Could Blockchain Bring in Financial Inclusion?:
In an urban city, I’ve never had so much trouble spending money on electronics in Financial Inclusion. But when India was under the spell of demonization, although I had enough money in my account, I couldn’t spend it for a simple reason: Vendors, fruit sellers, or rickshaw shooters didn’t have a bank account.
It is fascinating to know that in India, where the mobile penetration is 65-75%, almost 19% of the Indian population is still broken (according to a report by Omidyar Network). While lower initial costs, connectivity, and profit margins are the main reasons banks operate in remote areas, the lack of KYC and valid documents makes it difficult for immigrants [from rural or neighboring countries] in urban cities to open a bank account.
Can Blockchain Technology Help Overcome These Challenges? The technology offers some unique features that allow banks and financial institutions to customize their products and services for easy use by banks and under the table. For example, the Philippine company Coins ph offers its users a blockchain-based platform that is compatible with mobile devices and allows users to send money cheaper and faster.
Combining the power of digital currencies with the agencies’ existing infrastructure, they can help people pay their bills, carry their wallets, buy bitcoin or Ethereum, and digitize and pay cashless payments.
Let’s dive a little deeper to find out if the blockchain can serve bankers in Financial Inclusion.
An employee at bankers?
End users (in this case the non-banking population) don’t care about the technology used and offer a solution, but are passionate about solutions that –
• Supports mobile devices [as the penetration of mobile devices is over 50% even in low-income countries]
• Serves as economic infrastructure for banks
• Customers can report directly, without the intervention of third parties
• It is not very good to use the solution.
• Accessible anytime, anywhere
• Most importantly, it is safe and reliable.
Fortunately, all these points can be solved by BLOCKCHAIN. So for now, we can say that Blockchain can help non-banks. What would be the implementation and execution? First, let’s look at areas where blockchain can help rural populations
How can blockchain bankers help?
Blockchain, a neutral network that eliminates the need for third parties/intermediaries, can help increase banks’ profits and costs, but it can benefit other areas.
• Digital identity
We have a virtual presence or identity on the Internet, but we have no control over which part of our identity is obtained from whom and for what purposes. For example, when drought/famine hits a region, government and international subsidies are provided, but we can never identify people under stress. Or, for example, refugees or illegal immigrants who do not have an identity card, no government organization can help them.
With digital identity in the blockchain, it would be easy for people to access aid and development. As reported by TechCrunch, “Bitnation is using blockchain to solve the refugee identity crisis in Europe. The system helps Syrians use an ’emergency identity’ to cryptographically prove individual identities and relationships with family members. Easily identify and use concessions.
• Ownership of digital assets
As Victor Sandos noted in his report The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere” by Hernando de Soto – The five-sixths of the world are poor, but 80% [of the majority are poor] are not, like Westerners often think they are desperately impoverishing their crops, land, homes, gold or other assets that have never been valued by the system. Earn it by borrowing, selling, or promising. Imagine a farmer owning a farm, a tractor, and own two cows.