While the idea of life without banking services might seem unimaginable to residents of affluent countries, in less developed regions, it's a stark reality. Pundi X emerged with the purpose of empowering the economically disadvantaged by offering financial services beyond the reach of traditional banks. Initially following the path of digital platforms like Alipay, Pundi X's leadership soon uncovered blockchain's transformative potential for these economically volatile areas.
Zac Cheah, the CEO of Pundi X Recently shared with Blockonomi, the driving force behind Pundi X's strategic use of blockchain was explained by its CEO.
“Embracing blockchain as a tool to aid the unbanked is the foundation of what Pundi X stands for. In Indonesia, a staggering half of the populace remains unbanked due to the prohibitive costs and logistical hurdles involved in securing the necessary documentation to open an account.”
It's a harsh reality that banks function as profit-driven entities with no obligation to facilitate access to their services for the financially disadvantaged. Banks can also discriminate Many financial institutions set stringent criteria, often sidelining potential clients who don't promise high revenue, leaving those truly in need with few affordable options.
Pundi X Could be Part of Real Change
Blockchain presents several compelling advantages, potentially positioning it as the go-to platform for future fintech innovations. Unlike traditional methods that rely heavily on human oversight, blockchain minimizes such requirements, resulting in significantly reduced costs and minimization of human error.
For those categorized as 'bankless,' the improved efficiency offered by blockchain signifies a newfound gateway to accessible financial services. Pundi X appears poised to leverage this avenue, aiming to uplift the poor while establishing a stronghold in a vast and untapped market .
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A View From the Trenches
It's evident that conventional financial systems have fallen short in addressing the needs of the world's impoverished. This shortfall stems not only from the expenses intrinsic to banking but also from the costs surrounding customer regulatory compliance.
During our conversation, Mr. Cheah delved deeper into the challenges faced by the unbanked poor.
“For numerous individuals, banking is an elusive goal due to the extensive paperwork required to initiate an account. The associated expenses and distances compound these difficulties, making it virtually unattainable for the majority to secure a bank account. Many hurdles tied to being unbanked are tied to documentation or proof of financial stability.”
But according to Mr. Cheah,
“Blockchain offers a transformative path, enabling these individuals to establish credit records independently of traditional financial institutions, thanks to an unchangeable record of their financial history. This technology effectively liberates them from reliance on conventional financial systems.”
Access to financial services transcends mere individual wealth accumulation. In a nation like Indonesia, home to over 260 million people, the unbanked outnumber the populations of entire countries. However, Indonesia isn't alone; many regions face the challenge of vast segments of the population being unable to integrate with typical financial services, posing considerable societal strains.
How Blockchain Works for Everyone
When marginalized communities gain financial access, it's likely to spur new forms of societal progression. Those entrenched in cash-only economies often end up paying more for less efficient offerings.
Consider money transfers as a case study. Without a bank account, sending money across borders to another unbanked individual often leaves services like Western Union or MoneyGram as the go-to options—both costly and time-consuming.
Platforms similar to Pundi X, in contrast, offer near-instantaneous and more affordable transaction solutions. Furthermore, blockchain-powered avenues introduce micro-loans to communities where they can foster meaningful change. The global impact of heightened fintech accessibility via blockchain remains to be seen, but it is likely to empower people to an extent unimaginable without blockchain's capabilities.
