Traditional finance has been struggling for a long time, but now its flaws are becoming more apparent. In today’s challenging economic climate, it is clear that the traditional financial system is not meeting the needs of a significant portion of the global population. Nearly 1.4 billion people remain unbanked, left behind by a system that is exclusive and inefficient.
The outdated models of traditional financial institutions continue to exclude those who lack access to documentation, credit histories, or stable infrastructure. This exclusionary approach has not changed over the years, leaving many individuals without access to essential financial services. However, with the emergence of blockchain technology and neobanks, there may be a solution to the problem of financial inclusion in the digital age.
One of the key issues with traditional financial systems is the high fees and delayed transactions associated with international money transfers. Banks can take days to process cross-border transactions and impose significant fees on them. In contrast, neobanks built on blockchain technology offer faster, low-cost, and almost real-time transfers by eliminating the need for intermediaries.
Financial inclusion goes beyond just access to banking services. The traditional onboarding processes of banks have made it difficult for socially disadvantaged individuals to access key financial services. The majority of the unbanked population lives in regions where financial institutions are either absent or have set up barriers to entry. Neobanks are addressing this issue by adopting decentralized models that make banking accessible to a broader population.
Another illusion created by traditional finance is the idea of ownership. When you deposit funds in a bank, you may believe that they are safe and untouched. However, banks have complete access to these funds and can use them for various purposes. Neobanks offer non-custodial accounts that allow users to retain full ownership and control over their assets, providing greater financial autonomy.
Centralized financial systems also pose a significant risk in terms of data exploitation. By accumulating vast amounts of personal information, these systems become targets for cybercriminals. Blockchain-based neobanks decentralize data, giving individuals control over their information and reducing the likelihood of data breaches.
Concerns about volatility in the cryptocurrency market can be addressed through stablecoins, which offer the stability of traditional currencies while leveraging blockchain technology. These digital assets provide a way for users to engage in financial transactions without being exposed to the high risks associated with volatile cryptocurrencies.
In conclusion, traditional finance is failing to meet the needs of a large portion of the global population, and decentralization through blockchain technology offers a solution. Neobanks built on blockchain infrastructure provide a decentralized, inclusive, and transparent alternative to traditional financial systems, paving the way for a more accessible and equitable financial future for everyone.
