Fintech and Digital Nomadism: Match Made in Heaven
Those who work in fintech, especially in product development, like myself in Profee, know very well that we must always be on the lookout for new user segments. Lately, the fintech industry has explored one such segment: digital nomads. Let’s take a look at how these people operate and what fintech can do for them.
Who are digital nomads?
Digital nomadism has yet to fit into a single definition. However, a digital nomad is usually a person who travels and has a stable income, who usually works in IT, marketing or creative industries. These people often take advantage of geoarbitrage, a concept that involves having a higher income level and moving to places with a lower cost of living, such as enjoying life in Mexico as a US citizen working for a US company.
Special visa regimes
While more than half of the world’s digital nomads come from the United States, the movement is also growing rapidly elsewhere, primarily in 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 type 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, such as Spain and Italy, want to finalize their respective visa laws soon. The requirements and conditions vary considerably from country to country. Let’s say, Germany or Greece do not give any tax preferences to Digital Nomads, while in Croatia they are tax exempt. In the Czech Republic, you can apply for a nomadic 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 fee: €300. Duration of stay: 1 year. Income: €2,700/month. Income tax: none
Barbados welcome stamp. Application fee: $2,000. Duration of stay: 1 year. Income: $50,000/year. Income tax: none
Dominican Republic: Work in nature. Application Fee: $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, the government creates an influx of cash by inviting economically active populations who earn their (rather high) income abroad but spend it domestically. Considering that 35 million digital nomads, by some estimates, create around $787 billion of global economic value per year, any government would love to have its share of this pie. Like any fintech service provider.
Digital nomads as Fintech consumers
Digital nomads are ideal customers for the fintech industry. They have money, and they have to move it across borders. When I think about what an international money transfer service can do to make the lives of digital nomads easier, I step into their shoes to understand their routines and needs.
Money and payments. The first group, the most obvious to 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 does not seem to differ much from other workers’ arrangements, but some of these instruments require to be fine-tuned to the specific needs of a digital nomad acting on an international scale. For example, most nomads have personal and/or official financial obligations in their home country. They may need to send money to support their elderly parents, or pay bills and taxes on their property, or pay off a loan. An international money transfer service solves these challenges effectively, and we see many such use cases at Profee.
In addition, our globe trotters often deal with different currencies since they may earn their income in euros but pay for their groceries in baht. Based on Profee’s expertise in this field, a multi-currency wallet is an optimal solution. Similarly, digital nomads will be conversion rate savvy, meaning they seek the best deal on the market for their currency transactions, or services that can alert them to such deals – another potential feature for providers to consider.
Many business travelers may need budget planning tools. Fintech opportunities abound here, ranging from analytical functions in the app to special emergency reserve accounts.
But in the case of the digital nomads, money-related services are part of a larger ecosystem. Partnerships can help providers ensure a more streamlined user experience. Let’s see what they might be.
Prospects to explore
Many digital nomads are freelancers who use gig economy platforms to find clients. Partnerships with such platforms can streamline money management processes for users.
Traveling to a new country often requires a lot of research into where to go, what to do and, importantly, how much it costs. Integrating payment providers with services covering accommodation, transport, events etc. will be a win-win solution for all parties.
The digital nomads who are considering settling abroad for a while may be interested in the respective residence permits. Which means they need legal and tax assistance, and providers like Profee can act as a gateway to this kind of support.
Leading a global lifestyle, many digital nomads will benefit from global access to services, and this can be made possible through providers like Profee. For example, they may need an insurance scheme that works in several countries. Or enjoy the benefits of their loyalty card on a global scale. Or take advantage of a free local history course while honing your professional skills online.
As we can see, the possibilities are many. I am positive that the popularity of remote work in general and digital nomadism in particular will continue to grow. Fintech service providers should investigate the needs of this group and the ways to address them with their products. For Profee, this is definitely on our list of professional resolutions for 2023.
