Imagine for a moment a fairer world. A world in which everyone had access to regular financial facilities and were in charge of their personal wealth. Where the clothes on their back and the color of their skin were irrelevant.
Even in the age of high-speed communication and major technological breakthroughs, just 1 percent of the world’s population owns over half of the world’s wealth. It doesn’t have to be that way.
One of the greatest barriers to reducing poverty is financial inclusion. Despite our efforts to date, at least 1.7 billion adults around the world remain unbanked.
Being unbanked means not having a bank account, but also, not having access to credit, insurance, pension schemes, or any other financial service that most of us enjoy.
If you have no access to credit and no means of gaining an education, starting your own business, or investing in yourself, you have no means of lifting yourself out of poverty.
The internet laid the foundation for giving people a voice and the right to be heard. Yet while the information is largely equally spread, there’s still a long way to go. Many of the world’s unbanked reside in impoverished countries and have no access to the internet.
However, technologies like mobile phones, mesh networking, and blockchain are starting to put more people on the grid. For the first time in the history of humanity, we have a real chance of connecting the world and redistributing wealth in a fair manner. Blockchain is the internet of value and with the right actions and responsibility, we can accelerate financial inclusion and provide equal opportunities for all.
Financial exclusion is not limited to developing nations or countries in which hyperinflation can wipe out your wealth. Many problems exist within developed countries as well, creating a category known as the underbanked.
In the US alone, for example, close to 20 percent of the population was considered underbanked in 2015. This means that they had some kind of a checking or savings account, but limited or no access to credit– i.e. no means of purchasing a property, or leasing a car. And as for investment opportunities? A distant dream.
When broken down by income, it’s not surprising that underbanked households have lower incomes. In fact, some 24 percent of households with an annual income of under $15,000 were considered underbanked. In higher income households of $75,000 or more, only 13.5 percent were underbanked.
Education is a key ingredient here–most of the underbanked reported having no family members with a college degree, compared to almost 80 percent of fully banked families.
Many of the unbanked and the underbanked also have to resort to extreme measures to gain access to the daily goods they need such as food and medicine. This may include cash advances and lending services, that often come with extremely high interest rates and violent methods of recuperation.
No one has all the answers just yet. But through fintech, cryptocurrency, blockchain, cellular phones, and mesh networking, we can gradually get the rest of the world online. This will give the unbanked and the underbanked access to financial services products that suit their needs and let them get ahead in the world.