- Research has it that close to a third of the worlds’ population don’t have access to banking services.
- Mobile money transfers lauded for its efforts to bring inclusivity and equity.
A report from Times published October 29th gives insight on Blockchain technology and explains why a third of the world’s population lack access to banking services hence instead have opted and prefer mobile money transfer.
The report is steered from a statement of the World Bank president who spoke out in Washington earlier this year, drawing a comparison of cryptocurrencies to “Ponzi schemes.” On the contrary, cryptocurrencies, and blockchain are already taking center-stage in international development. Many in the development sector have high hopes that blockchain will offer solutions for close to 1.7 billion adults who aren’t in the banking system.
A Third of the World’s Population Lack Access to Banking Services
This is evident in individuals who earn low-income thus are not in a position to access financial services. Even in the developed countries, it is recorded that only 15% of Americans over 15 years prefer using financial services of banks.
However, this issue is dominant in developing countries whose citizens are forced to take high interest informal loans, save money in cash, and also make dangerous journeys to hand over cash to business associates or family members.
The Executive Chairman of the blockchain research institute, Don Tapscott, writes in his book Blockchain Revolution, that;
“Blockchain could be the solution. By lowering barriers to financial inclusion and enabling new models of entrepreneurship, the tonic of the market could be brought to bear on the dreams and ideas of billions of the unbanked.”
Mobile Money Transfers Lauded
Technology has had a profound effect on financial inclusion with the evolution of mobile money transfer. The best-known form of this is Kenya’s M-Pesa which is attributed to over 6 billion transactions annually and is being put to use by most households in the country. The service works via text where an M-Pesa agent deposits money to an account linked to a customers’ phone number and a text with the details sent to the recipient. The money deposited can then be transferred to another number where both parties will receive a message with the transaction’s details. The money can be converted to cash by an agent. A study conducted by MIT and Georgetown University economists found that M-Pesa has lifted the lives of 2% of Kenyan household from poverty.
Blockchain has been lauded as the next frontier for financial inclusion. However, blockchain wasn’t designed for low-income customers in mind and does not always address the challenges they face. Women, on average, have also been found to be far less interested in the emerging space.