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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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TradFi To Become Biggest DeFi Customer

Published

57 mins ago

September 19, 2024

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Chainlink co-founder Sergey Nazarov predicts that tokenized real-world assets (RWAs) will soon be more valuable than cryptocurrencies. He points to the increasing involvement of traditional finance in decentralized finance, driven by a growing interest in tokenization.

Nazarov also noted that Chainlink is ready to take advantage of this shift in the blockchain space.

TradFi Interest in Tokenized RWAs To Alter Blockchain

Nazarov anticipates an interconnected world where decentralized finance (DeFi) and TradFi actively transact with each other. Acknowledging the growing interest in tokenized RWAs, he says TradFi would be DeFi’s largest customer.

Speaking at Token2049 in Singapore, Nazarov highlighted DeFi’s ability to generate yield and create reliable markets for RWAs. He urged the industry to prepare for this shift, noting that it’s already happening, driven by asset tokenization. According to Nazarov, blockchain technology is giving TradFi exactly what it needs.

Chainlink co-founder also highlighted how decentralized infrastructures like Chainlink and smart contracts are transforming the digital space by removing the need for traditional counterparty relationships. Instead of relying on human decision-making, automated code ensures outcomes, improving efficiency and reducing risks that traditional finance models often face.

Chainlink co-founder on TradFi, DeFi, and tokenized RWA during Token2049 in Singapore

Nazarov emphasized that this represents a major shift from the current TradFi model, where delays and risks stem from human intervention.

His remarks align with his statements from late August, when he predicted that tokenized real-world assets (RWAs) would surpass crypto in value by 2027, driven by institutional interest and TradFi integration. Currently, the RWA market is growing, with RWA.xyz data showing it is already a $2.22 billion industry.

Tokenized RWA — Tokenized Securities Industry Valuation. Source: RWA.xyz

This development comes as blockchain technology continues to tackle the infrastructure challenges faced by traditional finance, while also opening up new investment opportunities. Blockchain’s ability to streamline workflows and significantly improve settlement times is especially appealing — echoing what Sergey Nazarov explained about the efficiency and certainty that decentralized systems offer.

“TradFi needs all kinds of different data that allow those traditional finance smart contracts to function properly…the Net Asset Value (NAV) data of tokenized funds is an example of a dashboard live on production showing the proof of Reserves of one of the many ETF funds use to prove things about them,” Nazarov said.

Notwithstanding, the road to a complete transition to digital infrastructure is marred with challenges. Among them are legal considerations, identity standards, and data privacy, which would demand careful evaluation with regulatory systems in mind.

Accordingly, TradFi and DeFi players and the broader financial services industry must work to build infrastructures capable of supporting broader tokenization adoption while ensuring security and compliance before Nazarov’s dream can become a reality.

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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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Vitalik Buterin’s Speech, and More

Published

2 hours ago

September 19, 2024

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The Token2049 conference in Singapore has once again proven to be a key event for the crypto industry, showcasing major advancements and collaborations.

The event covered everything from Ethereum’s growth to new partnerships in sports and AI, highlighting how the industry continues to evolve.

Vitalik Sings Ethereum’s Progress: Fees, Speed, Future

Ethereum creator Vitalik Buterin surprised Token2049 attendees by delivering his speech in the form of a concert. Despite the unusual presentation, he shared key updates on Ethereum’s progress.

Buterin highlighted how Layer-2 networks have reduced transaction fees and improved transaction confirmation times to just 5 to 15 seconds.

He also stressed the importance of balancing mainstream adoption with Ethereum’s core values of decentralization and open-source development. Buterin briefly mentioned the ongoing competition with Bitcoin, which currently dominates 58% of the market.

On the second day of Token2049, global crypto exchange Bitget announced a partnership with LaLiga. The collaboration, timed with Bitget’s sixth anniversary, will focus on leveraging blockchain technology alongside LaLiga’s ventures into AI, virtual reality, and the metaverse.

Bitget CEO Gracy Chen highlighted the alliance’s potential to connect with millions of football fans in emerging markets. This follows Bitget’s 2022 partnership with Lionel Messi, reflecting the growing overlap between crypto and sports.

Solana Mobile Unveils ‘Seeker’: Next-Gen Web3 Smartphone

Solana Mobile, a subsidiary of Solana Labs, has unveiled its second-generation Web3 smartphone, called “Seeker”. Previously referred to as “Chapter Two,” Seeker has already secured over 140,000 presale units across 57 countries, according to Emmett Hollyer, Solana Mobile’s general manager. The device is set for release in 2025 and aims to further Web3 mobile development within the Solana ecosystem.

Seeker’s key features include a seed vault wallet, Solana dApp Store 2.0, a Seeker Genesis token, and enhanced hardware. The Early Founder price is $450 until September 21, 2024.

This launch comes after the Saga phone faced initial struggles with sales, but later sold out following a surge in the value of the BONK meme coin.

Chainlink’s Sergey Nazarov Predicts RWA Surge

Chainlink co-founder Sergey Nazarov once again predicted that tokenized real-world assets (RWA) will soon surpass cryptocurrencies in value on Web3. During his keynote at Token2049, he stated that TradFi will become decentralized finance’s (DeFi) largest customer, reshaping the blockchain industry.

Nazarov highlighted Chainlink’s Cross-Chain Interoperability Protocol (CCIP) as crucial in connecting various financial systems. He noted that Chainlink’s oracle network has already enabled $15.49 trillion in transaction value since 2022.

To integrate with blockchain, TradFi needs access to diverse data types and cross-chain connectivity. CCIP offers programmable token transfers, allowing value and data to be included in single transactions.

CertiK, the prominent blockchain security firm, announced a major upgrade to its Web3 services. The company introduced two free community security tools: Token Scan and Wallet Scan, aimed at increasing user asset protection.

Token Scan offers instant security checks for tokens, helping users detect potential scams on networks like Solana. Wallet Scan allows users to assess their wallets for risks such as approval vulnerabilities, and interactions with phishing addresses.

These tools were developed based on CertiK’s extensive experience, including over 70 white hat operations, reporting of 4,000+ security incidents, identification of 115,000 code vulnerabilities, and protection of approximately $360 billion in assets.

Hollywood Veteran Critiques Celebrity Meme Coins

Andrew Saunders, a former Hollywood executive and now Skale’s chief marketing officer, voiced criticism of celebrity-backed meme coins at Token2049. Despite his background in entertainment, Saunders warned against these tokens due to concentrated supply and high risk, likening them to a player-versus-player game where early entry is key to making a profit.

Looking ahead, Saunders predicted a shift in the landscape as crypto regulations become clearer and public understanding improves. He envisioned a future where celebrities use blockchain to connect with fans in a more meaningful way, accessing unique data through an “arm in” model.

As a better alternative to meme coins, Saunders suggested that celebrities develop decentralized applications (DApps) where fans could earn points through social interactions. These points could then be redeemed for exclusive experiences or merchandise.

Solidus Ai Tech and SambaNova Partner for Web 3.0 AI

Solidus Ai Tech has partnered with SambaNova Systems to advance AI in Web 3.0 by integrating SambaNova’s RDU stacks into Solidus Ai Tech’s AI marketplace and European HPC Data Centre. This collaboration promises unprecedented speeds in AI inferencing and fine-tuning.

Set to launch in September, the AI Marketplace will feature advanced AI models powered by SambaNova’s SN40L chip, making high-performance AI accessible across various industries. Paul Farhi, CEO of Solidus Ai Tech, described it as a major leap for AI, while Su Le from SambaNova emphasized the potential for decentralized intelligence in Web 3.0.

Venture Trio Launches Fund for Aptos Ecosystem Growth

MEXC Ventures, Foresight Ventures, and Mirana Ventures have joined forces to establish a new fund aimed at boosting the Aptos ecosystem. This collaborative initiative will focus on supporting promising projects built on the Aptos platform, with a particular emphasis on developing crucial Web3 use cases.

The fund will prioritize projects that leverage Aptos infrastructure, including technologies like Block-STM, and those that facilitate seamless interoperability with key EVM ecosystems. This strategic investment demonstrates strong confidence in Aptos’ technological advancements and future potential.

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How Fed Rate Cut Could Help LINK

Published

3 hours ago

September 19, 2024

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Chainlink’s (LINK) price has risen above $11 following the recent Fed rate cut. This increase has ignited fresh speculation about the coin’s short-term outlook.

In this analysis, BeInCrypto examines the factors contributing to the hike, the potential implications of the rate cut, and what traders can expect from LINK.

Chainlink Key Drivers Want More

According to Santiment, alongside the recent rate cut, Chainlink’s 90-day Mean Coin Age (MCA) has risen. The MCA reflects the average age of tokens in circulation, with a low MCA suggesting that previously inactive tokens are being moved from cold wallets, potentially leading to a sell-off and putting downward pressure on the price.

Conversely, a rising MCA indicates that investors are holding onto their tokens and engaging less in trading activity, often signaling a long-term hold strategy. In Chainlink’s case, the spike in the MCA suggests that many investors are choosing to keep their LINK tokens dormant or moving them into self-custody, reducing selling pressure.

Chainlink 90-Day Mean Coin Age. Source: Santiment

Beyond the rising coin age, the 4-hour LINK/USD chart reveals a surge in the Cumulative Volume Delta (CVD), a key indicator of market sentiment. Each bar on the CVD shows whether the market is dominated by buying or selling activity. Red bars signal selling pressure, which could drive the price down.

In LINK’s case, the chart shows five consecutive green bars, indicating sustained buying pressure. This suggests that the market’s demand for LINK is growing, potentially supporting the continuation of its uptrend.

Chainlink Cumulative Volume Delta. Source: TradingView

LINK Price Prediction: Further Gains

The daily chart shows that Chainlink is holding strong at the $10.02 support level, which played a key role in its recent breakout above the $10.83 resistance. Currently, LINK is trading at $11.30, with no significant resistance in sight to halt the uptrend.

Using Fibonacci retracement levels to assess potential price targets, LINK’s next likely move could take it to $11.86, corresponding to the 38.2% Fibonacci level. If it breaks past this point, the next target could be around $12.98, a level that appears within reach given the current momentum.

Chainlink Daily Analysis. Source: TradingView

However, the cryptocurrency could experience a pullback if it fails to surpass $11.86. If that happens, LINK might drop to $9.25.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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