Cash currency

Technology and Trust Key to Unlock Financial Services for Refugees and the Underbanked

This week, the United Nations estimated 65.6 million people worldwide were displaced from their homes, the largest number ever recorded.

For those forced to flee to a different country or displaced in their own state, access to the formal financial sector can be critical. However, often the most vulnerable people are unable to obtain credit, buy insurance or make other purchases that would help them cope with daily demands, set up a business, or save money safely for the future.

The problem is global and extends far beyond refugees, with the World Bank estimating that around 2 billion people live without access to formal financial services. Over 50 percent of adults in the poorest homes are also underbanked, the same report said.

How to reach these different groups was the theme of a video webinar hosted by on June 20, World Refugee Day, and moderated by Nina Nieuwoudt, senior business leader for public sector and humanitarian solutions at Mastercard.

Thea Anderson, Mercy Corps’ director for financial inclusion said organizations assisting refugees or internally displaced people should make use of established financial service methods.

“We’re not starting from scratch,” she said. “I think we can apply a lot of the same lessons we already know from financial services in general, but also financial services for vulnerable populations.”

Anderson said there is a place for digital innovation to help communities. Case studies from Bangladesh, Zimbabwe and Ethiopia show promise for cash aid delivered via electronic channels, which offer users the ability to better track the status of their funds.

But she cautioned that projects need to be balanced with conditions on the ground, the abilities of partner organizations, and the digital fluency of the intended beneficiaries. 

Sucharita Mukherjee, vice chair of IFMR Trust, a private trust that invests in companies delivering financial services to India’s low-income population, said economic migrants face similar barriers to financial access as refugees when moving between states in India.

When migrating, they lose access to informal credit histories tied to their community connections and relationships, or other semi-formal chit schemes that offer some avenues to financing.  


For internal migrants, displaced people and refugees, proving identity remains a large barrier to being able to use the formal financial system.

The Aadhaar system, a national registry in India that gives users a unique code, has helped close some of the gap for migrants, according to Mukherjee, but large numbers of people still live with limited access to financial institutions in the country.

Finding a way to provide a government-issued or functional ID – perhaps in digital form – that can be used across borders is a concept being explored by some aid groups, Anderson said.

Attention to resolving the issue for refugees or displaced people could also be a catalyst to fix it for other groups who are not fleeing conflict zones but live without recognized IDs.

Greater financial inclusion could come from increased technology adoption, a change in attitude to banks and within the industry, and greater competition, panel members said.

“Finance is sort of the ultimate tool to me, to smooth things out to make your dreams and goals and aspirations happen,” Mukherjee said, describing the larger purpose of her work.

“What we believe deeply is that finance unlocks development,” she added. “Ultimately it unlocks the freedom of the individual or a household to make the choices they need to make about their future.”


According to an International Monetary Fund report, India has about 13 commercial bank branches available for every 100,000 adults. While the country has more banks in total than the United States and China, among others, its access ratio is lower because of its large population.

More Indians will gain access to financial services via wider adoption of mobile phones and financial services that can be used with the devices, Mukherjee said.

Urban communities are adopting the tools faster than rural areas, but Mukherjee believes younger people are more likely to use available technology in either location, which could serve as a catalyst for more people to sign up for financial services.

India’s established banks and the financial services industry should also become more accommodating to the underbanked, she added.

“There is still exclusion because [poor] customers are not respected and are not welcome in bank branches,” she said. The consumer goods industry, which adapts items to suit all strata of consumers, should be a model banks follow for innovative products to reach underserved individuals, she added.

More competition within the financial service sector would also benefit consumers, she argued. “Monopoly profits” are possible because banking regulations and policy hurdles keep out new companies, she explained.

Mercy Corps’ Anderson said it was important to know the regulations you must work within when offering financial services, adding that trust is a key component to encourage participation and give customers methods of recourse.