According to the World Bank, more than 1.7 billion people worldwide don’t have bank accounts. That’s 22% of the world’s adult population who remain pretty much shut out from the global economy and its opportunities.
For a large proportion of these people, cryptocurrencies can provide a welcome alternative to more traditional forms of banking and institutions, allowing access to the global financial system without sacrificing security or financial stability.
The opportunities for unbanked people are rapidly changing with the rise of cryptocurrency, provoking a significant and positive impact on their financial independence and accessibility, as well as on the world’s economy and how it’s run.
Why are some people unbanked?
Unbanked people are those who do not have access to mainstream financial systems, such as bank accounts. Underserved people include those who have access to some form of financial system, but who lack sufficient access to certain services and often pay large fees to access them.
There are a variety of reasons why people may be unbanked:
- Poor credit scores, often due to past loans or financial mismanagement, can make certain financial services inaccessible
- The cost of opening and running a bank account
- Lack of access to mainstream banking institutions, most prominently in developing economies
- Lack of access to the internet or large towns
- Not wanting to share one’s data with financial institutions
- A lack of trust in financial institutions to look after one’s money
- Age: many young people cannot access credit or bank accounts due to a lack of credit history or a poor credit history
How can crypto help the unbanked?
Crypto offers a perfect opportunity for unbanked people to access the financial system. Its availability to all regardless of financial situation, its universality across nearly all countries, and its low cost accessibility makes it a great resource for those locked out of current financial infrastructure.
Firstly, crypto can be a great financial resource for those on low incomes. Where those on low incomes may not be able to open an account or access loans, cryptocurrency can provide an easy to access currency with no need for prior financial vetting or expensive account fees.
And of the 1.7 billion unbanked people in the world, over 1 billion of them have mobile phones. This means that where bank accounts may not be possible due to a lack of infrastructure or financial incompatibility, crypto provides an easily accessible resource. In this sense, crypto can especially provide opportunities for people in the Global South and emerging markets to access capital and other financial resources. Perhaps it is no surprise that crypto’s growth and popularity is most noticeable in developing economies.
The emphasis of Decentralized Finance (DeFi) and crypto on democratizing finance and making it more accessible to all can also provide great opportunities to those of the unbanked who simply do not trust large traditional financial institutions. Crypto is a decentralized financial space and removes the need for large third-party entities to process transactions or exchanges.
And crypto is also more accessible in terms of data sharing and security. For those of the unbanked who do not wish to share their data, or are unable to share the appropriate data required for a bank account (an address for example), crypto provides a great opportunity for accessing money and financial infrastructure. It requires little personal information, and the holder of the funds can be responsible for the security of their own personal assets.
How is crypto impacting the unbanked right now?
In the USA, crypto is beginning to provide key benefits to the unbanked and underserved. Underserved Americans have stated that they’re much more likely to use crypto to access money than other services, while 58% of underserved Americans say they access their money just as easily as without a bank account.
Underserved people also state they’re more likely to use crypto to make payments than other financial resources. And where 100 million merchants in the USA now accept crypto, with the help of a crypto debit card, the expanding capabilities of the payment space and the positive impacts of crypto on the unbanked are more than evident.
The positive impact of crypto on the underserved and unbanked can be seen most prominently in the Global South and developing economies. Other than the USA, developing countries have a significantly higher proportion of crypto mining and users, which is having positive effects on people’s access to finance.
For example, in Argentina, which has seen prolonged financial crisis due to mass inflation, increasing numbers of Argentinians are choosing to be paid in cryptocurrency. Crypto can provide security against rapid inflation, ensuring that individuals’ savings and incomes are not eroded over time. The international availability of crypto also allows users to travel or buy goods abroad on a better exchange rate, and to more easily access stable currencies such as USD or EUR.
Chainswipe and Crypto
Chainswipe offers a variety of crypto services, from ramping to debit cards to rewards. With our bundled no-code integrations, we’ll do all the hard work for you. Offering crypto and other financial services to your customers is no stress at all.
Contact us today to find out more.