Those working in fintech, especially in product development, such as myself at Profee, know very well that we always need to be on the lookout for new user segments. Lately, the fintech industry has been exploring such a segment: digital nomads. Let’s have a look into how these people operate and what fintechs can do for them.
Who are Digital Nomads?
Digital nomadism is yet to fit into a single definition. However, a Digital Nomad is usually a person who travels and keeps a steady income, commonly working in IT, marketing, or creative industries. These people often take advantage of geoarbitrage, a concept that implies having a higher income level and moving to places with a lower cost of living, e.g. enjoying life in Mexico as a U.S. citizen working for a U.S. company.
Special visa regimes
While over half of the world’s digital nomads come from the US, the movement is rapidly gaining steam in other places as well, first of all, Europe. Facilitated by the pandemic, this trend is further driven by the growing number of European countries offering the so-called Digital Nomad Visas, a special kind of residence permit for high-income, highly qualified professionals with employers/clients abroad.
Among such countries in Europe are Cyprus where Profee is based, Estonia, Norway, Croatia, Portugal, Greece, Hungary, etc. Others, like Spain and Italy, are looking to finalise their respective visa legislations soon. The requirements and conditions vary significantly from country to country. Say, Germany or Greece give no tax preferences to Digital Nomads, while in Croatia they are tax-exempt. In the Czech Republic, one can apply for a nomad visa for free; at the same time, Norway charges each applicant (including spouses) €600.
This type of visa is also a popular option for many island countries that usually offer much more relaxed conditions to digital nomads. Some examples include:
Malta Nomad Residence Permit. Application cost: €300. Duration of stay: 1 year. Income: €2,700/month. Income tax: none
Barbados Welcome Stamp. Application cost: $2,000. Duration of stay: 1 year. Income: $50,000/year. Income tax: none
Dominican Republic: Work In Nature. Application cost: $100+$800. Duration of stay: 18 months. Income: $70,000/year. Income tax: none
In my opinion, for governments, Digital Nomadism is becoming the ‘new oil’. Instead of exporting fossil fuels, authorities create an inflow of cash by inviting economically active populations who earn their (rather high) income abroad but spend it in the country. Considering that by some estimates, 35 million digital nomads create around $787 billion of the global economic value per year, any government would be happy to have its share of this cake. As would any fintech service provider.
Digital Nomads as Fintech Consumers
Digital nomads are ideal customers for the fintech industry. They have money, and they need to move it across borders. When I contemplate what an international remittance service could do to make digital nomads’ lives easier, I step into their shoes to understand their routines and needs.
Money and payments. The first group, the most obvious one for a fintech professional, is finance-related. Digital nomads receive, manage and spend money, and they need instruments such as bank accounts, payment cards, money transfer services.
This doesn’t seem to differ much from any other working person’s arrangements, but some of these instruments require to be fine-tuned to the specific needs of a digital nomad who acts on an international scale. For example, most nomads have personal and/or official financial obligations in their home country. They might need to send money to support their elderly parents, or pay bills and taxes on their property, or make payments towards a loan. An international money transfer service effectively addresses these challenges, and we see many such use cases at Profee.
Also, our globe-trotters commonly deal with various currencies since they might earn their income in euros but pay for their groceries in bahts. Based on Profee’s expertise in this field, a multicurrency wallet is an optimal solution. Similarly, digital nomads would be conversion rate-smart which means they seek the best offer on the market for their currency transactions, or services that might alert them to such offers – another prospective feature for providers to consider.
Many working travellers might require budget-planning tools. Fintech opportunities are plenty here, ranging from in-app analytical features to special emergency reserve accounts.
However, in the digital nomads’ case, money-related services are part of a larger ecosystem. Partnerships may help providers ensure a more streamlined user experience. Let’s see what those could be.
Prospects to Explore
Many digital nomads are freelancers who use gig economy platforms to find clients. Partnering with such platforms could streamline the money management processes for users.
Travelling to a new country often requires a great deal of research on where to go, what to do, and, importantly, how much it costs. Integrating payment providers with services covering accommodation, transport, events, etc. would be a win-win solution for all sides.
Those digital nomads who consider settling down abroad for some time might be interested in the respective residence permits. Which means they need legal and tax assistance, and providers such as Profee could act as a gateway to those types of support.
Leading a global lifestyle, many digital nomads would benefit from global access to services, and this could be enabled through Profee-like providers. For example, they might need an insurance scheme that works in multiple countries. Or enjoy the benefits of their loyalty cards on a global scale. Or, take advantage of a free course in local history while honing their professional skills online.
As we can see, the opportunities are many. I am positive that the popularity of remote work in general and digital nomadism in particular will keep growing. Fintech service providers should investigate this group’s needs and the ways to address those with their products. For Profee, this is definitely on our list of professional resolutions for 2023.
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- Source: https://www.finextra.com/blogposting/23553/fintech-and-digital-nomadism-match-made-in-heaven?utm_medium=rssfinextra&utm_source=finextrablogs