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Digital revolution is underway, bringing new capabilities, and perhaps surprisingly, the people that have the most to gain are those who are currently unbanked.
Blockchain technology is offering a radical departure from the traditional way in which many businesses are conducted. Specifically, the disruptive innovations accelerate the leapfrogging of financial services over traditional banks. The novel technology grants people in regions, where they cannot gain access to traditional bank services, the possibility to make payments for goods and services, pay bills, receive and make loans, withdraw cash, send money, and securely and cheaply conduct any financial transaction.
To put the need for such services into perspective, only consider that there are currently 2 billion people in the world who do not have bank accounts – most of them living in developing economies. According to World Bank’s data, more than 20 percent of unbanked adults receive wages or government transfers in cash, and many people in developing countries pay bills and fees in cash. Without a bank account, simple tasks such as sending money to a relative or paying bills, typically incur huge fees. In developing regions of the world, these fees compound financial hardships, and there is practically no way to get credit or a loan. So, how to solve this challenge? BitMinutes, a new financial startup, offers a pioneering solution by using prepaid airtime minutes as a new form of currency.
Increasingly, there is a call to make affordable and secure financial services available to the unbanked. The reason: financial inclusion is key to reducing poverty, and access to financial services plays a vital role in the founding and expanding of businesses, and making transactions more efficient.
The World Bank, through its Universal Financial Access 2020 initiative, set a bold goal for providing financial inclusion for billions of global citizens. They hope to cut the number of unbanked people to one billion by 2020. Such action is critical to help reduce global poverty and spur more economic growth.
FinTech can lead the way. For example, mobile phone companies have already played an important role in Africa. What started as people bartering and paying each other using prepaid mobile minutes…