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The rise of neo-banking and its role in banking the underbanked

Published

1 month ago

August 14, 2024

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Emerging nations are the fastest growing regions in crypto adoption and the growing presence of neo-banks plays the biggest role in this growth. Could these innovative platforms be the solution to financial inequalities and the lack of adequate banking services for over one billion people?

As Satoshi once remarked in his now-stopped social messages, “Bitcoin would be convenient for people who don’t have a credit card or don’t want to use the cards they have”. Emerging nations whether in Africa, Latin America or South East Asia could resonate more truly to this statement than others. Over the past half-decade, the growth of neo-banks in developing countries has caused a revolutionary change in how the populous interact in their economies and a radical change in their financial systems.

Crucially, the billions of unbanked and underbanked are finally integrated into the global financial systems, despite the lack of efficient banking structures in their respective nations.

This article will break down how cryptocurrency is benefiting the unbanked (and underbanked) and the role neo-banks play in providing financial services to countries with little hope of having a stable banking infrastructure. The piece further looks at the role developing countries play in growing the crypto ecosystem and various technological advancements in the industry as a result of rapid adoption across Sub-Saharan Africa, Latin America and Southeast Asia regions.

Financial Inequality in Underserved Economies

According to World Bank reports, over 1.2 billion people across the world are either unbanked or underbanked. Developing countries remain the most affected nations with over 50% of the population having little to no access to solid banking infrastructure or basic financial services such as loaning facilities, savings accounts, etc.

The advent of blockchain technology and cryptocurrencies sparked a drastic change in the global financial system, providing previously unavailable financial systems to citizens of these nations. The emergence of this decentralized industry is becoming a force in the global financial landscape, redefining traditional currency, transactions, and financial systems.

Cryptocurrencies, powered by blockchain technology and cryptographic principles, are opening up the financial world to developing nations, allowing previously unbanked and underbanked citizens to participate in the financial ecosystem. These assets have opened up new avenues to transact and store value by giving everyone access to fast and low-cost digital cash that can be spent anywhere.

The Rise of Neo-Banks and Decentralized Finance (DeFi)

The global financial crisis in 2008 brought rise to several innovations in the industry, majorly the growth of neo-banking. Neo-banks refer to financial technology firms that are redefining how banking services are delivered to consumers, from seamless digital experiences to lower transaction fees and accessibility via smartphones, etc.

The most prominent form of neo-banking arose in Kenya, with the launch of M-Pesa, a mobile-based financial service that allowed anyone with a SIM card and a phone to send and receive money. Over the years, such innovations have evolved into formidable players in the financial sector, as they revolutionize traditional banking and financial services.

Recently, decentralized finance (DeFi) apps have come to the fore, providing digital and decentralized alternatives that offer personalised user-centric services that resonate with crypto-savvy consumers. Notwithstanding, crypto exchange apps have sprouted rapidly offering anyone across the world an opportunity to access cryptocurrencies directly on their smartphones. These apps ensure advanced security measures, and seamless integration of fintech solutions, setting them apart from traditional finance services.

As such, developed countries have been able to join the global financial systems, signifying a paradigm shift in the transformative power of crypto for the modern consumer.

Crypto Exchanges May Challenge The Status Quo

As alluded to, crypto exchanges are diversifying to wider markets, moving from simple on-ramp and off-ramping business models to becoming neo-banks and challenging the traditional finance system – global, low-cost and very accessible to the unbanked. Crypto adoption is becoming more prominent for the 1.2 billion and financial services and products are more sophisticated and accessible. Could this pose a threat to the traditional banking systems?

The jury is still out on that but the solutions provided by these “decentralized neo-banks” are having a great effect on emerging nations’ economies – financial inclusion, low-cost remittance fees, and fast and secure transactions have driven the growth of crypto in these economies.

Boxwind, a digital asset exchange platform set to launch later in the year, brings these solutions to the 1.2 billion who need such services. From trading to lending, saving, trading, and a channel to affordably transfer crypto cryptocurrencies into and around emerging economies. The exchange is designed with advanced functionalities for new and experienced investors, providing spot and derivatives trading of over 300+ digital assets, on-ramp and off-ramp solutions, staking services, borrowing/lending and much more.

The platform also features its brainchild, PIP World, a service that aims to empower users via Edutech programs, gamified trading, and AI-powered gaming. PIP Trader, one of the gamefied and educative platforms, allows users to team up, battle in trading games, and earn rewards on an AI-powered game.

Looking Ahead

Chainalysis’ 2023 Crypto Report showed that over 40% of the world’s cryptocurrency users reside in lower-middle-income countries (LMICs), with the number growing every year. This impressive growth is heavily influenced by CEXs and the vast services they offer. Regulated crypto exchanges could be the main driver of sustained adoption rates by facilitating neo-banking services to the underbanked.

Crypto adoption in emerging economies presents a unique opportunity to empower individuals, enhance skills and financial literacy, and provide solutions to financial inequalities. For the industry to really grow, however, several things must be put in place including setting up secure platforms, regulatory compliance, users’ funds protection, easily accessible platforms, and educating the masses on the technology.

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$1.6 Billion in Bitcoin and Ethereum Options Expire After Fed Cut

Published

4 mins ago

September 20, 2024

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The crypto market is bracing for heightened volatility as nearly $1.6 billion worth of Bitcoin (BTC) and Ethereum (ETH) options expire today.

This event coincides with the Federal Reserve’s recent decision to cut interest rates by 50 basis points (bps).

Fed’s Decision Fuels the Crypto Market Rally Ahead of Major Options Expiry

According to data from Deribit, 20,037 Bitcoin options contracts worth approximately $1.26 billion will expire on September 20. These contracts have a put-to-call ratio of 0.85 and a maximum pain point of $58,500.

Expiring Bitcoin Options. Source: Deribit

Similarly, Ethereum’s options market is set to expire with 125,046 contracts worth $308.16 million. Today’s expiring Ethereum contracts have a put-to-call ratio of 0.65, with a maximum pain point of $2,350.

Expiring Ethereum Options. Source: Deribit

In options trading, the maximum pain point refers to the price level at which option holders would suffer the largest losses. It is essentially the price at which the highest number of options (both calls and puts) would expire worthless, inflicting maximum financial “pain” on traders. On the other hand, the put-to-call ratio gauges market sentiment by comparing the number of put options (bets on price declines) to call options (bets on price increases).

Greeks. live’s recent analysis outlined the impact of the Fed’s decision to cut rates for today’s expiring crypto options contracts. The analysts noted that the Fed’s move was largely expected and aligned with macroeconomic forecasts.

“Implied volatility declined significantly across all major maturities, with ultra-short-term IVs falling by over 25%, as short-term short-selling expectations by large investors fell short,” they wrote.

Looking ahead, Greeks.live also noted that there will be another interest rate meeting on November 8 and December 19 this year, where the market expects a cumulative 100 bps rate cut. The next rate cut could coincide with the US election, increasing the likelihood of heightened market volatility.

BeInCrypto reported that this week’s rate cut has positively impacted the crypto market. Following the decision, Bitcoin surged from the $59,000 level to surpass the $63,500 mark.

Similarly, Ethereum also experienced a significant increase during the period. Data showed that ETH skyrocketed from $2,293 to as high as $2,482.

However, both assets have now stabilized. At the time of writing, Bitcoin and Ethereum are trading at $62,890 and $2,450, respectively.

Despite the positive momentum, traders are advised to remain cautious. Historically, options expiration often leads to short-term instability in the market. The next few days will be crucial in determining whether Bitcoin and Ethereum can sustain their upward trends or if a period of correction is imminent.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Crypto Pundit Predicts Historical 9,468% Pump To $27

Published

1 hour ago

September 20, 2024

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Este artículo también está disponible en español.

A new XRP price prediction by popular crypto pundit Egrag Crypto projects that the cryptocurrency could experience a historical price surge of about 9,468%. This predicted price gain would push XRP from its current price of $0.58 to $27, marking new All-Time Highs (ATHs).

XRP Price Forecasted To Pump To These Targets

Egrag Crypto has taken to X (formerly Twitter) to express his bullish outlook on XRP, predicting the cryptocurrency could surge as high as $27. On Wednesday, September 18, the crypto analyst shared a price chart illustrating a speculative breakdown of potential price movements for XRP using five distinctive color indicators to represent various price increase scenarios.

XRP Community Express Skepticism

While Egrag Crypto’s bullish projections for XRP raise the hopes of investors who have been HODLing the coin for years now despite its low value and persistent consolidation phase, many have also expressed doubts. A few crypto members criticized the analyst, calling him out for his overly bullish forecasts for XRP.

Crypto Brands Return to Sports Sponsorships With 26 Deals

Published

2 hours ago

September 20, 2024

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Crypto sports sponsorship is cautiously rebounding in 2024, signaling a modest revival from the downturn following the boom in 2021. Despite these signs of recovery, the sector still falls short of reaching the highs witnessed during the peak year.

The increase in sports sponsorship also indicates a recovery of the crypto market. Brands are sponsoring sports teams because they have additional funds available for such marketing activities.

The crypto industry started heavily investing in sports sponsorship in 2021. During that year, the industry saw an unprecedented expansion with 42 new deals, representing 45.6% of the total 92 sports sponsorships from 2021 to 2024.

This growth was propelled by a bullish digital currency market, which led to significant agreements. Notably, Crypto.com secured a $700 million deal for the naming rights of Staples Center, renaming it to Crypto.com Arena.

Additionally, FTX entered into a $210 million sponsorship with esports group Team SoloMid. The aggressive sponsorship came as firms sought mainstream visibility and adoption.

However, the narrative shifted drastically in 2022 with the market’s downturn. The sector saw a severe reduction in new deals, dropping to 25. The collapse of FTX, previously a key player, led to canceled deals, including its partnerships with the Miami Heat and other sports platforms.

Despite the downturn, some firms like Bybit and Vechain managed to secure substantial agreements; Bybit secured a $150 million deal with Red Bull Racing, and Vechain signed a $100 million contract with UFC.

The downward trend persisted into 2023, with only 8 new sponsorships signed, though 14 existing deals were renewed. Amidst prolonged bearish market conditions and the FTX fallout, the industry remained cautious, limiting substantial financial commitments. However, OKX demonstrated resilience by securing a $70 million deal with Manchester City, illustrating that strategic investments could still thrive.

By 2024, the industry witnessed a gentle recovery, with 26 new sponsorships and 16 continuing from prior years. Noteworthy among these was Crypto.com’s sponsorship with the UEFA Champions League and BlockDAG’s $10 million deal with Borussia Dortmund (BVB). Additionally, Bitget announced a new partnership with LaLiga to enhance crypto adoption in Southeast Asia, Eastern Europe, and Latin America.

“The volume of new sponsorships has not surpassed the 2021 levels, but the uptick in activity suggests crypto firms are slowly re-entering the sports space,” CoinGecko said.

Crypto Sponsorships in Sports. Source: CoinGecko

Specifically, crypto sponsorships have primarily focused on football, with early adopters including prominent clubs like Manchester United, Chelsea, and Manchester City. The strategy extended to global events such as the UEFA Champions League and the FIFA World Cup, leveraging football’s massive international following.

Despite the market’s volatility, some partnerships, like Crypto.com’s diverse sponsorships and Bybit’s strong presence in Formula 1, have become long-term success stories.

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