Continued mistrust in banks is holding back the fintech ‘revolution’
A crypto and fintech “revolution” could solve the lack of financial inclusion in developing countries – but it must first gain the trust of the unbanked, according to a payments firm executive.
In the year During a panel session at the Web Summit in Qatar on February 27, Juan Pablo Ortega, founder and CEO of the online payment platform, argued that the biggest challenge to financial inclusion is a lack of trust in anything other than money. – Inflation countries.
The panel was moderated by Cointelegraph Ambassador and Editor-at-Large Christina Lucrezia Koerner.
Ortega explained that in places like Argentina, there is a deep-rooted distrust of banks where some locals prefer to store their money in person.
“People don't actually send money. [Instead]You go to the bank and take all the cash, and you pay for the house in cash.
“It's absolutely crazy.”
Consumers should not open a bank account in a bank they do not trust.
Ortega gave a hypothetical example of a taco vendor who needed a $100 loan for his business. Under the current system, the seller can pay that return with 300% interest, but Ortega said doing so is widening the wealth gap.
Fortunately, Ortega said, Latin America, Asia and parts of Africa are starting to see a “revolution” in financial inclusion driven by fintech companies, although challenges remain.
“In order for inclusion to happen, the regulator must first change the law, but you must have companies [and] Fintech can regain trust in the consumer.
Ortega cited Brazilian fintech neobank Nubank as one example of a firm that is recently making some inroads on this front.
The Warren Buffett-backed bank recently partnered with stablecoin issuer Circle to spur demand for USD Coin (USDC) across Latin America.
In the year A November 22 announcement by Nubank offered 14 cryptocurrencies in addition to Nucoin (NUC), a utility token for its loyalty program.
Welcome to Day 1 of #WebSummit Qatar where thousands of entrepreneurs, investors and global leaders will gather in Doha! pic.twitter.com/QiiN1mtOZg
— Web Summit Qatar (@websummitqatar) February 27, 2024
Many developing countries are relatively advanced in terms of crypto adoption.
According to Chinalysis 2023 Global Crypto Adoption Index, India, Nigeria and Vietnam lead the world in adoption.
The Philippines, Indonesia and Thailand ranked sixth, seventh and 10th respectively, while Brazil was the only Latin American country to finish in the top 10.
Related: Crypto gives Africans a ‘lifeline' from inflation and corruption, execs say
Meanwhile, Yashish Dahiya, founder and CEO of insurance-focused fintech company PolicyBazaar, told the panel that India has also placed a lot of emphasis on financial inclusion.
Financial inclusion will play a major role in Indian Prime Minister Narendra Modi's plan to lift 750 million Indians out of poverty over the next 15 years, Dahiya said.
However, the Indian government recently banned crypto exchanges Binance, Kraken, KuCoin and others last December for not complying with the guidelines of the country's Financial Intelligence Unit, so it is not clear exactly what role crypto plays in this movement.
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