According to data from the World Bank, there are an estimated 1.4bn unbanked people worldwide in 2023.
As the use of cash diminishes and digital payments increase, many unbanked people with access to mobile technology have instead opted to explore the offerings provided by cryptocurrency and the DeFi space.
There is limited data on the interest of unbanked individuals in cryptocurrency. However, some reports suggest that digital currencies already play a significant role in financial inclusion for the unbanked, as there’s no requirement to have an active bank account and can be accessed through a mobile phone.
The reasons for this are multifold, with experts citing limited financial literacy, lack of proper documentation, high costs of financial services, lack of trust in financial institutions, and limited financial infrastructure in certain areas. Additionally, marginalised populations may face discrimination or exclusion from the formal financial sector.
The DeFi space – alongside its democratised platforms and numerous currency options – has, therefore, begun to provide an alternative finance space for people disenfranchised with, and unable to participate in, traditional banking markets.
A divided economy
Speaking about the changing market, Sahar Salama, CEO and Founder of the full-service mobile payment platform TPAY MOBILE, notes that increased digitisation of the economy is creating a divide between the technologically savvy and disenfranchised groups. She says this requires appropriate government policy so that everyone can benefit from the new possibilities of the digital world.
“As our society becomes increasingly cashless, some advocacy groups have raised concerns about the inclusion of vulnerable groups in the digital economy.
“While these concerns are warranted and it’s true that not enough is being done to include everyone in the digital economy yet, the solution should be a collaborative one that involves governments, regulators, financial services, and fintech providers all playing an active role, rather than a rejection of the concept of cashlessness.
“For a cashless society to be truly successful, digital payments must be accessible and appealing to everyone.”
New opportunities for financial service providers
Reports suggest that an estimated two-thirds of the world’s unbanked – so around a billion people – use their mobile devices for transactional purposes.
Salama points out that the use of mobile technology can increase access to financial services by reducing barriers such as the need for physical infrastructure and documentation. As a result, mobile financial services have the potential to greatly increase financial inclusion for the unbanked population.
Additionally, cryptocurrency transactions can be quicker and cheaper than traditional banking transactions, making it an attractive option for individuals in developing countries for whom there may be limited access to traditional financial services.
Credit: Source link