Bitcoin’s heady, high-tech growth makes it seem like a financial innovation for currency traders and cyber-geeks… a world away from the day to day life of low-income women.
Charlene Chen from Bitpesa gave participants at Women’s World Banking’s Making Finance Work for Women Summit an insider view of why blockchain can be a game changer for women’s financial inclusion, even in the village (click here to view Charlene’s presentation).
What is blockchain?
While Bitcoin was the first and best-known application, blockchain technology can be used for much more than transfer of currency. It can be used for contracts, records and many other kinds of data.
Blockchain—or distributed ledger technology (DLT) if you want to impress the cyber-geeks—is a decentralized way to keep a record of all transactions taking place on a network. It makes it possible to share information across multiple providers securely. Blockchain uses cryptography to ensure that data cannot be edited and no one person can change it. It has never been hacked.
Blockchain is transformative, and along with other technologies like machine learning, has tremendous potential to change the way financial services are offered. It is beginning to reach critical mass. In the last three years over US$1.4bn was invested in bitcoin and blockchain companies. Over 24 countries are currently investing in DLT: 90 central banks are engaged in discussions on it around the world and 80% of banks are predicted to be initiating DLT projects by 2017.
What can blockchain do for low-income consumers?
A digital ledger that can keep track of transactions and IDs of every client, all encrypted, is a powerful tool. We have not even begun to imagine the many possible applications in financial inclusion. Bitpesa is one of few companies operating in Sub-Saharan Africa, with operations in Nigeria, Kenya, Senegal and Democratic Republic of Congo.
International remittances: Blockchain has potential to help low-income workers send money home. Bitspark and rebit partnered on a solution for low-income women from the Philippines working in Hong Kong. This solution enables a worker in Hong Kong to send funds, which the recipient can withdraw at a cash agent or through a bank account. The payment is passed through bitcoin, but neither the worker in Hong Kong nor her family in the Philippines buys or sells bitcoin.
Loan disbursements: Digital lender Branch partnered with Bitpesa to enable transfers of funds from the US to local borrowers in Sub-Saharan Africa. Branch bought bitcoin in the US and made a local transfer through Bitpesa’s API, which could then be disbursed instantly disbursed into the cell phones of their digital borrowers.
Global micropayments: Premise Data is a data collection and analytics company that works with the World Bank, the UN and others. It used Bitpesa to pay hundreds of data collectors in Tanzania and Uganda the equivalent of $5 into their mobile money wallets every wee.
SME trade finance: SMEs in Africa are beginning to use Bitpesa to pay suppliers in China, Dubai, the US and Europe. The benefits are faster, more reliable and lower cost payments, with less working capital tied up.
In the future, blockchain is expected to improve:
- Credit scoring – if all digital transactions were stored in a distribute ledger this could provide a reliable source of data for making loans.
- Medical records and insurance, making it possible to automate claims payments
- Land registry – getting title deeds out of dusty government offices and onto blockchain has potential to reduce fraud and make it easier for heirs to inherit land
Making it easier to prove who you are, get access to credit, register land titles, and receive insurance payments, blockchain has great potential to improve the way financial services are offered. Far from being only for cyber-geeks, it can be transformative wherever it is put it to service to make finance work for women.
Want to learn about the latest innovations in blockchain and other disruptive technologies in the financial services industry?