For the world’s unbanked, cryptocurrency and DeFi offer a way to participate in the global economy, breaking down cultural and economic barriers that have existed for years.
People can use digital currencies without needing a bank account through a traditional financial institution. As many as a quarter of the unbanked do not have the necessary documentation to open a bank account either. Many of the unbanked live in rural or underdeveloped areas where there are no bank branches.
The digital currency marketplace can be accessed through mobile phones, making it easy to open accounts, track the price of coins through platforms like Binance and transact globally. This new financial system is decentralized and democratized to allow anyone from anywhere in the world to own digital assets, buy and sell goods and services as well as invest in crypto markets.
Barriers in the Traditional Banking System
Traditional financial systems require barriers such as government issues identification, credit history, and minimum income requirements that many in low-income or politically unstable regions cannot meet. Women, rural populations, migrants, and gig economy workers in these regions are disproportionately affected. In addition, legacy financial systems are often entangled in bureaucratic inefficiencies, currency instability, and restrictive regulations that deepen inequality.
Banking institutions, while essential, are profit-driven and risk-averse. This makes the onboarding of low-income populations economically unattractive. Even when access exists, it often comes with high transaction fees, long processing times, and a lack of transparency. These serve as major barriers to over 1.4 billion unbanked or underbanked people globally making simple transactions or loans near impossible.
Financial Inclusion Through DeFi & Crypto
DeFi is an alternative for people who previously were unable to access banking markets or those who have been disenfranchised. For example, the FDIC reports that nearly 21% of individuals in the U.S. do not have enough money to meet minimum balance requirements without incurring fees. These fees are another reason why many shy away from traditional banking options. Others simply don’t trust banks.
A decentralized system has significant benefits:
• Ease of use: Virtual wallets make it easy to send and receive payments.
• Payments: Transactions are quick, secure, and typically done at lower costs.
• Lending and financing: Those without credit histories may gain access to lending opportunities that they previously could not achieve. Peer-to-peer transactions can occur without a financial institution.
• Investments: Users can track investments and make decisions without relying on a central bank.
Another area where cryptocurrency and DeFi overcome challenges with traditional banking is with its immediacy. Crypto transactions are recorded in real-time. For those living paycheck to paycheck, traditional banks often have delays. Checks need time to clear, which can create problems when people need to pay for basic needs.
While there are concerns about price volatility in cryptocurrency markets, there are also opportunities to build wealth — which likely seemed out of reach to many in the unbanked world. The transparency built into DeFi solutions also helps to build trust.
All of this has the potential to create financial inclusion for individuals globally who are currently unbanked, and there are significant numbers of people fitting that bill.
The World Bank estimates that about 1.4 billion people are unbanked as of 2024. In these communities, especially in low-income and emerging markets, transactions are often informal. Yet, micro, small, and medium enterprises (MSMEs) account for as much as 90% of businesses and 70% of employment in these markets. These businesses must have access to financial instruments.
A More Equitable Financial System
By leveraging digital technology, cryptocurrency, and DeFi, the unbanked and underserved populations can participate — and contribute — to the global economy, breaking down barriers and driving financial inclusion for a more equitable financial system.
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