Financial inclusion is one of the most mature applications of blockchain, with more program-stage projects than any other sector, according to the Stanford University report.
The opportunities in this area are enormous. While financial inclusion is on the rise globally, 1.7 billion adults still remain unbanked — with men in developing economies 9 percent more likely to have an account than women, noted the World Bank. Fortunately, many of the challenges in this space, such as a lack of digital identity and of property registration, happen to also be some of the greatest strengths of blockchain.
“A lot of governments globally are looking at land titles as a first step to start because land titles in certain countries can be tampered with.”
— Katrina Donaghy, co-founder and co-CEO of Civic Ledger
“A lot of governments globally are looking at land titles as a first step to start because land titles in certain countries can be tampered with, which can take away an economic proposition of its citizens,” Katrina Donaghy, co-founder and co-CEO of the Australian startup Civic Ledger, told Devex.
Also, for poor people in the developing world who own land or property, such assets are among the easiest to leverage for credit in order to help pull themselves out of poverty. Clear land boundaries and entitlement are expensive to obtain, however.
One of the most forward-looking developing countries in this space is Georgia, which launched a project with the Amsterdam-based Bitfury Group in 2016 that has secured more than 300,000 Georgian land titles on the Bitcoin blockchain to date. The project is now in phase two, which was designed to include a private blockchain anchoring the public Bitcoin blockchain, and has “smart contract” capabilities, which are programmable contracts that self-execute when select conditions are met.
“We’ve now introduced other agencies to the conversation, so that phase is being redesigned as we decide how to move forward,” Kathleen Collins, communications associate at Bitfury, told Devex.
The other main challenge is digital identification, which a 2014 World Bank survey noted as the reason why 18 percent of the unbanked cannot access financial services. But, several humanitarian and nonprofit groups are looking into this issue. WFP told Devex that for the aforementioned pilot project in Jordan, each participating refugee has an identifier on the blockchain, which could be enriched with data such as health records, education, and which supports full ID “cards.”
Given the wide range of blockchain projects, perhaps it’s no surprise that 44 percent are financial inclusion initiatives, which while still in early development, are on track to reach more than a million people each before 2020, noted the Stanford University report, adding that for almost half of the projects in this sector, reaching more people is a primary benefit of using blockchain.
The focus is now on moving from proof of concept to scale, not just in financial inclusion, but for blockchain technology in general, Jane Thomason, global ambassador and advisory board member at the British Blockchain Association, told Devex.
With the Organization for Economic Co-operation and Development hosting a conference on blockchain this September in Paris, donors and the international development community continue to demonstrate that they understand the huge potential, but they still need to do more to accelerate the uptake of blockchain for development purposes, said Thomason.
“It is not time to stand back and be an observer, it’s time for donors to lean in and shape this technology and be part of shaping the future,” she added.