New Street Tech launches FAR on the side-lines of UNGA
After months of partnership and teamwork - a dream opening for FAR at the iconic UN HQ in NY during the UN General Assembly week
A Blockchain based solution that gives migrant workers financial freedom while unlocking a $20Bn market opportunity
Imagine a world where the flow of money is not chained by lack of information, where capital flows freely yet securely to the right stakeholders. A world where credit from legitimate formal sources help improve the lives of millions of families that have their lives and livelihoods split across different countries.
Last week, I had the privilege of unveiling an innovation that does just that. Representing New Street Tech in an event at the United Nations Head Quarters, on the side lines of the UN General Assembly in New York, it was my honour to announce the launch of FAR [Finance Against Remittances] from UAE to Nepal - the first ever FAR corridor globally. FAR runs on MiFiX, our proprietary Blockchain-powered ecosystem that connects money transfer providers in countries where migrant workers are employed, with banks in their home countries.
To give FAR some context, consider this – over 250 million people live and work in a foreign country having sacrificed a life with their family in return for a livelihood. And in their productive years these migrant workers contribute to the making of TWO economies. For example, a construction worker in Dubai doesn’t just build a skyscraper in the UAE, the host country; the money that he earns in Dubai and remits back home also helps build that nation - his home country. A staggering USD 600 billion+ in migrant remittances moves across 200+ corridors globally, annually. The consistency of these cross border flows and its macroeconomic impact renders it a very valuable proposition for all stakeholders involved - Remitter, Beneficiary, Money Transfer Operators (MTO), Banks, Governments alike.
The remittances industry has over the years witnessed a lot of innovation and competition, making frictionless, almost instantaneous, and price efficient flow of cross border remittances a reality. However, more recently, the following factors are posing challenges to the continued development of this industry and to the improvement of the migrant worker’s life.
- Rising cost of living, reduces wealth creation opportunities for a migrant worker in the home country. He needs access to credit during his productive years to create assets and livelihood options for his dependents and himself when he returns. But financial institutions in the Home country do not have enough information on the migrant to offer him credit and other financial services
- Price compression, rising cost of compliance, regulatory actions against money laundering etc. have rendered the remittances business less profitable for MTOs and Banks. They need their cost of operations to go down, especially their cost of acquiring and retaining customers
- Geopolitical changes have seen host countries becoming less welcoming of migrants, preferring that they don’t become a burden on these economies past their productive years. They would rather encourage them to build sustainable livelihoods back home, and the same is preferred by home countries too, who would love to see their migrant sons and daughters of the soil return back to a productive life and continue their contribution to the economy
- The regulators while being keen on stopping suspicious cross border money flows, are ending up creating barriers for legitimate migrant remittances to flow through at lower costs.
Its all these challenges that New Street Tech has risen to resolve with just one stroke of innovation - enabling FAR on MiFiX (our proprietary Blockchain enabled ecosystem) - by bringing information harmony and distributed processing capabilities to all stakeholders.
MiFiX already has thousands of customers and millions of dollars of financial services products delivered on behalf of our partner Banks, NBFCs, P2P lending platforms, Business Correspondents, Insurance Companies and other parties. By simply enabling MTOs in the host country as partners on the ecosystem we have made available reliable and immutable KYC and credit related information on remitters so that lenders can provide credit to the dependents of the migrants in the home country. Stakeholders can now receive information about the migrant, who regularly remits money, to build a credit profile, complete with KYC, proof of employment, and a track record of regular payments. They can then use this profile to provide credit and other financial services to workers’ families, supported by seamless remittance facilities that assure them of timely repayments.
A win-win for everyone involved.
- Migrant workers can get access to financial services in their home countries, and their families can access savings products, investments or cheaper credit through formal channels.
- MTOs get assured flows of remittances throughout the loan tenor implying a lower cost of acquiring/retain customers
- Banks see a jump in high quality assets backed by assured remittances along with the added benefit of cross-selling other services.
- Host countries benefit from the continued contribution of migrant workers, which adds to the GDP, while home countries continue to benefit from the contribution of migrant workers without needing to worry about their post-productive years.
- Last, but definitely not the least, FAR on MIFIX provides regulators the assurance that that there is no additional risk of illegitimate transactions creeping into formal cross-border funds transfer channels. At the same time, legitimate transactions that were routed through informal channels can be mainstreamed into formal channels.
- This is not just a means of creating widespread social impact, but collectively to the stakeholders, a $20 billion revenue opportunity has been unlocked which has remained evasive until now.
New Street Tech came together with Al Fardan Exchange, UAE, Laxmi Bank, Nepal; and with some support from the UNCDF, and our development partner KrypC Technologies; have launched the first ever FAR corridor globally – a business we all believe will create a huge positive commercial impact while making the world a better place, no matter where you live or work.
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