The quest for financial inclusion (Pt.1)
When we talk about financial inclusion, we’re talking about offering individuals the possibility to use financial services, in a way that’s convenient and practical, according to their needs.
But the current system excludes 31% of the world’s adult population (source: CFA). While financial services are something we immediately associate with banks; the truth is 1.7 billion adults globally are still unbanked, according to Findex. New financial services are emerging every day, trying to fill the gap left by traditional finance.
The unbanked
The “unbanked” population includes people with no access to bank accounts, mainly low-income individuals (In the words of the World Bank: “Globally, two-thirds of adults without an account cite a lack of money as a key reason, which implies that financial services aren’t yet affordable or designed to fit low-income users”) or for example, the female population in certain countries. A smaller group of unbanked include people who have developed a deep mistrust of the financial system (a recent, growing trend).
There’s another group called “the underbanked”, which are people with access to traditional bank accounts but not to all financial services.
Where are they? Just a few examples: Asia (India, Bangladesh, China, etc), Africa (Nigeria, etc.), Latin America (Mexico) and the Middle East. This graph can illustrate:
Why are they financially excluded?
According to previous research by our team, the reasons include the following:
- They either live in remote areas hence don’t have access to banks/ financial institutions
- They have very low income hence no sufficient income to open an account or use banks/financial institutions services (i.e. services too expansive for them)
- They do not have the required documents and banks usually require a lot of paperwork
- Micro and small businesses in developing countries are also often financially excluded and operate mostly on a cash basis.
- They simply do not trust banks or financial institutions.
Why is financial inclusion important?
One could say that financial access is crucial for a decent quality of life. From families to businesses, just having the possibility to make a transaction makes day-to-day living easy and convenient; but more than that, people can better plan and organize their current and future life when they have access to financial services.
“…Everything from long-term goals to unexpected emergencies. As account holders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives” —worldbank.org
Globally speaking, “an increase in financial inclusion means an increase in the number of people actively contributing to the transfer and movement of money around the globe”, says Patrick Szakiel in his article 7 Things Disrupting Financial Technology in 2019. “It also means there are more opportunities for financially included individuals and businesses to improve their situation, build and leverage credit for growth opportunities, and more”
Financial inclusion is a recurrent topic for G20 members. The “G20 Financial Inclusion Action Plan” has also been created in order to address this problem.
Reinventing traditional finance
The quick evolution in technology may be the key for financial inclusion. For example:
- By allowing financial services to be available beyond physical locations in urban populations. Mobile and online financial services may include customers in remote areas.
- By offering a fresh perspective on financial operations. New fintech proposals offer alternatives to people who don’t trust the traditional financial sector.
- By lowering the costs of traditional banking, and improving quality at the same time; something that can be achieved by revolutionary technologies like the Blockchain for example.
Globcoin and financial inclusion
Globcoin has been at the forefront of currency management innovation for a long time. Our financial services had been offered to our diverse, international clientele for years; and we gained our reputation in the industry with innovation, transparency and excellent products.
The reason we decided to jump into the Blockchain world, is precisely because we wanted to make our solutions available to every individual, irrespective of their country or circumstances. We needed new technologies to convert our services into digital assets and spread them across the World.
Our stablecoin GLX, backed by a global currency basket, allows anyone to use a global payment solution that’s more stable than the Swiss Franc. In our vision, we can help the un(der)banked population to save money with cheap, near-instant money transfers, security and transparency.
The Globcoin Group is also working on several solutions to encourage financial inclusion in Africa. These solutions are based on sports communities, since we have observed that many unbanked people; even if they don’t have a bank account, most of them do have a mobile phone and many share a passion for sports. More details will be published soon.
We’re doing our bit to cut that 1.7bio figure. You can help us get there faster by knowing our projects and spreading the word: globcoin.io
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