Marc Serafino
It has been said a multiple times that blockchain-based cryptocurrencies like Bitcoin and Ethereum can provide unbanked and underbanked population with access to financial services. This is a big market with more than 2 billion individuals around the globe, according to the World Economic Forum figures. The same research suggests that blockchain technology could result in 95 million new jobs in emerging economies while providing a boost to these economies of up to $3.7 trillion.
The blockchain-based solutions don’t require any intermediaries such as banks and/or mobile phone operators, making it more affordable for people to buy and sell stuff online and effectively enabling them to join the global trade.
Bitcoin and payments conducted in other cryptocurrencies are not just more affordable — they are also more secure. There are some caveats that need to be resolved before such services could be introduced to the general public, and in this article we are going to talk about one of the main issues — consumer protection — as well as discuss how blockchain is used to provide access to financial services to the unbanked people.
Consumer protection is a problem
There are a few companies trying to tackle this issue; one of them is UTRUST, which has developed what they say is the first online cryptocurrency payment platform to offer consumer protections.
“We aim to create an infrastructure that provides the benefits of fast, secure, convenient, and inexpensive cryptocurrency transactions alongside the world’s first cryptocurrency payment protections,” the company’s CEO Nuno Correia said in a statement. “Our goal is to democratize the world of altcoins and Blockchain technology to ensure that anyone can benefit from instantaneous, transparent and cost-effective transactions, irrespective of where they live and [their] level of education.”
UTRUST aims to provide access to the mainstream financial system for the unbanked population worldwide, and has already attracted some capital to use towards that goal. With no physical branch presence required, tech solutions such as the one UTRUST is building may be able to overcome current banking limitations.
Finland using blockchain to enable migrants to access financial services
It is not just the people in developing world who don’t have access to financial services; migrants have same problems.
Finland is using blockchain to solve the problem of refugee identity, using the (public?) ledger to record data of new residents, as well as to give them with access to bank accounts. As part of the deal, arrivals are provided with a prepaid debit card instead of cash, linking the identity of cardholders to the blockchain.
Said cards are the product of local startup MONI, and function more like a bank account replacement than a simple payment device.
“Our purpose has always been financial inclusion, and especially to help people in developing countries,” the company’s CEO Antti Pennanen said in a statement.
Singapore testing blockchain payments for migrant workers
Singapore too is looking to use blockchain to provide access to financial services to around 19,000 migrant workers. To that end, Singapore’s Maybank has teamed-up with local startup InfoCorp Technologies to use their CrossPay network and allow migrants in a giant dormitory to pay for purchases digitally.
Just like Finland’s solution, CrossPay too is using blockchain to store consumer identities and includes a private platform for making payments. At the other end, Maybank will settle the final amount with dormitory operator TS Group.
“(Banking) solutions are not suitable for migrant workers as many of them have no experience with banking services,” InfoCorp CEO Roy Lai told local news outlet Business Times. “Introducing CrossPay to migrant workers, therefore, makes sense as it is a solution that specifically caters to their needs.”
The trial in Singapore is set to show results later this year, with a fuller rollout in due course. “We see the potential to work with InfoCorp on serving those with little access to conventional banking services,” Maybank’s head of global banking Amos Ong added.
Work in progress…
While blockchain has already shown promising results, it is too early to tell which platforms and solutions will win at the end. In a decentralized market, software providers don’t get to benefit as much as their centralized counterparts do. And in that sense, we expect existing players to fight the change, but at the end — there is no going back to the old, more expensive solution. This is a developing story, obviously.
