How Modern Heroes Are Using Blockchain to Foster Financial Inclusion for Refugees and Unbanked Population

In 2016, globalization sometimes is accelerated by unfortunate events, such as the ones happening in the Middle East, forcing masses of the local population to leave their homes. Becoming citizens of the world as a result of displacement, international migrants are uprooted from their communities, financial and other national systems. However, formal and legal borders still exist and legal complexities create significant barriers to assimilation and healthy adaptation.

In addition to forced displacement, there are also parts of the global population that live in countries inherently having weak financial systems. Parts of the world like Africa, unfortunately, contain a large number of financially excluded populations with a lack of access to national financial systems, let alone international.

Overall, ~2 billion people in the world don't have access to formal financial services. What is even more disturbing, according to the World Bank, is that 73% of the world’s population is unbanked. In addition, there are >232 million undocumented migrants internationally and the number continues to rise. Since many of those people do not have a formal identification document at the new place of residence, they are often victimized and hold a disadvantageous position in the financial system and beyond. The problem is especially relevant for women and children – over 800,000 men, women, and children are bought and sold across international borders every year and are exploited into forced labor. In the global scale, the number is believed to be reaching 21 million.

Opportunities for blockchain application

Severe modern problems with financial exclusion created modern heroes that are looking to put advanced technological solutions to serve the needs of the disadvantaged population. Talented entrepreneurs are investing efforts to bring efficiency, connectivity and security of blockchain technology to shed light on the parts of the world’s population living in the shade of national and international systems.

  • Inclusion through blockchain-powered Economic Identity

One of the ways the technology is put to aid is through blockchain-powered digital identity. Among the benefits of blockchain-based identity, professionals mention efficiency of reissuance of identity documents and data in case the documents are lost or stolen, enhanced privacy with the possibility to selectively reveal private identity information, higher verification efficiency for large financial institutions and the opportunity to operate in systems where identity is not restricted to individuals, but includes devices.

With the pace of rapid technology development, there are already players in the market bringing blockchain-powered digital identity to excluded population and refugees in parts of the world like Africa. BanQu is a bright example as it is the first-ever blockchain Economic Identity technology platform and network that enables a secure and immutable platform for creating economic opportunities for people around the world who are refugees and living in extreme poverty.

As explained by Ashish Gadnis, Co-founder of BanQu, We designed the BanQu ledger to be flexible enough to center around contracts and personal identity records and additionally handle a variety of transaction types all the while being interoperable with key stakeholders in the public, private, and NGO sectors.

"Thus, BanQu yields twofold benefits: it serves individuals by allowing them access to the global financial economy, its systems and networks and it serves policy designers by facilitating the creation of intelligent data sets that are otherwise unobtainable.

Image source: BanQu

The BanQu network uses a proprietary method to create a mash-up of a 'selfie' plus other key human characteristics for people with no access to technology or banking. This Economic Identity then can be augmented by critical pieces of information such as land rights, voter registration, relationship based credit profiles and health records, etc.

While the uses cases are infinite, BanQu is focused on solutions in following areas:

  1. Lifting status of refugees
  2. Eradicating extreme poverty
  3. Empowering women (currently, ~50% of women globally are financially excluded)
  4. Food/medical/payroll distribution in conflict zones
  5. Increasing revenue streams for social enterprises via diaspora capital participation and compliance-based remittance

BanQu aims to gather all meaningful data about the person into a profile that will allow people to step out of poverty. The wide mobile phone adoption in African countries allows BanQu to create a personal digital profile comprised of various records of personal financial and other activities. That profile is recognized and accepted by financial institutions as a legitimate identification information and will allow people to access formal financial services.

Simply put, the company carves meaningful events in one's life into blockchain to empower the person and provide an access to data that would allow that person to take his ‘history’ with him and use as an identification information when external events force the person to leave home and cut ties with local systems when they are burnt.

All pieces of information can be contained in the cloud and can further be used as a proof of identity. The idea and the solution BanQu was able to build is a life raft for those lost and excluded from legal and financial systems and condemned to invisibility in their new homes.

Recognizing tremendous benefits BanQu brings to the population in poverty, refugees and financial excluded, the Wall Street Blockchain Alliance brought Ashish Gadnis, Co-founder of BanQu, to the board of Financial Inclusion Working Committee. In addition, BanQu was among the winners of the FinovateSpring 2016 and took the Best of Show award, impressing the voters with the way innovators are using technology to solve the challenges of refugee populations and the underbanked.

  • Inclusion through blockchain-powered remittance service

Another interesting example of blockchain-powered inclusion for disadvantaged parts of the population is the joint effort by Stellar, the Stripe-backed open-source payment network, and Oradian, a cloud-based software provider for microfinance institutions in developing countries.

The payment-transfer network inside Oradian is built on top of Stellar’s platform and allows 300,000 Nigerians (90% of them women) to cheaply transfer money between microfinance institutions over the Stellar network. It’s not all smooth yet; users will still need to visit their MFI branches to send and receive the funds. For convenience, Nigerians will have 200 branches operating across the country, mainly in rural areas.

Stellar was founded by Mt. Gox/Ripple Founder Jed McCaleb a couple of years ago and operates as a decentralized protocol for fund transfers in any pair of currencies. It is a non-profit foundation that aims for financial inclusion by connecting different financial systems around the world.

  • Companies allowing to help refugees and migrants from anywhere in the world for free

Among modern heroes are also companies that allow people anywhere is the world to help those in need for free or at a very low cost.

Regalii, for example, is an international mobile payments platform that allows immigrants to pay their families’ bills anywhere in the world. The business model of this startup is to allow migrants to send money for food and bills to their families through SMS messages.

Ripple is another disruptor and a hero, making it easy to send money anywhere in the world in any currency – instantly and for free. Users simply need to load money to an active Ripple wallet through a participating gateway. One can send it in any desired currency to a Ripple user based in China, for example, who could accept payment in a completely different currency through a transaction that happens in less than five seconds and costs only a minimal fee.

WorldRemit is also looking to make it easier to help families abroad. It is an online service that lets people send money to friends and family in other countries, using a computer, smartphone or tablet. Money can be received as a bank deposit, cash pickup, mobile money, or mobile airtime top-up. WorldRemit’s service is available to senders in 50 countries and is offered to more than 120 destinations across Europe, Asia, Africa, Australia and the Americas.

There are certainly much more examples of innovative companies looking to make the world a better place for poor and excluded part of the global population. Over time, as advanced technology like blockchain becomes mainstream (if it isn't already), more companies will turn towards the expansion of their mission for the good of those excluded from the international formal financial system.