New market segments: migrants and financial innovation

This paper analyses migrants’ financial behaviour and financial services demand and investigates supply policies that banks can adopt in order to satisfy their specific financial needs. On the demand side we draw a theoretical framework about migrants’ life cycle and financial needs to identify the sequence of temporal phases that usually characterize migrants’ demand for financial products and services. Adopting this perspective, we consider the relationship among phases and goals of migratory project, priority of basic needs and resulting prioritisation of intervention by social and governmental institutions, structure of banking markets and “bancarisation” of the native population. On the supply side, we identify which features the supply of financial services and products should have in order to satisfy migrants’ financial needs during their life cycle; banks should consider the “life value” of these new citizens and start up relationships in the expectation that they will become profitable customers in the medium-long run. In particular, we focus on three main groups of financial services, remittances, mortgages and pension schemes, because at present they are the most significant drivers for financial innovation. We also focus on banking experiences from different countries to identify the best practices to address migrants’ financial needs.