Banking Fintech Mobile & Online

Selma Ribica on tackling the financial exclusion of migrants across Europe

Selma Ribica on tackling the financial exclusion of migrants across Europe. Photo: paul prescott,
Written by Phil Siarri

Phil Siarri talks to Selma Ribica, director at Lebara Financial Services, where she is in charge of building the financial services vertical for parent company Lebara, a leading mobile virtual network operator for immigrants across nine European markets.

Hi Selma, nice to connect with you. Can you tell us a little about your professional background and what led you to join Lebara?

My professional career could be described in these words: international, diverse and social impact. I’ve lived in seven countries, in emerging and developed markets, working in startups and large multinational corporations. I’m passionate about using technology to bring about a positive impact for development issues, and in particular how technology can make financial services more inclusive of low-income population and migrants. Currently in the world there are two billion people excluded from financial services, and 254 million migrants who have limited access to financial products. There’s clearly an opportunity here for products that serve these segments, empowering people to build a better future while building sustainable, profitable businesses.

Selma Ribica, LebaraAfter graduating from Insead in 2011, I joined M-Pesa, the most successful mobile money service in the world, which is used by over 25 million people (Kenya, Tanzania, DRC, Egypt, India, Romania, Albania, Mozambique, Lesotho and Ghana). M-Pesa provides basic financial services to those who would otherwise remain excluded. During my time in M-Pesa, I worked on launching M-Pesa in new markets and building new products, expanding the way people can use it. I built the first mobile-to-mobile international corridor in East Africa, enabling people to send money from Kenya to Tanzania by phone, halving the cost of remittances between two countries and reducing the informal remittance flows. Later on, I closed partnerships with global remittance players and MTN Money in Uganda, Rwanda, Zambia, and hopefully this will be also be live in DRC, Mozambique and Lesotho.

In August 2015, I joined Lebara with an ambition to build a version of M-Pesa for migrants in developed markets, across Lebara’s European footprint. Lebara is traditionally a telecom player who disrupted the price of international calling 10 years ago, and acquired a large market share of the migrants market in the UK, Germany, Spain, the Netherlands, France and Denmark.

Aside from international calling, migrants have many unmet financial needs and limited access to certain financial products. I joined to build a fintech vertical within the company, and since then we built and launched our first financial product: a transparent and affordable money transfer service.

We are a diverse team of talented people from many countries: India, Israel, the Netherlands, Belgium, Bosnia, Lithuania, the UK, and a very agile team of developers based in Ukraine. Being immigrants ourselves, we’re sensitive to the needs of our customers and passionate about building the answer to the financial exclusion of migrants across Europe. So far, it’s been an exciting and fast-growth journey.

Your customer base is very much affected by currency fluctuations. How is your product offering addressing this?

Lebara Money is a new venture that aims to offer really good and very easy to access solutions to the financial needs of expats and migrants living in the UK and other parts of Europe. Our first product, the international money transfer service, is a great starting point for us given this is probably the most common and pressing financial need our target audience has. The money transfer market is relatively competitive in the UK, given that there are several VC-backed digital players who already disrupt pricing in certain corridors, and offer a much more cost-effective solution vs traditional players such as banks or Western Union.

We decided to go beyond competing only on cost, and developed a service that overcomes two of the most significant pain points people feel when needing to send money abroad regularly: the hassle of being sure you’ve found a good rate relative to what’s available at the time, and dealing with constantly fluctuating international exchange rates – a particular challenge in the current political climate; Brexit, Trump administration, and political statements on Twitter can cause significant currency fluctuations. On our blog, we present analysis of how the savings of an Indian migrant might have been affected by currency fluctuation in the period between March 2014 and March 2017, and the drop is as high as 41%!

Our key feature ‘Like It, Lock It’, took the “forward fx contract” concept, which is usually available to business and high net worth individuals, and brought it to the mass migrant market by allowing our customers to lock the fx rate they see for up to 30 days, and on values as small as £100.

It has been a good way to set out our stall to our customers, offering them an innovative, yet easy-to-use solution better than anything currently available.

What other barriers do immigrant communities face when it comes to access to financial services?

Migrants and expats in Europe are often underbanked – in other words they have limited access to financial services and/or they end up overpaying for financial services due to their limited financial identity profile, or ability to start one. To illustrate, opening bank accounts is difficult in some countries when you’ve just arrived, when a bank requests you to provide a proof of address, while in order to rent a flat you need a bank account and need to pass comprehensive reference checks, which is basically impossible if you’ve just arrived and have no (or limited) history.

Access to loans or credit cards is another example. For a while, up to 2-3 years, migrants’ access to loans is limited until one builds a credit profile, and money transfer is often expensive using traditional players such as banks and brick-and-mortar money transfer operators. We seek to fill that gap in the market, and by using smart technology to manage risk, to offer more accessible financial services designed for migrants’ and expats’ needs.

What do you think are the underlying causes of migrants having limited access to financial services?

I believe the key reasons lie within the inflexibility of banks to adapt their processes, risk management, and technology to the new realities. Banks have been operating for decades and sometimes hundreds of years in a highly regulated environment, with barriers to entry and low competition, and this created a protective cushion that stopped them from evolving and focusing on the customer. In the meantime, migration has been growing, and European regulation has allowed for more levels of licensing, opening doors for smaller players to leverage technology and build more customer-focused, nimble financial services companies, one use case at the time. This is how the fintech industry was born.

In the particular case of migrants, it is the risk management of banks that’s outdated, inflexible and lacking ‘layers’ of services, making it difficult to offer basic financial identity to someone coming from abroad. Deploying a risk-based approach would be a way to go, where everyone has a right to open a basic ‘light’ account, with an account number, debit card and no overdraft – and to do so with minimum documents and checks to allow the newcomers to create a financial identity. Fintech challengers can choose to ask for alternative documents, and deploy new ways of validating credit risk when giving out loans.

What’s next for Lebara Money this year?

The ambition is to build a range of products based on meeting the financial needs of our target audience, with an emphasis on addressing important need areas where migrants are most poorly served currently: financial identity and small loans. We’re looking to expand the services portfolio mostly through partnerships, and being in London – one of main fintech capitals of the world – there are plenty of potential partners interested in working with us and jointly addressing the unmet needs of Lebara’s five million customer base. Our second big goal for 2017 is the international expansion into all Lebara markets: France, Germany, the Netherlands and Spain.

READ NEXT: The challenges of mobile financial inclusion

Photo: paul prescott,

About the author

Phil Siarri

Phil Siarri is an innovation management professional and fintech observer. He has been selected as one of Canada’s top 40 social influencers in finance, innovation and risk by Thomson Reuters, as well as top 50 fintech influencers in Montreal by FinFusion.

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