I’m calling it. Finance has a xenophobia problem.
I’ve experienced it first hand on numerous occasions. Just a few years ago, I was setting up a business in Holland. After six months of struggle, I never managed to open a bank account because, while my company was Dutch, my passport wasn’t.
If you don’t have a local passport, you’re essentially cut off from local banking systems even if you’re contributing to the local economy. Doing business internationally shouldn’t be a problem in the 21st century, but when it impacts genuine, local business affairs, we know it is.
And it’s not just me. My case is one of millions and it’s a pervasive issue in the business world. Many entrepreneurs are being prevented from scaling their business internationally and taking advantage of the global business and financial hubs in the West. Geographical barriers shouldn’t get in the way of genuine business. It’s time to properly address the issue.
The risk issue
Finance’s xenophobia issue stems from the industry’s approach to risk. Financial institutions see risk everywhere. It’s not surprising – dodgy financial dealings across the globe are on the rise, and negative sentiment – even in the public-eye – towards finance is rife. Just look at the Pandora Papers leak.
But, for me, finance’s reluctance to engage with foreign activity is summed up when entities from abroad, completely legitimately, attempt to establish full business bank account solutions in the UK. Typically, full business bank account solution applications take a lengthy 4 weeks to 3 months to approve from abroad.
Defining risk by nationality is old-fashioned. If you don’t want to do any due diligence or investigate the nature of business, it’s easy to simply reject passports. However, in a world where you can check everything online, assessing risk properly doesn’t have to be difficult. The aim of FinTech isn’t to improve the perception of risk, but the way we assess it.
Of course, it’s expected that financial institutions approach any sort of financial activity with caution. This is what we, as customers, expect from governing bodies. But only within reason.
In 2021, business leaders from abroad should never have to be judged by their passports. Finance needs to be more inclusive to avoid alienation on a global scale. As an industry, we need to spend more time understanding foreign businesses – who they are, what they do, who their business partners are – and what their aims are for the future, as opposed to judging them too quickly and turning them down. This will actually make identifying risk easier in the long-run. If we fail to do so, we could end up missing out on many of the world’s best innovations.
As Europe’s leading financial hub, London, is one of the world’s most iconic and influential cities. That’s a hard-earned reputation, so why waste it? The London pull means thousands of global innovators, ambitious businesses and smart entrepreneurs are all lining up ready to do business and invest in the United Kingdom. If xenophobia in finance remains, we risk shutting the door on all of these great minds and stifling consumer choice. This cannot be allowed to happen, particularly as the world re-builds from the pandemic and the UK’s post-Brexit future is determined.
My call to the industry is simple: work harder to quit xenophobia. Follow suit to wise up and quell the risk of losing out on many of the best companies and trade in the world. Our global commerce depends on it.
About the Author
Ivan Zhizenskiy is a Co-Founder and the CEO at global bank challenger 3S Money. Hailing from Russia and starting his career as a university lecturer and then a BBC journalist, Ivan moved into finance. He now has 13 years’ experience in the industry. In 2018, Ivan co-founded 3S Money, a FinTech company helping corporate clients send, collect and exchange money in 190 countries. In 2021, 3S Money achieved profitability and is continuing to scale with offices in London, Luxembourg, Amsterdam, Riga and Dubai. Ivan is a prominent UK FinTech industry leader and regular commentator on finance, business and innovation.