they could use that data and use elements of their identity to do things like credit score and work out whether ibrahim is or isn't a good risk for, you know, the flat that he wants to rent or whatever it might be.

14:47What are some of the sort of practical and or legal barriers that stop companies from using foreign identities for people who are moving across borders like this? Yeah, so it's a couple of different things, right? And I think if you look at customer data right now, everyone is like, it's a very sensitive topic, right? If you look at GDPR, if you look at PII, and, you know, every country, DORA, every single region slash country has their own regulations around data. And so I think it's also a fear of, you know, we don't want to not comply with the regulators, right? And I think that is something that we need to start challenging more because the reality is, is as a customer, that data belongs to me, right?

15:38My identity belongs to me. And so there's got to be a way for banks and fintechs to create a playbook that actually says, look, at the end of the day, if I'm getting the consent from the customer and if the customer is saying, look, I am moving across the board, I'm giving you access to share my data so that my identity becomes a global identity, that then helps to fix the problem. That's one challenge. The other challenge that I think that we have is data is not the same everywhere, right? So if you look at a credit score in the UK, that's very different to a credit score in South Africa or other parts, like, for example, in Thailand, where to this day, I still can't get a credit card, even though I lived there for like eight years.

16:23Right. So I think data is extremely difficult because there's no playbook around like what are universal signals and universal data points that I can use. And I think that's one of the reasons why what Maxime is doing is so important. And I think it's really going to revolutionize how we look at a customer's identity and alternative data is because they're using practical data to create a persona for a customer. And so if you look at, for example, and Abraham, I'm going to steal one of your points from our last discussion, but, you know, the airtime piece. I mean, this is critical. This gives you real insight into customer behavior.

17:04how are they spending? Where are, you know, how regularly are they paying? And so when we start thinking outside the box around data and if we start stopping, you know, if we start to look at the regulation and say, actually, there is an area for me to play. There is an area for me to actually create a real identity with the customer's consent. I think that's an area that we need to start, you know, really looking at. And I would challenge all banks, regardless of whether it's in the UK or across Europe or globally, to say, look, how do you actually help solve that customer problem? Because actually, this is a universal problem.

17:41Maxime is solving, you know, for the UK and, you know, we're waiting to see where else it grows. But I think this is a universal problem that I think that the laws need to start being a little bit more agile. And fintechs also need to start questioning the data and how they can actually use it. Valerie, do you think it's part of the problem here that individual individual companies, regulators, and quite probably politicians, are just sort of underestimating the size of this problem, maybe ignoring it. Maybe are people just not realizing just how important diaspora are, how big the links between countries.

18:14I mean, I think, you know, the UK and Nigeria are a really good example. You know, there's two countries that have got a long, long history, and there are lots of people who've got Nigerian roots, who live in Britain and so on. So you've got very strong links between those two countries, And yet, maybe at a sort of governmental level or a national level, there's not really any recognition of the flow of people back and, and business, of course, back and forth. Do people just underestimate how big these flows are? Yeah, I think we significantly underestimate the power of the diaspora. So one key example is, of course, we've looked at music and culture.

18:48You see the power of the diaspora come through and we see Afro beats now on UK Topless. and a really good example is Ibrahim will know about Dirty December which is where typically the diaspora will go back home to Africa every December for Christmas and what you see now is that if you look for a BA ticket back home to Africa, it could be Ghana, it could be Lagos, wherever it be it is going to be double the price of what it is probably in like May that is the power of the diaspora they've been able to again like send money I think it's the total remittance flow is apparently 100 billion annually that's a lot of money That's right.

19:21Yeah, that's a lot of money that's being sent back home. So I think you've just underestimated the power of diaspora when it comes to financial services. I think on top of that, as Marisha was talking, I was thinking about the Consumer Credit Act, which is prevalent in the UK. That was made in the 1950s. That's when it typically came around. And when you think about the 1950s... I see where you're going. It's such a different world, right? Such a different world. People weren't globally mobile. People typically would have been globally mobile if you were really rich. So that's typically where you see your high net worth, ultra high net worth.

19:52You see the likes of standard chartered. Yes, they're in Nigeria, but they're typically only serving the ultra high net worth, which means they have their own specific credit model. So I think also an issue is that because the diaspora have been under-assessed, they don't have a specific credit model in the way that you would look at high net worth. Or for example, an individual looking for a mortgage versus a personal loan would have two different credit models or SME looking for a loan versus a large corporate, they'd have two different credit models. So I think there's also a conversation around the fact that These subset of people have very different financial behaviors and starting points and need their own, I guess, like credit model to assess them.

20:26And Marisha, you made fantastic points around different alternative data sources that can be used to feed into that. That's such an interesting point you're making about, you know, things that go back to the 50s. I'm also thinking of, you know, the credit scoring models. Yeah, you know, you're smiling as I say that, you know, because some of those are made on, you know, all sorts of assumptions that somebody made in the 50s about what a sort of credit-worthy person might do, some of which are just really quaint. I mean, I find the one in America where if you look up your credit score, it changes your credit score.

20:56It's such an odd thing that was probably perfectly logical in 1950, but it's just so outdated now. So I think what we're saying and what you're saying is actually some big firms have really missed a trick here. I mean, we've sort of named a few, you know, large international banks, but we're sort of saying actually large international banks, maybe large international insurance companies, a few other big firms, big wealth management firms, have really missed a trick here of helping not just the very wealthy, but, you know, just more normal people, more sort of ordinary people who, you know, professional workers, whatever, or company owners moving across companies.

21:37Ibrahim, is that kind of the market opportunity you see that just actually there's millions of people who are in this scenario, probably millions even in the UK and then millions more in every other European country and beyond. Is that how you see it? There's just a huge missed opportunity here to make life better for people with fintech. Yeah, I mean, one of the operating principles we have internally is the market is big, right? But we need to solve for the individual, right? It's over 20 million people that are not living in their country of birth as they today, around the world. It's over 20 million people, right?

22:22And so for us, right, we can as well say we want to go after 20 million people at a go, but we want to solve the problem for a brain first, you know, then we solve for the next Marussia, then the next person, then the next person. It's about the impact of solving the problem itself. It's not just about saying, oh, we want to compete against the guys that miss the plot, or we want to be better than them. We want to be better for the customer, right? That's why for us, it's more of, you know, how can we start? How can we solve the problem in a way that every single customer can understand the problem we're solving for them, which I think we've done a very good job at that right now.

23:10But the goal is improving their lives with the solution we're proposing as well. So for us, it's about solving for the first one person at the same time solving for the 3 million people who are in the world. Fabulous. Okay, well, why don't we take a break at this point? So we defined some of what the problem is. And so in the second half of the show, Why don't we look at sort of what comes next and how we start going about solving some of those problems and moving diaspora banking beyond just simply moving money home.

23:52Welcome back to FinTech Insider, where we're exploring what it would take to build financial services around increasingly global lives. So we talked in the first half about sort of some of the problems that are facing people. I think what would be great to do in the second half of the podcast is to talk about, in a bit more detail about some of the challenges and how we go about solving some of those. So the obvious sort of job to be done for diaspora customers has always been remittances, has always been sending money home. We've also been talking a lot about, you know, getting credit in the new country, being able to potentially borrow money.

24:29But, you know, Ibrahim, as you were talking earlier, you were also sort of talking about really just basic problems with just identity, of just being recognized as a person and recognized by systems that are designed around a sort of national identity that as a new person you don't necessarily have. Are there other challenges as well? Because I think as we think of the sort of diaspora more widely, so not just the person who's just moved to a country, but somebody who's maybe been living for a country 5, 10, 15, 20 years, or maybe even, you know, generations, but still got very strong links back to relatives in another country.

25:07What other sort of financial needs are there? And I'm not sure who I'm shooting that at. Maybe Marussia. I mean, this is a big question, but what are some of the financial needs of diaspora customers? So not just the newly arrived person, but, you know, people who've been in a new country for maybe half a generation. So that's a great question. And I'll speak, you know, from my experience. So obviously the first one is getting your initial bank account, right? Then it's starting to build up your credit history so you can actually get some kind of credit facility, right? And then, so there's two sides to this.

25:48There's me as an individual and there's me as part of the diaspora that's, you know, left my home country, right? And so as an individual, I have all of my individual needs. You know, like we say, mobile contracts, mortgages, insurance, all of those kinds of things. But then there's a big need for me to send money back home, right? And whether that's to just send money to my family, that's the first. The second is also to pay my bills that I still have in South Africa, right? So it's not just about, you know, P2P spend. It's about really being able to have financial tools that can service your lives in two countries.

26:27Because the reality is, is you always have one foot in one country and one in the other. And so being able to have like one act where I can do both, I can send my money, I can have my credit, I can have everything in one place where it's all linked to my identity and me being able to kind of operate these different versions of my life. Right. And so I think that's really something that we see as being able to create a borderless experience for customers with the infrastructure that we are bringing into, you know, the issue of processing space or the, you know, creating financial models and experiences for customers.