At least once a month, Muriel Michael, who works in supply-chain management in Germany, sends money home to the Philippines to support her family. It can be a time-consuming and expensive process involving several financial institutions, including a local bank, a transfer company and a cash pickup point at the destination.
Now she has found a better solution. Rewire is a digital neobank for the 270 million people who work in another country and need to manage their money across borders, including sending payments back home. Rewire uses technology to make financial services accessible and simplifies the process by offering low-cost international money transfers, as well as banking, credit card and bill-pay options.
“Now my family always receives the money on time,” said Michael, 31.
Despite overseas workers’ increasing role in the global economy, they often struggle with access to bank accounts and other financial services. When they can use financial services, they must often deal with multiple accounts.
A hybrid between a digital bank and a money-transfer company, Israel-based Rewire focuses on solving the challenges for these migrant workers, whose global business is estimated at $1 trillion. They are eager for affordable banking and financial services.
“This really simplifies people’s lives,” said Alex Bakir, general manager for Rewire in Europe, where the company has recently expanded into 19 countries.
The company began in Israel in 2015 to serve the thousands of Filipinos mostly working here as domestic caregivers for the elderly. Investors include the OurCrowd venture investment platform, Viola Fintech and Moneta VC – all based in Israel – together with BNP Paribas (Opera Tech) and Standard Bank of South Africa.
In 2019, about 270 million migrant workers transferred $715 billion to their home countries, according to World Bank estimates. The money plays a vital role in the economies of developing countries, like the Philippines, where such remittances are equal to 10% of gross domestic product, according to the World Economic Forum. In 2019, these remittances exceeded five percent of GDP in 57 countries, the IMF reports. The money went mostly to low-income households. In the current health crisis, the need for that income is acute. “Adequate and timely policy responses from both remittance-sending and remittance-receiving countries are critical to help migrant workers,” says the IMF.
Financial logistics have long been a challenge for migrant workers. Globally, the average cost of sending $200 abroad is 6.8%, or $13.60, according to the World Bank, a figure that has drawn criticism from advocates of migrant workers, who say money transfers should be simple and more affordable.
Rewire charges roughly half of the average transfer fee of major institutions in Europe.
“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families,” said Dilip Ratha, head of the think tank KNOMAD, the Global Knowledge Partnership on Migration and Development.
“Just in five minutes, I sit down at my home and transfer money to Nigeria, and they get it,” said Emelde, a migrant worker who uses the service. “There are so many apps to send money, but Rewire is always on top.”
Rewire also provides users in Europe with an online EU bank account and debit card so they can more easily and securely manage and spend money locally, including receiving direct deposit of their salaries. Migrants only need a passport to open the account, and do not have to provide proof of address or pay slips, as commonly required by traditional banks.
The company and its banking partners and investors are in the process of launching other services, including cross-border saving accounts, loans, insurance and bill-pay features, that users and their families can use in both their work and home countries. This will ultimately make the app a one-stop shop for financial needs, ending the common reliance on several institutions in different countries, said Rewire’s CEO and co-founder Guy Kashtan.
“We will provide all these services under a single platform, aimed at helping migrants and their families save more for a better future,” Kashtan said.
Rewire is an example of how fintechs and banks are increasingly cooperating, rather than competing, a trend that Daniel Tsiddon, co-founder of investors Viola Fintech, calls “fintegration.”
“Rewire has succeeded in creating a solution for the target community that greatly needs this type of resolution, while winning favor with banks and educating them as to how they can best serve this community and expand their activities,” Tsiddon said.
Although the ongoing coronavirus pandemic and accompanying global economic downturn has reduced average remittance payments sent around the world, the company saw its revenue grow even as the world economy contracted.
Kashtan attributes this to more users across Europe turning to digital, rather than in-person, financial transactions as countries entered lockdowns. It could also be due to Rewire’s award-winning technology. The company won the Fintech category of Samsung’s Xtreme Tech Challenge in July.
Although cash will continue to play a large role in the migrant worker economy, Rewire expects many of its new customers to stay even after the pandemic wanes.
“People aren’t going back to their previous habits because this is faster and more secure,” Bakir said. “There is a real digital transformation going on here.”
For more information on Rewire, click HERE.