Why is Financial Inclusion Important?
Financial services like online payment services, digital wallets, and online banking drive the growth of a nation making its population take investment decisions that can help them during emergencies. It is easier to send money to another part of the world using digital payment instead of sending cash which has its own set of complications.
Many people around the world lack access to proper payment services and access to banking systems. I have not even started talking about digital payments and wallets for facilitation of banking services.
The Unbanked
As per a report from Medici some 39% of world’s population in developing countries is currently unbanked. In another report, India accounts for 43% for dormancy rate of around 195 million out of the total 460 million bank accounts. This means that 460 million have an account, but about 43% of it is not active (regularly used) and are dormant.
Access to digital payment services can open up various doors to a country’s economic growth, reduce corruption, money laundering and improve efficiency.
Given below are some points that emphasize the importance of Fintech:
· Reducing Poverty
· Increase in the income-earning ability
· Increased savings
· Mitigate financial risks
· Manage financial emergencies
· Reduce transactions costs
· Reduce corruption and money laundering
Growth Opportunity
Bringing the unbanked under the scope of banking solution adds up to a countries progress and its economic upliftment. It removes the geographical barriers and helps to bring people closer. People use digital payment solutions to pay bills, shopping, and online services, pay EMIs and send money to their relatives.
The U.S has around 93 % of the population who have access to banking and digital payment services. However, this is only one side of the coin. As per a report from World Bank, globally, around 2 billion adults do not have access to proper financial services. Younger generation loves technology, and they are more open to adapting the online and mobile banking solutions.
Majority of the world’s unbanked population is from rural areas like sub-Saharan Africa and Central Asia. Countries like Turkmenistan and Niger have only 1.8% and 3.5% people with access to banking. These are the places where bringing up a banking solution might not fetch the desired payoff. Why? Because close to 60% people are unemployed and a low population.
In developing countries, like Asia-Pacific and Latin America, however, the picture is in contrast to above. Both the region offer increased penetration of around $270 billion for personal and micro & small business banking combined.
Reasons for being Unbanked
According to a report by goEBT, the primary reasons for people not looking forward to banking with banks are :
· Distrust
· Lack of Literacy
· Unemployment
· Inconvenience
· Bank Fees
· Blacklisted
· Lack of Services
People are ready for the paradigm shift to the digital economy and use mobile and digital payment as a primary way of banking.
How BABB Solves the Problem
BABB refers to Bank Account Based on Blockchain. The BABB team wants to use Blockchain technology to offer a bank account to anyone. BABB model cuts the marginal transaction fees and makes it easier for the people around the world to open a bank account and start using it.
By building its ecosystem on top of Blockchain, BABB will ensure that user’s data is stored safely.
Being on blockchain also ensures that banking is not centralized anymore instead it is decentralized so that it is less susceptible to shocks such as 2008 financial crisis.
BABB likes to think that all its users are essentially their own banks.
The Product BABB Offers
BABB uses a combination of Blockchain, Biometrics and Artificial Intelligence to offer the below products to its users:
Smartphone APP: Leveraging the shift to mobile banking and rise in the number of people preferring to bank on their mobile BABB looks forward to introducing their one-stop solution APP for all the banking needs of a user.
Real UK-Based Bank Account: An account that can be set up in seconds, BABB smartphone app will allow the user to setup up a banking account quickly. The user will have to take the selfie and use a passphrase for an account.
- An important point to note is that BABB is an authorized payment institution regulated by the FCA and has applied for a UK Banking license – which they are confident, that they will acquire soon!
Peer-to-Peer Financial Services: A portal to a connected world of crowdsources financial services, connecting people with ideas to people with money.
Secure Payment Card: BABB will introduce the Black card which will be independent of Visa and MasterCard. All the retailers will be able to accept the Black card without needing to buy a separate POS or paying higher transaction fees.
With a significant market share to chew on BABB aims to bring the unbanked closer to the banking system and to offer them to be a part of global economy. The market is enormous, and BABB does look ready to gird one's loins and make it big by leveraging the financial gap between the banks and the unbanked.
For more information on BABB do refer to one of my earlier article explaining the story about the idea behind BABB and more on their products and features.
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