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Often Shut Out of the Financial System, Refugees and Other Migrants Face Economic Integration Challenges

GDI team member, Ting Zhang, published an article featured in Migration Policy Institute where she reflects on the importance of financial inclusion and challenges for refugees and other migrants.

“Globally, significant strides have been made in recent years to expand affordable financial services to marginalized populations. Services such as low-cost microcredit and mobile money transfers have helped millions of people obtain loans, build credit, and benefit from an advanced, global financial system. Nevertheless, many refugees and other migrants in the Global North can encounter difficulties accessing financial services, due to inadequate identification, discriminatory business practices, and limited financial literacy, among other challenges. These barriers can prevent migrants from fully integrating into their host communities and can have wide ripple effects, given that a bank account is often essential to access formal employment, obtain housing, and manage expenses.

The landscape is uneven and differs for certain migrants in particular regions. For instance, the European Union is generally recognized as a global leader in financial inclusion, and EU regulators and financial service providers have offered lower fees and simplified onboarding processes to millions of displaced Ukrainians since the Russian invasion in 2022, helping these individuals access banks, credit cards, and other financial services. But other groups have tended not to receive the same accommodations, and many refugees and asylum seekers arriving in the region are financially sidelined. The 2014 EU Payment Accounts Directive, which grants refugees and asylum seekers the right to open basic bank accounts, has not been evenly implemented across the bloc. Furthermore, a 2017 study indicated that EU financial institutions lacked both capacity and willingness to serve refugees, even after 3 million asylum seekers arrived in Member States in the three-year period from 2015 through 2017. This reflects a broader tendency across many Western countries to be more receptive to certain groups of migrants over others, due to political leanings, public sentiment, geographic proximity, or other reasons. Globally, 75 percent of refugees and humanitarian migrants reside in developing countries, where access to formal financial services is even more limited.”