Opinion Blockchain helps Neobanks bridge financial gaps
The author of this article, Maksym Sakharov, expresses the opinion that traditional finance has long been flawed but has been disregarded. However, with the current economic challenges, these flaws are becoming evident and cannot be ignored any longer. The traditional financial system excludes around 1.4 billion unbanked individuals and is inefficient and exclusive.
Traditional financial institutions continue to exclude individuals who lack documentation, credit histories, or stable infrastructure, which works against certain populations. The use of blockchain and neobanks may provide a solution to financial inclusivity in the digital age.
Traditional financial systems have outdated processes that are unmanageable in today’s fast-paced digital era. For example, international money transfers through banks are slow and expensive, with high fees and delayed transactions. Neobanks built on blockchain infrastructure eliminate the need for middlemen, making transfers faster, seamless, low-cost, and almost real-time.
Financial inclusion is not just about access, but also about simplifying onboarding processes and making financial services accessible to socially struggling individuals. Developing regions often lack financial institution operations or impose barriers to entry, leaving large populations without access to financial services. Neobanks challenge this by adopting decentralized models and behavior-based identification through the blockchain, providing financial identities and equal opportunities to those left behind by traditional banks.
Traditional finance creates an illusion of ownership when depositing funds in a bank. However, banks have complete access to these funds and can use them for lending, investment, and other purposes. Neobanks offer non-custodial accounts, allowing users to retain full ownership and control over their assets, providing financial resilience, especially in times of economic uncertainty.
Traditional finance’s centralized systems accumulate vast amounts of personal data, making individuals vulnerable to data breaches and cybercrime. Blockchain-based neobanks decentralize data, giving individuals control over their personal information and reducing the likelihood of data breaches.
Stablecoins offer a solution to the volatility associated with cryptocurrencies. They provide the stability of traditional currencies while utilizing blockchain technology for speed, transparency, and security. Stablecoins make financial transactions stable and predictable, ensuring users avoid the risks of volatile assets.
The author concludes that traditional finance is failing the world and that blockchain-fueled neobanks are the solution. These platforms offer a decentralized, inclusive, and transparent alternative, allowing everyone to participate in the financial system, regardless of location or financial background.
