For many years, traditional financial institutions around the world have attempted to close the financial exclusion gap by offering services to those without bank accounts. However, for many reasons, these financial institutions still fail to serve everyone who needs their products and services.
Regulatory Hurdles
There are several reasons why banks have yet to do this, but the inability to serve the unbanked has conversely led to the rapid growth of fintech startups. Instead of relying on metrics commonly used by traditional banks when deciding whether to open a new branch, fintech startups likeEversendEversendis often primed to serve those without regular income.
For people like veteran banker Stone Atwine, who wasnamed to Forbes’ “30 Under 30 List for Europe, and Technology,” the collapse of major financial institutions has created opportunities. In addition to explaining why he believes traditional banks have failed to bridge the financial exclusion gap, Atwine (co-founder of Eversend) also shared with Bitcoin.com News his feelings on crypto, stablecoins, and Web3.
Below are Atwine’s responses to questions sent to him via email.
Bitcoin.com News (BCN). You have worked in various capacities for several traditional financial institutions. What are your thoughts on their efforts to provide financial services to the unbanked? It’s been a few years since you started talking about financial exclusion; do you think they will be successful in this endeavor?
Stone Atwine, SA: The traditional banking system is not optimized to serve people without significant income. Branch networks, compliance systems, and limited efficiencies make it impossible to serve those without bank accounts. The economics do not make sense for a traditional bank if it cannot generate a minimum income from its customers.
BCN: In your opinion, why are fintech startups doing a better job of bringing financial services to the excluded?
SA: Yes, they are. Promising fintech startups can bring services to the excluded at lower costs. But not at the bottom of the pyramid; startups like Eversend try to help their customers make money. This is very attractive.
BCN: After retiring from banking, you now run a digital-only bank for Africa and an African diaspora payment platform. Tell our readers about this digital-only banking alternative.
SA: Eversend is an all-in-one payment platform offering mobile-based cross-border P2P payments, virtual cards, stock trading, crypto and asset-backed credit with a focus on Africa. In addition, Eversend is building cryptosphere B2B and API-based payment services, including collections, payments, and currency exchange.
BCN: What are some of the challenges that a fintech startup like yours faces?
SA: The main challenge is regulatory compliance. There are multiple regulatory regimes in African countries, meaning there are different laws and regulations.
BCN: What do you think is the best use case for blockchain in Africa and why?
SA: There are many great use cases, but the leading one for me is not the cutting edge like web3 or NFT, but solving the huge problem of cross-border business payments with stablecoin.
BCN: The Central African Republic recently became the second country after El Salvador to make bitcoin legal tender. As expected, the decision divided opinion, with some arguing that it would be impossible for a developing country with limited telecommunications infrastructure like CAR to adopt bitcoin. Others argued that the decision demonstrates that cryptocurrencies like bitcoin can serve as an alternative reserve currency. What is your reaction to these views and sentiments?
SA: It could be a great move by CAR to attract wealth and human capital. Builders like to build for a supportive regulatory environment. It would not be surprising to see some firms move with builds around Bitcoin and the Lightning Network.
However, the criticism of limited electricity and internet access is legitimate, as bitcoin does not necessarily solve the problems of everyday people if access is restricted. That should not stop CAR and other countries from being the first to take the lead in this area. There are always advantages to this.
BCN: Others have suggested that adopting a stablecoin makes more sense than a volatile bitcoin. However, the recent crash of UST stablecoins seems to have turned this argument upside down as well. What are your thoughts on this?
SA: Stablecoins need to be auditable and fully backed up by fiat money so that they do not experience a loss of value when the bank runs out. I do not support the idea of algorithmic stablecoins today; UST is an example of what could happen.
BCN: Since cryptocurrencies and current stablecoins all seem to have challenges maintaining stable value, is a central bank digital currency the answer?
SA: Central bank digital currencies are a great idea for central banks and governments looking to have complete control over their citizens. Yet, they are not recommended for the privacy of said citizens. If I hand over my fiat currency, the government will never know about the transaction. But with CBDC, every single movement of value is recorded. Most people have nothing to hide, but in my opinion it would be a massive invasion of privacy.
A fully backed stablecoin makes a lot of sense.
Image credits: Shutterstock, Pixabay, Wiki Commons, Eversend, Stone Atwine