For most people in the developed world, the idea of being unable to use a bank is far-fetched. In the developing world, things are very different. Pundi X was founded on the idea that people who don’t have enough money to use the normal banking system still need access to financial services. At first, Pundi X worked along the same lines a platform like Alipay, but their management team soon realized how powerful a force blockchain could be in the developing world’s financial markets.
Zac Cheah, the CEO of Pundi X, recently told Blockonomi why his company is using blockchain to further its goals,
“The idea of using blockchain to help the unbanked is at the very core of Pundi X’s reason for being. In Indonesia half the population do not own a bank account. The cost, distance difficulty involved in acquiring these documents makes it practically impossible for the majority of people to open an account.”
The sad fact is that banks aren’t a public service. As a for-profit entity, banks have no responsibility to help the poor access their services. Banks can also discriminate against people they think may not generate enough income, which makes accessing financial services nearly impossible for people that could really use low-cost options.
Pundi X Could be Part of Real Change
Blockchain has a number of advantages that could make it the default platform for fintech going forward. Unlike traditional record-keeping, it eliminates the need for most human oversight. The economic upshot to this is far lower costs, and less room for human error.
For the global population that is “bankless”, the gains in efficiency that blockchain creates are a doorway into a much higher level of accessible financial services. Pundi X appears to recognize the opportunity to help the world’s poorest people, while cementing themselves in a market that is absolutely enormous.
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A View From the Trenches
It should be clear that the established financial system hasn’t created solutions for the world’s poor. Part of this is due to the costs associated within the banking system, and part has to do with the costs involved in achieving regulatory compliance as a customer.
Mr. Cheah expanded on the issues the bankless poor face,
“For many people, banking is unreachable because of all the documentation required to open account. The cost, distance difficulty involved in acquiring these documents makes it practically impossible for the majority of people to open an account. Many of the obstacles relating to being a member of the so-called ‘unbanked’ relate to documentation or provability of wealth.”
But according to Mr. Cheah,
“Blockchain technology will provide a means for establishing credit histories for these individuals independent of the financial institutions by providing an immutable record of their incomes and credit histories. It will make them independent of financial institutions.”
Access to financial services is about much more than generating individual prosperity. With a population of more then 260 million people, the unbanked population there is larger than the total population in many nations. Indonesia isn’t the only place that has a huge number of citizens that aren’t able to use traditional financial service providers, which puts a strain on the society as a whole.
How Blockchain Works for Everyone
When the poor are able to access financial services, new kinds of social development are probably going to be possible. People who are stuck in a cash-only economy generally have to pay more, for less efficient systems.
Take transferring money as an example. If a person doesn’t have a bank account, and has to send money to another bankless person, a service like Western Union or Money Gram are among their only options. These platforms are expensive, and also can be time consuming.
Using a platform like Pundi X is nearly instant, and is much cheaper than normal, cash-based transfer services. Additionally, blockchain based platforms open up the world of micro-loans to the people that can really put them to good use. It is impossible to know how this change in fintech accessibility will help the global poor, but it is likely to empower people to a degree that would be impossible without the efficiency that blockchain enables.
