Due to the nature of widely segmented Diaspora Communities, there have not been much financial services that are tailored to the Diaspora’s specific needs, simply because the market has always been too narrow and segmented for traditional banks and financial institutions.
For each Diaspora, the transition from a home country usually takes five major phases that are very similar to the widely researched phases of grief.
On arrival to a new environment or country, one is faced with a new environment and goes into a phase of denial, where the world does not seem to make much sense. And everything can get overwhelming to adapt to this new environment.
Over time, the stage of anger sets in, when one feels abandoned and misunderstood or neglected in the new environment. The next phase is bargaining with the conditions to try to get to terms and accept what you cannot change. After bargaining, emptiness can set in that drives one into a ‘Diaspora depression’. Eventually, a person gets into a phase of acceptance, where life in the new environment starts to make sense.
Within this transformation, the financial disorientation is very common and, depending on the duration someone spends in one of the given phases, there is a set up in the personal financial development. Financial advice is rare or misinformed, at times based on advice from family back home who are not aware of the new realities. It is no surprise that wrong financial decisions are made within these phases. If informed financial decision is taken during these phases, the Diaspora becomes financial giants such as the case of Elon Musk, multi-faceted entrepreneur and co-founder of Paypal. What Fintech can do for the Diaspora is to customize financial services that match with the Diaspora’s lifestyle and to foster more Diaspora members to emulate success stories such as Elon Musk.
Services such as Diafcon that was unveiled at the Uganda UK Convention for the first time are currently under development, and the Diaspora community should take advantage when these services start getting available within the next 5 years.
As one of the Diafcon founders, Patrick Mukanza spoke about the opportunities that come with open banking – mainly focusing on how this may benefit the Diaspora communities. He explained that Diafcon aims to facilitate financial planning – creating a platform that will collect several features used by the Diaspora people into one single application. A much higher level of customization and personalized services can be provided when an open banking framework is in place, at a much lower cost – or no cost at all.
The Diaspora needs to move with the trend now. Coincidentally, one of the strong pillars of open banking, which is a new European legislation known as second Payment Services Directive (PSD2) came into effect on 14th September 2019, the UK Uganda Convention Day!