If you live in a place where having a bank account is considered the standard, you may take it for granted. Owning a bank account can be helpful in several ways, for example, you can receive payments, prove that you have some savings, benefit from a small interest, use a debit or credit card, make payments and money transfers. But the number of unbanked individuals is surprisingly high. Why is that so? What can these people do? And more importantly, how can cryptocurrencies function as their own bank, thus improving their lives?
The Unbanked: The Numbers and Reasons
Let’s have a look at some data to see how extensive this issue is, bearing in mind that the numbers might be a bit different a few months from now. Anyway, the overall picture will be more or less very similar.
- As of June 2020, the world population is 7.8 billion, according to what was published by the United Nations.
- Globally, about 31 percent of adults remain unbanked.
- This translates to some 2 billion unbanked people all around the world.
The Table of the Unbanked
The table below shows the biggest numbers of unbanked globally, listed in millions.
|China||224m||19.8%||2 in 10|
|India||190m||20.1%||2 in 10|
|Pakistan||99m||78.7%||8 in 10|
|Indonesia||96.6m||51.1%||5 in 10|
|Nigeria||62.7m||60.3%||6 in 10|
|Mexico||58.7m||63.1%||6 in 10|
|Bangladesh||57.9m||50.0%||5 in 10|
|Vietnam||49.3m||69.2%||7 in 10|
|Brazil||48.4m||30.0%||3 in 10|
|Philippines||46.4m||78.7%||8 in 10|
Note: Unbanked (in millions); all numbers in the table are approximate.
These are just examples from the top 10 countries. Surprisingly, the USA has 7 percent unbanked individuals, but this relatively small percentage translates into some 14.1 million American adults without a bank account, which is higher than the overall population of 158 countries. Also, females are typically much worse off since up to 2/3 of the unbanked are women.
What Does It Mean to Be Unbanked?
From all kinds of polls and statistics, the following can be observed:
- The unbanked typically have no savings or they don’t have large enough savings to motivate them into opening a bank account.
- About 62% of the unbanked have only elementary or lower education. This percentage is much higher in certain countries, e.g. Tanzania (86%) and Pakistan (75%). Only about 38% of the unbanked have graduated from high school or finished post-elementary education.
- The unbanked usually don’t know much about how to manage their personal and family finances, which adversely impacts the quality of their lives.
Why Many Remain Unbanked
It is important to know why people remain unbanked, why they don’t have a bank account. These are the reasons stated most often:
Not enough money: Up to 2/3 explained they had too little money to use a bank account, and about 1 in 5 stated this fact as their main reason.
Unnecessary: About a third of the unbanked adults said they can just do without it.
Cost: About a quarter of the unbanked adults stated the costs (monthly payments and fees) of owning a bank account cannot be justified.
Distrust: About 1 in 6 of the adults with no bank account expressed their concern that they cannot trust an institution to keep their money in it.
Documentation: About 1 in 5 of the unbanked adults said they didn’t have the required documentation to open a bank account.
Distance: About 1 in 5 of the adults with no bank account reported that the bank or financial institution is just too far away for them.
The Solution for the Unbanked: Smartphone and Cryptos
The solution for those with no bank account is quite straightforward and simple:
After installing a free crypto wallet, the unbanked can have their own secure bank in their mobile device or smartphone.
Just three steps are needed:
- Mobile device or smartphone: It can be your own device or you can borrow it from a neighbor, coworker etc. to access your crypto wallet.
- Free crypto wallet: You don’t have to buy a hardware crypto wallet to start with. There are many free high-quality crypto wallets. Just download it, install it and start using it.
- Internet connection: You don’t have to be online all the time, only when you need to make a transaction. Thus, you can use Wi-Fi at a public library, internet café, shopping mall, restaurant, gas station, etc.
Mobile Devices and Smartphones Ownership
While many remain hesitant when it comes to opening a bank account, the number of smartphone and mobile device users are steadily growing every year. (Note: A mobile device is a handheld computer that can typically connect to the internet and features a screen interface.)
The price of the most basic and most affordable smartphones are getting closer to the price of feature phones. This could be the reason why many users switch to a smartphone, getting more functionality, including access to the internet, to crypto wallets and many other functions.
- In 2020, about 5.28 billion people have a mobile device which is about 67.7%, while in 2017 it was only 53%. By 2023, the number of mobile device users is expected to be around 7.33 billion.
- About 4.78 billion people use a mobile phone.
- About 3.5 billion people own a smartphone which is about 44,8% of the global population.
The number of mobile device and smartphone users is growing every year, opening a new world of opportunities to these people.
No Objections With Cryptocurrencies
The unbanked who own or who have access to a mobile device or smartphone can immediately enjoy many advantages. And let’s see how the objections against owning a bank account are overcome when using crypto currencies.
Not enough money: If you own a mobile device or smartphone, even a high quality crypto wallet is free. If you have too little money to use a bank account, with crypto, you can keep an equivalent of just a few USD in your crypto wallet.
Unnecessary: With the ease of use and with all the advantages of crypto wallets and crypto currencies, there’s no reason not to benefit from crypto.
Cost: A software crypto wallet is free to download, free to use. There are no monthly costs. The fees are typically much lower than with credit cards, bank transfers or PayPal. Depending on the cryptocurrency chosen for the payments, the fees can be negligible.
Distrust: A crypto wallet is safe. You own the private keys to your assets. Even if you lose or break your mobile device or smartphone, after reinstalling the wallet on a new device, you have all your money back.
Documentation: You don’t need any verification, documentation or permission to install a crypto wallet and to use it with cryptocurrencies.
Distance: No institution is needed to start using cryptocurrencies. All you need is just your mobile device or smartphone.
Some are afraid to use cryptocurrencies, pointing to their unstable price and volatility.
Volatility: It’s fair to note that some fiat currencies suffer from a very high inflation. Some examples: Venezuela (inflation of 282,972% as of 04/2019), Argentina (55.3% in 2019), Zimbabwe (175.66%), South Sudan (56.10%), Iran (50.40%), Sudan (47.80%), Liberia (23.30%), Haiti (18%), Sierra Leone (17.46%), Angola (16.94%), with percentages shown from March to June 2019.
Stablecoins: The threat of devaluation of your crypto assets can be offset by using stablecoins (cryptocurrencies tied typically 1:1 to USD). Examples are USDT and USDC coins.
Governments Against Crypto
The unbanked might not be encouraged by their governments to start using cryptocurrencies instead of a bank account. The reasons are simple:
The governments around the world are not willing to give up their power and let cryptos replace or push out their state-owned currencies. They are afraid of losing track over payments, since crypto transactions can be untraceable. With this comes the potential loss of taxes.
The Unbanked With Their Own Bank in a Pocket
We have seen that there are about 2 billion unbanked globally. But with a mobile device or a smartphone, you can have your own bank account in your pocket. Start benefiting from using cryptocurrencies. With a mobile device or a smartphone, you have absolute control over your financial resources; you have complete autonomy. You are not unbanked any more. You have your own bank. You can choose the cryptocurrency, time of payment and fees. Nobody can control your payments. You are your own boss.