Jan Brzezek: Look to blockchains for greater financial inclusion

By Jan Brzezek, CEO and Founder, Crypto Finance AG

It’s a fact that almost a quarter of adults globally don’t have access to bank accounts. That means they have no means of saving, managing their money and investing in their wellbeing. I’m a big believer that public blockchains can change this.

Why? Because anyone can have access to a virtual account with a wallet and then convert their local currency to bitcoin or a stablecoin. You can then earn a yield on your money, much like having a savings account.

Already digital financial services are leading to greater financial inclusion and blockchain can accelerate that process. It could allow people in developing countries effectively to access a range of financial services, in a way that’s convenient and not intimidating.

The proportion of adults around the world with a bank account actually increased from 51% to 76% over the 10 years from 2011 to 2021, according to the World Bank. That was largely due to digital financial services – mobile money, cards, e-wallets, and direct account-to-account payments.

Blockchain has the potential to take digital financial services to the next level, allowing emerging countries to leapfrog the western world’s banking system, developing a new financial system.

We have already seen a similar thing happening in telecommunications. Western Europe has copper lines connecting every house, every apartment. Yet Latin America’s favelas don’t have fixed lines. Instead, by setting up mobile phone antennae a million people got access to the telephone and the internet. With that come all the advantages associated with the internet, such as online education.
The jump in financial inclusion would give more women especially access to financial services, and alleviate people’s greatest financial worries. They would have somewhere safe to store their money, to save for emergencies and be able to pay their bills.

In many emerging countries, this would provide an alternative to the shadow banking system where some people in a community act like banks. Their customers deposit money with them, which is lent to others at a very high interest rate. But the blockchain can disintermediate shadow banking, allowing depositors to lend out their crypto holdings directly to borrowers.

There is a great opportunity to deploy crypto finance technology to make the financial system more inclusive. Over a relatively short period, blockchain technology could boost financial inclusion in emerging markets, without the need for extensive branch networks. The benefit for the financial wellbeing of people in these countries would be tremendous.

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