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Blockchain: A Potential Avenue to Increased Financial Inclusion



This article is written by Gino Baltazar. This article does not reflect the views of the Sovereign Wealth Fund Institute.

With blockchain’s prominence in the eyes of the media on the rise, and its potential to fundamentally transform economies of exchange becoming increasingly apparent, various financial actors have been placing bets based on how they believe this game-changing technology will impact their business models and future value propositions. Many are experimenting with how to leverage their assets, while others are filing defensive patents of the kind won by Goldman Sachs in 2017 to “settle securities in financial markets using distributed, peer-to-peer and cryptographic techniques” using a proprietary coin called SETLcoin.

Some are organizing entities such as the R3 Consortium – a cadre of banking institutions that include JPMorgan, Credit Suisse, Goldman Sachs, State Street, BBVA, Royal Bank of Scotland, Barclays and 100 other such institutions, pitching its platform Corda as the “next generation financial operating system.” The consortium managed to raise just over US$ 100 million last May, and continues work that it contends will make it “easier for computer developers building applications with the technology to incorporate future upgrades and updates.”

At the country level, Estonia is exploring development of a new sovereign wealth fund that would utilize blockchain technology as a fund-raising mechanism by selling “estcoins” to the public. The proposal has largely been seen as a way to bring much-needed capital to the country’s dilapidated capital markets, which have been left largely underdeveloped under the control of foreign banks. The idea may have merit – the country has more digital and mobile subscribers than its population, second only to the United States, according to the Organization for Economic Co-operation and Development (OECD).

Even e-commerce giant Amazon is angling to get in on action through a team-up with Luxoft, a technology firm that has developed a digital ledger solution that runs on Amazon’s Web Services cloud computing platform (AWS). The partnership allows Amazon to use and host blockchain technology without the cost of having to develop it themselves.

Why Financial Inclusion Matters

While they may not grab as many headlines as big-name corporate initiatives, opportunities to unleash the latent economic potential at the bottom of the pyramid using blockchain are of equal importance, and mobile telecommunications and financial service providers should take notice.

The reasons for exploring these opportunities have less to do with altruism, and more to do with the risks financial inequality poses. The World Economic Forum (WEF) – a multi-stakeholder platform which counts among its members the world’s top leaders in business, as well as representatives from leading governmental, academic, and international organizations – have argued that inequality outpaces climate change, disease, and other calamities as the single biggest risk to sustainable long-term economic growth and global stability.

Economically excluded people, particularly young people, end up “feeling disenfranchised and become easy fodder for conflict … reducing social cohesion and security, undermining democracies and crippling hopes for sustainable development and peace,” says the WEF’s report.

“Blockchain could be one solution,” says Don Tapscott in his book “Blockchain Revolution,” where he outlines exactly why this the far-reaching implications of this nascent disruptor are simply too potent to ignore: “By lowering barriers to financial inclusion and enabling new models of entrepreneurship, the tonic of the market could be brought to bear on the dreams and ideas of billions of the unbanked.”

Noteworthy Blockchain Use Cases for Increased Financial Inclusion

Abra is building a global digital asset management system based on blockchain technology with the goal of turning “every smartphone into a teller.” Founded in 2014, the company provides person-to-person (p2p) money transfers primarily between users in the Philippines and the United States, with plans on expanding to 20 more countries in the near future. By installing Abra’s app on their mobile devices, users can store money in a digital wallet, no bank account required.

By creating what is essentially an intermediary-free exchange mechanism through p2p transfers, Abra effectively displaces a conventional bank’s historically two very essential roles: payments and value storage.

In the Philippines, where remittances amounted to nearly US$ 33 billion in 2017, Abra is taking on companies well above its weight-class like financial titans Western Union and Visa. Abra has effectively consolidated “Visa’s and Western Union’s differing payment settlement rails into one single solution that works domestically or cross-border, and that can be used for both p2p or person-to-merchant (p2m) payments for the first time,” says Bill Barhydt, Abra’s CEO.

With regards to property rights and ownership, which remains undefined and unenforced for some 5.3 billion people living in poverty in the developing world, Amsterdam’s BitFury Group is partnering with the Republic of Georgia to create a blockchain-based land title registration service. Peruvian economist Hernando DeSoto is a stakeholder who has studied the problem in other places like Honduras, where many people do not have legal title to their houses, cars, and other assets. DeSoto estimates that property titles for the world’s poor would translate to some US$ 9.3 trillion in unrealized assets – land, homes, and businesses that, if registered, would grant access to billions in previously untapped loans, fuel for further economic growth.

Bitfury follows the work of Factom, an Austin-based blockchain company that has been working to solve the problem in Honduras, where 60% of land is undocumented due to allegations of rampant corruption in property registry, land sales and resolution disputes. According to a 2011 report from the New York Times, land conflict has served to widen the economic and social divides that span Central America’s second poorest country. In contrast to Bitfury’s welcome collaboration with the Republic of Georgia, Factom’s work in Honduras stalled in 2015 due to “political problems” and remains in limbo.

Everex, a blockchain-based microlending and merchant payments provider that focuses on small businesses in Asia, is taking a stab at some of the thorny problems that microfinance (MFI) has been experiencing – primarily the need for better management of how they are operated – by minimizing or eliminating predatory loan structures and making sure MFI loans end up in the right hands.

The Singapore-based company’s offerings – including Chainy, Ethplorer, Crytocash and Everex Wallet – provide means of storing and sending funds on the Ethereum network, and promise to use blockchain for greater accountability and transparency by monitoring transactions, auditing funds, and detecting fraud. The startup has been partnering with NGOs in Thailand while running product trials with migrant workers in Myanmar, drawing some US$ 500,000 in capital from Chinese investors.

What’s Needed – Leadership and Collaboration

Notably common to all these use cases, and are almost certain to appear in other potential use cases, are partnership and experimentation among technology providers, governments and development-focused institutions. Blockchain, for all its promises, is a complex technology requiring education, buy-in from investors, and – in some cases – sponsorship by government or political entities.

In cases where partnerships are succeeding, such as with Abra or Everex, ventures are being funded while real problems are getting solved. In cases where partnerships are not successful, such as with Factom, external obstacles to innovations and implementation persist with no real solution in sight.

At end of the day, blockchain technology – like the internet before it – is not a miracle solution for all the world’s economic woes, nor will it bring an end to economic exclusion. But it does provide an opportunity for those of us in a position to affect change and harness its use for the betterment of all. It will take a concerted, cooperative, and diligent effort among parties impacted to overcome serious obstacles, but the result will be the development of a more equitable and just world that we can be proud of.


Gino Baltazar is a former VP of Technology, Mobile and Digital Strategy at JPMorgan Chase and currently a Principal at Invest Impactly, where he studies and writes on the intersection of technology, social good and sustainable investing. He has an MBA and Masters in Financial Analysis and Investment Management from Saint Mary’s College in California and a BS in Computer Science from California State University. He is available for consulting as a Data or Digital Analyst, or for speaking engagements. Email:

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