Are emerging markets ready for blockchain technology?
Blockchain this, blockchain that… but how do emerging markets fit in?
There’s been a lot of talk about this “revolutionary” technology that’s said to disrupt big industries. Sure, it sounds promising and highly adoptable by bigger, more established countries, however, can emerging markets keep up?
If you’re not sure about what blockchain is, check out our refresher article on what the blockchain is via this link. We also followed up with a what is cryptocurrency for beginners on this link.
Blockchain in developed countries
Blockchain is slowly being adopted in many industries, many use cases, and across many countries. Take Singapore, for instance; its Central Bank is gearing up to facilitate inter-bank payments through blockchain. Meanwhile, in China, the People’s Bank has expressed interest in adopting its own digital currency and, at the same time, e-commerce group Alibaba is getting creative in using blockchain to put an end to counterfeit food products.
With this technology being supported by reputable governments and technological giants, blockchain seems so much more promising than ever.
But are emerging countries such as the Philippines, Vietnam, Indonesia and Myanmar ready for this disruptive technology?
Yes, after a reasonable maturation period.
Why?
Philippines
If you’ve been to the Philippines, you would know that transactions are mostly on a cash basis and that there are low credit rates — primarily because most Filipinos are unbanked.
According to the Bangko Sentral ng Pilipinas (BSP), only 22.6% of the Philippine population have bank formal bank accounts. This Leaves the rest of the population stripped of the benefits of formal financial institutions. Although there are many barriers that are keeping Filipinos away from the traditional banking system, BSP sees promise in technology to bridge financial inclusion, considering the high mobile phone and internet penetration rates of its people.
Vietnam
It is no secret that Vietnam is a relatively juvenile country with 45% of its 96 million population between the ages 25–54. However, despite the young population, it’s surprising to discover that only ⅓ have bank accounts. In fact, Vietnam is one of the most cash dominated countries in the world with 90% of its transactions in cash.
As it is Vietnam’s vision to go cashless by 2020, the government is taking measures to assure that market, utilities, electronic and telecommunication transactions would accept cash-free payments. With the reduction of cash transactions, electronic payments will thrive and control tax evasion.
Indonesia
According to the latest Global Findex report, Indonesia has shown significant progress in crossing its citizens over to the formal financial system. As of April 2018, 48.9% of the Indonesian population now have bank accounts — a big jump from the 20% Indonesian account ownership in 2011.
Although the number of banked individuals in Indonesia is growing, a little more than half the population still do not reap the rewards of the formal banking system. According to this report, 33% of these unbanked individuals cite proximity as the key factor in not having a bank account. Despite the barriers, the Indonesian government sees promise in the digital landscape as an opportunity to reach the unbanked as 69% of this segment population have mobile phones.
Myanmar
Surprisingly, only 4.8% of the whole Burmese population have bank accounts. According to the Myanmar Times, 62% of the country’s adult population have no savings, while 17% save by means of storing gold and other valuables in hidden places.
According to Hennie Bester, director of non-profit Centre for Financial Regulation and Inclusion, Burmese are reluctant to save in banks, hence, purchase jewelry and gold to store value. Bester, however, added that this limits the opportunity for banks in turn to lend money and fuel economic development.
Myanmar’s vision for 2020 is to increase bank account holders to 30–40%. According to MoPF deputy Minister U Maung Maung Win, the need for both public and private sectors to promote financial education is vital for the further adoption of financial services in the future. He added that financial services will be more effective in coming years and digital financial services will be made available throughout Myanmar.
How likely will emerging markets welcome this technology?
Imagine the adoption of blockchain like the birth of the internet in 1990. At that time, no one really understood what it was, what it did or how it worked. 28 years later, emerging countries such as Philippines Indonesia, Vietnam and Myanmar have become among the top internet users in the world.
In terms of blockchain technology or cryptocurrency, the interest in emerging markets are very high. Despite multiple barriers to adoption (high unbanked population, tech savvy young median population), these countries — Philippines, Vietnam, Indonesia, Malaysia — are among the top countries that showed interest in blockchain and cryptocurrencies.
At the moment, blockchain is at its infancy in these emerging Asian countries, however, it proposes potential to be the backbone of global economy in the coming years. It just needs an expected maturation period before it it becomes adept to a world audience.
Present day adoption
It’s exciting to imagine the endless possibilities blockchain could bring about. But what we’re most excited about are mass adoption triggers like XONIO Mobile which enables emerging market consumers on prepaid mobile (which makes up 95–98% of the population of these countries), to convert their airtime credits into a digital currency that can be used to access a blockchain-powered digital goods store and the token economy.
In a panel discussion held in Singapore earlier this year, XONIO founder Raymond Racaza explained how XONIO’s strategy would help connect the huge base of the pyramid population in emerging markets to the blockchain. You can watch the video and learn more from the event via this article.
Inclusivity, in terms of mobile technology, is enabling products and services for the bottom of the pyramid. This market segment has a very specific behavior compared to the top 3% or 5% percent of that pyramid [which is why we came up with XONIO]. — Raymond Racaza, XONIO founder and CEO
It’s just a matter of time before emerging markets can fully adopt the power of the blockchain and reap its benefits. With projects like XONIO targeting the bulk of the population with solutions that address barriers to mass adoption of blockchain technology on its way, emerging markets might very likely be among the top users of blockchain technology.
For more info, visit www.xon.io. Join the community on Telegram.
