Traditional banks are not optimized to serve the unbanked – Bitcoin News Interview
For years, mainstream financial institutions in different parts of the world have tried to reduce the financial exclusion gap by extending their services to the unbanked population. Yet, for many reasons, these institutions still cannot deliver their products and services to everyone who needs them.
Although several reasons are cited as to why banks are still unable to do so, their inability to serve this unbanked population has, on the other hand, led to the meteoric rise of fintech startups. Instead of relying on metrics often used by traditional banks to decide whether or not to open a new branch, fintech startups such as Flip are often ready to serve even those who do not have a regular income.
For people like Stone Atwine, a seasoned banker who was appointed in the Forbes 30 under 30 list for Europe and technology, the bankruptcies of major financial institutions have created opportunities. Along with explaining why he thinks traditional banks have failed to close the financial exclusion gap, Atwine (co-founder of Eversend) also shared his feelings on crypto, stablecoins and Web3 with Bitcoin.com News.
Below are Atwine’s responses to questions emailed to them.
Bitcoin.com News (BCN): You have worked for several mainstream financial institutions and in different capacities. What can you say about their efforts to extend financial services to the unbanked? Do you ever see them achieve this, since it’s been several years since they started talking about financial exclusion?
Pierre Atwine (South Africa): Traditional banking systems are not optimized to serve people without massive incomes. Branch networks, compliance systems and limited efficiency do not allow them to serve the unbanked. The economy is meaningless for a traditional bank if it cannot earn a modicum of money from customers.
BCN: In your opinion, why are fintech startups more successful in bringing financial services to the excluded?
HER : Yes. Promising fintech startups can serve the excluded for less. But not at the bottom of the pyramid. Startups like Eversend try to help the customer increase their revenue. It’s very attractive.
BCN: Since leaving the banking job, you are now leading a digital-only banking alternative for Africa and African Diaspora payment platforms. Can you tell our readers about this digital-only banking alternative?
HER : Eversend is the all-in-one payment platform offering cross-border mobile-based P2P payments, virtual cards, stock trading, crypto and asset-backed credit, with a focus on Africa. In addition, Eversend develops B2B and API-based crypto-fiat payment services, including collections, payments and currency exchanges.
BCN: What are some of the challenges faced by fintech startups like yours?
HER : The main challenge is regulatory compliance. African countries have several regulatory regimes, which means different laws and regulations.
BCN: What do you think is the best use case for blockchain in Africa and why?
HER : There are many interesting use cases, but the main one for me is not the most advanced like Web3 and NFTs, but solving a huge problem of cross-border trade payments using stablecoins.
BCN: The Central African Republic recently became the second country after El Salvador to make bitcoin legal tender. As expected, the decision divided opinion. Some have argued that it is not possible for a developing country with limited telecommunications infrastructure like the CAR to adopt bitcoin. Others said the ruling shows cryptocurrencies like bitcoin can act as an alternative reserve currency. What is your reaction to these views and feelings?
HER : This can be a great initiative by CAR to attract wealth and human capital. Builders like to build for favorable regulatory environments. It won’t be surprising to see a few companies move into building around bitcoin and the Lightning Network.
But the criticism of limited electricity and internet access is legitimate because bitcoin wouldn’t necessarily solve the ordinary citizen’s problems if access were restricted. This should not prevent the CAR or any other country from being a fast and pioneering player in this space. There are always advantages to this.
BCN: Others have suggested that adopting stablecoins makes more sense than volatile bitcoin. However, the recent crash of the stablecoin UST also seems to have upset this argument. What is your opinion on that?
HER : Stablecoins must be auditable and fully backed by fiat currency so that we do not suffer loss of value in the event of a bank run. I do not support the idea of an algorithmic stablecoin today. UST is an example of what could happen.
BCN: Are central bank digital currencies the answer since cryptocurrencies and now stablecoins all seem to have difficulty maintaining stable value?
HER : Central bank digital currencies are a great idea for central banks and governments looking to have full control over their citizens. Yet, they are not recommendable for the privacy of said citizens. If I hand you a fiat note, the government won’t know about this transaction. But with CBDCs, every movement of value is recorded. Most people have nothing to hide, but in my opinion that would be a massive invasion of privacy.
Fully backed stablecoins make a lot of sense.
What do you think of this interview? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, Eversend, Stone Atwine
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