Narrowing the advantage gap - The Payments Conference takes on the problem of being unbanked
It may come as a surprise to some that over 2 billion people in the world still don’t have access to a bank account, and we’re not just talking about third world countries - there are almost 9 million American households that remain unbanked in 2018 according to the FDIC.
Being unbanked means that individuals are unable to transfer money, save for the future, build a credit history to be able to borrow money, or even receive a salary by deposit from an employer. It puts people at a financial disadvantage in several ways, restricting the way they can live their lives in a modern world where banking is the norm.
As part of SiGMA18’s conference series, Monty Munford (Forbes), Wesley Ellul (Quizando), Vladislav Hveckovics (SoftGamings), and Theo Goodman (Proof of Work Media), all discussed the problems and solutions to being both banked and unbanked.
Banks have traditionally been used as “a nice safe place to put your money, that was the original reason we had banks, just for safety and security”, according to Wesley Ellul. “Now we’re giving people an option where they can store their money but instead of being on a third party person, it’s stored in a wallet which could be in their pocket, it could be held with a thumbprint, there are various different ways to do it.”
Beyond banking your savings, Monty Munford believes that “mortgage disruption is another area” that could be improved and “we might get to a position where if we’re trying to borrow money we will use a start up that measures us differently.”
Theo Goodman agrees with this. “It should be more efficient. Person to person, or group to person could be a way to do it”. He believes that online reputation is something that’s increasingly important to us and could be leveraged to get loans and other financial services without having to use traditional banking services.
But could we do without cold hard cash? The group seem optimistic it’s a utopia that’s possible with Blockchain and smart contracts - just two examples of the technology that could change financial arrangements for the unbanked without using banks.
“The technology has been moving us forward for many years”, said Hveckovics. “One reason cryptocurrencies have grown in popularity is down to people’s distrust in banks, governments and so on.”
Crypto and smart contracts can help rebuild trust in many ways, as Wesley Ellul believes. As soon as a transaction has been completed, “boom, it’s been done” he said. It’s transparent and trustworthy.
So what does the future hold? In 2019 the group thinks we’ll see a more stable currency in the crypto market. “Once we see a widely accepted stablecoin”, thinks Ellul, “then we’ll see the cryptocurrency market explode”. They all agreed that banks could cease to exist in ten years, fintech will take the lead, and the whole financial marketplace will be disrupted to make the system fairer and more transparent for everyone.
So our financial future looks bright without banks - not by being ‘unbanked’, but with the progress of technology taking the place of outdated banking systems. Let’s hope they’re right!
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