Driving Financial Inclusion with Blockchain

According to the World Bank, financial inclusion refers to the provision of accessible and affordable financial products and services that cater to the needs of individuals and businesses. This encompasses various aspects such as transactions, payments, savings, credit, and insurance, all delivered responsibly and in a sustainable manner .

The World Bank Group acknowledges the significant role of financial inclusion in combating extreme poverty and fostering shared prosperity . The initial stride towards achieving broader financial inclusion is facilitated by access to a transaction account, enabling individuals to securely hold and conduct various monetary transactions such as sending and receiving payments. In addition, individuals will have the opportunity to establish financial security through various means, including saving money, investing in financial products to meet their children’s education and retirement needs, and adequately preparing for potential financial challenges.

Since their inception, blockchain technologies have demonstrated tremendous potential in promoting financial inclusion and streamlining the formalization of remittances (Rella, 2019). Blockchain technology presents an array of possibilities, encompassing faster, cost-effective, and highly secure payment processing. Furthermore, its distributed ledger capability instills enhanced trust among participants. Originally conceived as a foundation for virtual currencies, blockchain has now found extensive utilization across various industries, notably in the realm of payments .

Furthermore, blockchain technology facilitates global payment processing and various other transactions through encrypted distributed ledgers, ensuring dependable real-time transaction verification. Consequently, intermediaries such as clearing houses and correspondent banks are rendered unnecessary. In addition, blockchain applications have gained significant appeal for remittances, particularly for transferring small amounts of money, thanks to their instantaneous, affordable, and traceable transactions that support multiple currencies across domestic and international mobile networks. Moreover, these applications can effectively store a variety of currencies within diverse mobile networks, highlighting the potential of blockchain-based systems.

After conducting comprehensive analysis of relevant prior research, it is evident that blockchain technology possesses the potential to facilitate digital financial inclusion across various domains. This technology finds application in diverse areas such as financial transactions, savings optimization, credit extension, and insurance provision . In conclusion, sustainable development can be achieved through various avenues, and one promising approach is leveraging blockchain technology to enhance financial inclusion. Governments, particularly those in developing economies, must prioritize serious consideration of blockchain investments to foster greater financial inclusion.