5 things you probably didn’t know about unbanked people
There are a number of blockchain projects these days that focus on the financial inclusion of unbanked people. But what does it mean to be among the roughly 2 billion people with no access to financial services? Here are five important things you should know:
1. Unbanked people find it more difficult to afford basic services.
75% of all unbanked people live in poverty. Not only are there no banks where these people live, they also lack employment opportunities and immigration support services. Even gender sees a disparity, with 55% of women unbanked compared to 46% of men in developing countries.
For poor people, banking services come with high transaction fees and require a travel time investment that could otherwise be spent earning money. These inseparable factors are barriers which make it more difficult for unbanked people to afford basic services, which may require capital or an initial deposit. And some services can’t even be accessed at all without a bank account, such as setting up credit card payments for a business or applying for health insurance.
2. Unbanked people likely have a smartphone.
With a variety of cheap Android smartphones available today for $50 or less, two-thirds of unbanked people own one. And the smartphone penetration rate will only rise as the prices are expected to drop even lower in coming years. That makes for well over 1 billion people who can’t use mobile banking apps, but are able to use other kinds of financial service mobile applications. The potential for financially enabling these people with well-designed mobile services is very promising indeed.
3. Unbanked people often deal with bad infrastructure.
Many unbanked people live in areas with no local bank branches. Financial centers and government offices are also often inaccessible. Even if they do have smartphones, it is likely the area has no internet connection or unreliable cellular network coverage. Addressing this problem is not just as easy as building a brick-and-mortar bank though, since these institutions have the same infrastructure requirements. What is needed are technological advances that help connect people without the need for this infrastructure. And more and more, we are seeing solutions that do just this, such as hardware-based transaction caching which makes peer-to-peer payments possible off-the-grid, for example.
4. Unbanked people want efficiency and convenience, which banks can’t provide for them.
While a large proportion of the unbanked have structural or societal barriers preventing them from accessing financial services, some are just frustrated or inconvenienced by their experiences dealing with the traditional banking system. 355 million people who do have bank accounts still deal with their utility bills, school fees and remittances in cash. This has caused an exodus to more flexible and user-friendly alternatives, such as cryptocurrencies and mobile wallets.
5. Unbanked people can bring a lot of money into the global economy.
Even with all the barriers that prevent unbanked people from accessing financial services, they would bring a lot to the table if they could participate in the banking sector: $380 billion, in fact. This will not only spell take-home value for banks and other companies involved, but also value for the unbanked as well. And this doesn’t just mean that they’d earn more money; they’d be connected to an ecosystem that allows them to make the most of what they have and live better lives.
The above is why a lot of startups like TraXion talk about “banking the unbanked.” There is a lot of potential long-term value if everyone was made able to fairly participate in the economy. But this potential is long-term because it will take a lot more than just a startup with a solution to pull it off. That’s why our team is creating communities, partnering with institutions and, most importantly, getting to know and working with unbanked people.
TraXion has developed a full package of smartphone-accessible, blockchain-based financial services that utilizes and innovates pre-existing infrastructure to reduce transaction costs. Finally, 89 million unbanked Filipinos will have convenient and efficient access to the same top-tier financial services we all enjoy, bringing up to $42 billion back into the economy.
To learn more about TraXion’s ongoing token sale, check out our website at traxion.tech. You can also stay updated by following our Facebook and Twitter pages.
