The Unbanked: A Life of Struggle and the Promising Future of Blockchain Technology - By CV Labs Africa
Imagine living in a world without access to basic banking services. A world where you can't save your money, invest in your future or even pay your bills. This is the reality for an estimated 1.7 billion adults worldwide who are unbanked and lack access to the formal financial system.
For the unbanked, life is a constant struggle. Without access to banking services, it is nearly impossible to participate in the formal economy, and the ability to save and invest money is a far-fetched reality. The unbanked are vulnerable to theft and fraud since they rely on cash to make transactions. The lack of access to banking services also makes it challenging to build a credit history, limiting the ability to access other financial services in the future.
So, why are so many individuals unbanked? In developing countries, lack of identification documents and physical access to banking institutions are common barriers. Additionally, many individuals may not have enough money to meet minimum account balance requirements or may not have a regular income that can be used to demonstrate creditworthiness.
What if technology could provide a solution to this problem? Enter blockchain technology. Blockchain is a decentralized digital ledger that can record transactions across a network.
The Impact of Financial Inclusion in Africa: Real-World Examples
One of the most promising potential uses of blockchain technology is to promote financial inclusion. Blockchain-based mobile banking platforms allow individuals to access banking services using their mobile phones, even if they do not have a traditional bank account. Additionally, blockchain-based platforms can enable individuals to use digital assets such as cryptocurrencies to store and transfer value.
In Africa, blockchain technology is already being used to promote financial inclusion. Nigerian startup, CARMACHAIN, is democratizing access to credit in Nigeria by connecting lenders with the data they need to make informed lending decisions. This is achieved by connecting lenders with alternative data sources, available in real-time on a peer-to-peer basis. In addition, CARAMACHAIN also enables fintech and service providers to monetize their data. This benefits consumers and lenders alike, as a consumer’s digital footprint offers a more comprehensive view of their socio-economic activities, thereby enabling lenders to increase their acceptance and approval rates for thin-file first-time borrowers.
Another example of blockchain technology promoting financial inclusion is Ghanaian fintech Mazzuma. Mazzuma has integrated blockchain technology and artificial intelligence to enable peer-to-peer payments. The Mazzuma token (MAZ) is the payment medium in the Mazzuma ecosystem that enables immediate payments and remittances that incur low fees. Mazzuma has created a solution that combines the efficiency and scalability of mobile money with the security of cryptocurrencies, resulting in a robust system that promotes financial inclusion.
Achieving a more Equitable System
The potential of blockchain technology to promote financial inclusion is exciting, but it raises important questions. How can blockchain-based platforms be accessible to all, regardless of socio-economic status? How can we regulate these platforms to protect consumers from fraud and exploitation? And most importantly, how can we ensure that the benefits of blockchain technology reach those who need it most?
These questions are important ones that need to be addressed as the use of blockchain technology continues to grow. But, what is clear is that blockchain technology has the potential to be a force for good in the world by providing access to financial services to those who may otherwise be excluded from the formal economy as a great example.
In a world where technology is advancing at an unprecedented pace, it's important to remember that how we use technology can profoundly impact people's lives. Blockchain technology can potentially change the lives of the unbanked for the better, and it's a reminder that when technology is used correctly, the results can be life-changing.
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