Over 1.4 billion adults lack access to financial services worldwide, depriving them of opportunities to invest, save, and even pay bills in some cases. These numbers represent individuals navigating life without the financial safety nets most depend on. Blockchain and Web3 technologies are creating pathways to bridge the gap between financial systems and unbanked or underbanked customers.
The barriers to traditional financial systems
Access to traditional banking is impossible for many, even in countries like the US, where one wouldn’t expect this to be the case. Almost a quarter (23%) of people earning less than $25,000 a year are unconnected to financial services. Similar barriers exist globally, driven by a mix of geographic, economic, and social factors. Excessive paperwork, high fees, and having to visit a physical branch create roadblocks. It’s challenging to maintain a bank account due to minimum balance requirements or monthly maintenance fees, which lower-income households may not be able to afford.
Entire communities lack the tools needed to ensure financial stability and security. What’s more, the fixed hours in which many banks operate conflict with hourly workers’ schedules, rendering access impractical or inconvenient. Unreliable infrastructure and the lack of internet access and nearby branches compound the issue in developing countries or rural areas. As a result, many people have no access to essential services.
Blockchain tools as a possible solution
Certain communities’ spending potential remains untapped, and merchants are missing opportunities to connect with a vast and underserved market. Web3 solutions are a potential game-changer, providing tools that empower the unbanked and underbanked to become part of the financial system. Blockchain platforms offer decentralized loans and payments as well as access to verifiable credit histories.
L1 blockchain Creditcoin is an example of a platform connecting the unbanked, whose financial services target emerging markets. It recently announced the launch of its Ecosystem Investment Program through Credit Labs, worth $10 million. The initiative will accelerate innovation within the platform’s network by providing equity investments ranging from $25,000 to $250,000 for Web3 entrepreneurs, startups, businesses, and developers. The program prioritizes investments in projects that drive broader Web3 tech adoption, improve financial accessibility, enhance decentralized payment and credit solutions, and utilize Creditcoin’s blockchain infrastructure for real-world applications.
Creditcoin also provides the infrastructure for decentralized internet access with Spacecoin, taking high-speed satellite internet connections to places in need. Increasing access to credit facilitates economic prosperity, allowing businesses to create jobs and scale.
The concept of leapfrogging to next-gen solutions
Many developing regions went straight to mobile because of insufficient funds for infrastructure. The massive expenses associated with the modernization and implementation of poorly developed infrastructure led populations to inevitably circumvent traditional communication technologies. This concept shows that lower-income countries can skip intermediate systems as they develop, going straight to their modern equivalents. Many countries skipped landline adoption. Landline use has remained extremely limited in India, Ghana, and Nigeria, while mobile phone adoption is rising exponentially.
Like cellular technology, blockchain technology can fill the gap left by analog systems. For example, Spectral and Centrifuge use this tech to track financial activities, creating transparent credit scores based on on-chain behavior. Decentralized platforms integrate non-traditional data sources, such as utility payments or mobile phone usage, to assess creditworthiness.
Collateralized and uncollateralized DeFi loans are another interesting development. DeFi platforms offering the first loan type require users to lock up assets worth more than the loan amount to mitigate default risks. The platform Jellyverse’s jAssets allows users to track the value of traditional real-world assets, locking crypto as collateral. TrueFi offers uncollateralized loans to trusted borrowers based on their creditworthiness and reputation. Community-based lending pools allow groups to vouch for individuals, reducing default risks. Platforms like MakerDAO use smart contracts to automate loan issuance, repayment, and collateral management.
Digital platforms enable cross-border lending, making credit accessible to underserved populations. Lenders and borrowers interact directly, with funds locked in smart contracts until terms are met.
Decentralized payment gateways like Celo focus on seamless cross-border payments using stablecoins. Web3 companies are also building user-friendly interfaces for non-technical users, like wallets with fiat on/off ramps for easy onboarding. By avoiding intermediaries, Web3 and DeFi platforms can provide lower transaction fees compared to traditional institutions.
Benefits of servicing the unbanked for blockchain companies
Predictably, Web3 and blockchain companies stand to gain from providing services to developing countries’ populations, primarily in terms of long-term profit. Developing economies are projected to grow faster than developed ones, with purchasing power and financial activity increasing rapidly over time. The IMF ranked countries by the projected percent change of real GDP growth from 2024 to 2025. The highest growth category, 6% or more, was observed in many developing countries, with Libya and Sudan’s GDP predicted to increase by more than 13% resp. 8%.
Many governments in developing regions are open to innovation and may offer favorable regulations or sandboxes to pilot blockchain solutions. Blockchain companies that enter these markets early can establish a dominant position, staying ahead of the competition.
Investors, customers, and partners may consider companies targeting developing regions to be socially and environmentally responsible. In fact, blockchain technology holds immense potential for environmental sustainability, offering transparent and secure solutions to support renewable energy trading, track carbon emissions, protect natural resources, and facilitate waste management. Many blockchain projects in developing regions align with Environmental, Social, and Governance (ESG) goals, making them attractive to impact-focused investors.
Bitcoin is notorious for its environmental consequences, but a recent study identified 23 blockchain networks generating significantly lower carbon emissions and consuming far less power than Bitcoin. Two of these environmentally friendly blockchains are Fantom and Algorand. Many organizations and projects support eco-friendly blockchain initiatives, such as GreenTrust, the Renewable Energy Certificate Mechanism, and the Energy Web Foundation.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
