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Banking the Unbanked in The World’s Most Isolated Communities – Facebook’s Attempt to Get it Right
Since 2017, the percentage of the population in India with a basic bank account has grown to 80% but only 2 percent of this population uses mobile payment services. This measly figure is despite having an 88% penetration of mobile phones into house-hold
Use of Libra across Facebook’s 2 billion users- at the expense of their currency – a situation that was always going to cause friction between the social media giant and governments
Facebook had an idea – says David Gerard, in his new book “Libra Shrugged: How Facebook Tried to Take Over the Money.” Yet in what seemed like a twisted turn of events -; from mainstream media massively covering Facebook’s cryptocurrency projects, then governments slamming the course as an organizational plot to take over the financial world and finally a pandemic toppling off what would have been the next big thing in global headlines.
Libra merited itself as a blockchain pundit that would deliver on the promises, vision, and ideas of financial liberation. Banking the billions of unbanked in undeveloped countries, support cross-border remittance, and solve inequality issues. Criticism from central banks, governments, and cryptocurrency opponents would sadly undercut the merits of a financial institution equalizing the odds for the less fortunate. Kenya is at home with its mobile payment infrastructure under M-pesa. Approximately 70 percent of Kenya’s adult population is banked on mobile money accounts. Kenya as a third-world country has illustrated how a simple mobile banking institution would transform millions of livelihoods. The focus right now for a country that has already developed and managed to bank about 90-percent of its population – the effort is now directed towards improving the financial infrastructure. Prescribing credit and savings methods, streamlining micro-finance services, and the broader inclusion of low-income bankers into the broader promise of middle-class banking institutions. The overall positive benefit has been to lift people out of poverty, bridging the gap between the world’s excluded population segments, and bettering the country’s market imperfections.
Let’s take a stroll above the clouds into Asia’s India and weigh the comparisons. In India alone, over 190 million remain unbanked. Since 2017, the percentage of the population with a basic bank account has grown to 80%. By this measure, it’s easy to see India as an above-average financial literate nation. Unfortunately, it’s not. Nearly 50% of the country’s basic bank accounts remain inactive to date. The government of India has played its part in incentivizing its citizens to open these accounts but has done little to nothing in advocating financial literacy across its population for people to increase usage of these accounts. It seems India’s lower and middle markets are not yet aware of the potential benefits of banking, most people even find visiting the bank a chore. The use of mobile phones to advocate for financial inclusion and engagement would seem the single-most solution for India’s unbanked population – the IOE360 report on India’s Consumer Economics indicates only 2 percent of the population use mobile payment services. This measly figure is despite having an 88% penetration of mobile phones into households.
Facebook’s selling point for Libra was Banking the Unbanked. But how the association was going to do that remained less persuasive and unclear. The only foreboding evidence is that of Libra trying to get everybody using its tokens. And that would not only have hurt the position of central banks but also seriously affect small capital markets. Another problem was adjudicating the use of Libra across Facebook’s 2 billion users- at the expense of their currency – a situation that was always going to cause friction between the social media giant and governments. On the other hand, there are millions of people who still wouldn’t bet on Facebook’s integrity and see its every arc as a means to break the rules of privacy. Most Libra opponents were against the idea of a central authority such as the social media company having control over people’s financial data.
If Libra was the only story adjudicating for the unbanked in developing nations, – more of such innovations should crop up and align themselves in ways that do not undercut the value of governments, financial authorities and ensure the world’s data is safe and at home.