A crypto and fintech “revolution” could solve the lack of financial inclusion in developing countries — but it first needs to gain the trust of the unbanked, according to a payments firm executive.
During a panel session at the Web Summit Qatar on Feb. 27 — Juan Pablo Ortega, a founder and CEO at online payment platform Yuno argued the biggest challenge to financial inclusion is distrust for anything other than cash — which he sees in high-inflation countries.
The panel was moderated by Cointelegraph’s ambassador and editor-at-large Kristina Lucrezia Cornèr.
Ortega explained there’s a deep-rooted distrust toward banks in places such as Argentina, where some locals prefer to physically store their cash.
“People don’t actually send a wire transfer. [Instead] they go to the bank, they take all the cash and they pay for a house in cash,” he said, adding:
“It's completely crazy.”
Consumers will not open a bank account with a bank they don’t trust, he stressed.
Ortega gave a hypothetical example of a taco vendor seeking a $100 loan for their business. Under the current system, the vendor may find themselves having to pay that back with 300% interest and said such conduct is widening the wealth gap.
Ortega said fortunately, he’s starting to see a financial inclusion “revolution” pushed by fintech firms in Latin America, Asia, and some parts of Africa, though there are still challenges.
“For inclusion to happen, the regulator first has to change the law, but then you need to have companies [and] fintech that are able to actually regain the trust from the consumer.”
Ortega noted that Brazilian fintech neobank Nubank is one example of a firm making some headway on this front recently.
The Warren Buffet-backed bank recently partnered with stablecoin issuer Circle to drive demand for USD Coin (USDC) across Latin America.
A Nov. 22 statement by Nubank said it offered 14 cryptocurrencies in addition to Nucoin, a utility token for its loyalty program.
Welcome to Day 1 of #WebSummitQatar, where thousands of entrepreneurs, investors and global leaders are gathering in Doha! pic.twitter.com/QiiN1mtOZg
— Web Summit Qatar (@websummitqatar) February 27, 2024
Many developing countries rank relatively high in terms of crypto adoption.
India, Nigeria and Vietnam currently lead the world in adoption, according to Chainalysis’ 2023 Global Crypto Adoption Index.
Philippines, Indonesia and Thailand were placed sixth, seventh and tenth, respectively, while Brazil was the only Latin American country to crack the top 10 (in ninth place).
Related: Crypto offers Africans a ‘lifeline’ from inflation and corruption, say execs
Meanwhile, Yashish Dahiya, a founder and CEO at insurance-focused fintech firm Policybazaar, told the panel that India too, has had a strong focus on financial inclusion.
Dahiya says financial inclusion will play an important role in Indian Prime Minister Narendra Modi’s plan to take the 750 million Indians out of poverty within the next 15 years.
However, the Indian government recently banned crypto exchanges Binance, Kraken, Kucoin and others last December for failing to comply with guidelines from the country’s financial intelligence unit — so it isn’t exactly clear what role crypto will play in that movement.
Magazine: Bitcoin in Senegal: Why is this African country using BTC?
