Banking the Unbanked through Blockchain Internet

Financial services are expensive and inaccessible for many individuals.
Financial services are expensive and inaccessible for many individuals.

Having access to the internet, a credit card, or a Netflix account may appear commonplace, but they are not for the average person. Approximately 2 billion people worldwide are now unable to access financial services because their information is not stored in ‘conventional’ sources. Even though many of them have access to technology such as mobile phones, they do not have access to any financial infrastructure.

There appears to be a disconnect between the ‘unbanked’ and those whose data is stored online via the internet and smart gadgets. The proper solution to banking the unbanked today is to connect people to the internet first and then give them the tools to learn about and access blockchain and DeFi. Let’s see how the internet via blockchain could efficiently solve a global problem.

Why bank the unbanked?

Financial services are expensive and inaccessible for many individuals. Some people are labelled unbanked because they do not use bank accounts or financial services. Financial institutions typically impose fees, minimum deposit requirements, and other upfront costs that create severe barriers to access for those who don’t have a lot of cash on hand at any given moment.

The importance of providing banking to the unbanked is that it is a necessary step in lifting people out of poverty. With bank accounts, individuals have access to better employment opportunities and can establish a credit history. This allows them to apply for loans and capital which in turn can increase their wealth.

For access to financial services and bank accounts, users must have legal forms of identification and access to an infrastructure that allows them to hold and access their money. The issue is that this does not appear to be a situation that will resolve itself without intervention.

The current situation

Banks are traditionally considered essential for bringing inclusive finance to large portions of the planet still unbanked today. The most deprived areas include:

  • 80% of sub-Saharan Africa
  • 67% of adults in the Middle East
  • 65% of Latin America
  • Over 870 million individuals across East and Southeastern Asia

As a result, new technologies have a dual promise for financial services providers: an accelerator for accessibility and significant emerging market potential. Companies today (both local and worldwide) are increasingly targeting unbanked consumers, whose economic profile and market dynamics differ significantly from their current customers. The rising markets of Africa, where the World Bank estimates most of the individuals in Sub-Saharan Africa are unbanked, provide the most promising opportunities.

Is there a way to make blockchain a reliable solution?

Several industries are exploring blockchain as an underlying technology for their services. The advantage of blockchain, in general, is that it can make things possible that seemed impossible a generation ago. How exactly?

The decentralized implementation of blockchain networks could help to improve the security, transparency, and efficiency of payments. Since blockchains eliminate intermediaries, transactions can be made quicker and more efficiently.

The Blockchain’s one-of-a-kind structure ensures complete privacy and excellent security when sending and receiving funds. It would also aid in the reduction of transaction costs between banks for both domestic and international payments.

Unfortunately, the most innovative tech and apps are not worth much if they cannot be accessed by the users who need them. Unbanked adults are often unconnected, which leads to an inability to use digital services in the first place.

While there are many companies that use blockchain technology to create tools for financial inclusion, 3air, for example, focuses on a wholesome solution with connectivity in mind. One-third of the global adult population does not have access to financial services. Yet there are still 3 billion people who cannot access banking or blockchain services because they are not connected to the internet. That is why 3air prioritizes connectivity and uses proprietary technology to build broadband infrastructure. Once connected to the internet, 3air onboards users onto their blockchain platform that offers DeFi and banking, DIDs, education and other services. Also, 3air works to make DeFi more accessible for the African population by building on SKALE, an L2 for Ethereum with zero end-user gas fees.

Closing thoughts

Platforms such as 3air address a fundamental problem that prevents a significant part of the population from accessing all of the life-enhancing blockchain services. Before we can bank the unbanked, we must first connect the unconnected.

Once they are onboarded, users are able to access passive and active revenue streams to increase and manage their wealth. They can gain access to education, health, banking, microloans and more, which will help generate and manage wealth to ultimately raise millions of unbanked families out of poverty.