Helping The Unbanked
According to the Federal Deposit Insurance Corporation (FDIC), a person who neither has a bank account nor even a bank card is called unbanked. This means that they cannot use commonly available financial services provided by a banking system.
Recent surveys show that there are more than two billion unbanked users across the globe, who have no access to banking facilities. Most of them live in the developing economies of South Africa, the Middle East, partially Asia, and the Asia Pacific area. That is so for several reasons - infrastructural (inflexible banking infrastructure, expensive financial services, etc), social (complex identification, low salaries), political (civil conflicts and even wars), and so on.
But why is a big number of unbanked people a problem? It seems more like a missed opportunity for those people and for the world’s community rather than a real threat to anything.
In fact, there is an interesting correlation between an unbanked citizens ratio and the economy development. Considering Africa as the poorest continent, it shows a surprisingly rapid economy growth in most of its countries (4-6% of annual GDP increase). But such a fast growth does not mean that there is no problems. Limited access to global financial services is one of the obstructions. For instance, those who intend to run their own business or start saving money simply cannot get a deposit account, take a loan or even transfer money.
The truth is that everyone would benefit if African regions got access to international capital. The global banking system would enter a new financial market, while the countries would get an opportunity to develop their economies faster.
The middle class in Africa has grown by several times over the last 30 years. Now, it accumulates approximately 300 million of people. Money spent on wealth is expected to exceed 1.4$ tln by 2020 at the current growth rate. This means that the whole continent is ready to accept the global financial culture. Unfortunately, the undeveloped financial infrastructure is a huge bump on the road to progress that would push the economy ahead and help millions of people to open fresh opportunities.
Blockchain-based cryptocurrencies like bitcoin and ether are able to improve the situation by proposing beneficial opportunities to unbanked and underbanked regions. Each cryptocurrency is a fairly simple and low-cost way to transfer funds. There is no need in ID verification or banking infrastructure. A modern communication device, the network connection and special software are enough to manage assets.
Even more opportunities are available for projects related to cryptocurrencies. Although major advantages of cryptoassets are indisputable, there are many restrictions to their application. Fee volatility, no ID and no need for physical infrastructure are both strength and weakness. Though, by overcoming negative effects high profitable solutions may be developed.
For instance, there is an international team from three continents developing a blockchain-based decentralized project called Humaniq. It is intended to provide an explicit financial ecosystem inside of a smartphone that can transfer money, get loans and provide other common financial operations with its token HMQ.
Considering the desires and needs of unbanked customers, the team has proposed several features that fits best in this case. It is dedicated especially to the citizens of developing economies. No paper ID authorization was proposed supported by biometrical identification. Token spread does not depend on hardware allowing common households to participate. Many companies are concentrating on unbanked customers, thus providing potentially huge impact on the world wide economic.