Contributed Commentaries
To be globally inclusive, DeFi needs to diversify
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
True crypto believers often talk about mass adoption of blockchain technology and Decentralised Finance. But in order for that to become a reality, far greater emphasis needs to be placed on the principles of inclusion and diversity, right down to the composition of project teams.
The missing element for DeFi to become mainstream is the "unbanked".
Remember, the promise of blockchain is not as a transformative technology, but as a replacement for broken, outdated and centralised financial systems that have failed to serve significant segments of humanity.
The unbanked
Being only an internet connection away, blockchain tech has the potential to reach unbanked individuals and communities who do not have access to traditional banking systems.
An estimated 1.4 billion people across the world are unbanked. This is a heterogeneous group, with the largest numbers living in China, India, Pakistan, Indonesia, Nigeria, Bangladesh and Mexico.
The reasons for a person to not have access to traditional banking are diverse. It can be due to geography, economic barriers or something as simple (but often intractable) as a lack of official identification documents. In developing countries sometimes referred to as the Global South, the existing banking services have been undermined by mistrust due to a deficiency of understanding of the system, demonstrated corruption by those in charge of the centralised ledgers, or outright misuse of funds. In the mind of the average person, is the bank truly a "store of funds" as advertised, or is it a mechanism to enhance and sustain the profitability of the wealthy?
I was born in the UK to parents from South Asia. Accordingly I spent time in both regions. In the UK, "money" meant a simple bank transaction or a swipe of plastic. In contrast, in Pakistan money was stored in house safes (within wardrobes) and under mattresses; it was very rare for someone to use a bank, especially in rural areas where my ancestral home is.
Like many developing nations, Pakistan still has a huge issue with gaining the trust of the people to store significant personal funds in the centralised banking system. Many would rather invest in assets such as land, gold or businesses, and retain control of their own wealth while brokering the entire process from start to finish.
Most people I"ve spoken to in Pakistan perceive the banking system as inaccessible and difficult to navigate. People who do have bank accounts – a prerequisite in order to receive salaries from established companies – withdraw their funds as soon as their salaries hit their account.
It was a similar experience in Iraq, where I lived for more than 18 months while working in the tech startup space. The problem of the unbanked was a huge issue especially for startups trying to launch in the digital economy.
True, necessity has inspired novel solutions, such as using mobile phone credit as a means to pay for services. But those quick fixes merely amount to taping over the holes in a colander trying to contain water. They are neither scalable for future economies nor the basis for frictionless trade.
The unbanked don"t need me to preach to them. What they need is empowerment and representation on the teams that are building the new globally accessible decentralised financial system.
Diversity of knowledge
As a CMO, I understand that a team"s diversity is crucial to comprehending the unique challenges and aspirations of the unbanked – our target audience for financial inclusion.
Often, local knowledge is far superior to top-down, agreed-upon "best practices". For example, I recall advising for an international market and data campaign, as strategists wondered how on earth they could collect detailed data about people in East Africa.
It took two phone calls and one "field trip" to Uganda to discover there were already local initiatives using radio and mobile phone call-ins to target rural communities in the country. This methodology opened up a huge trove of data that was otherwise invisible to the group of senior strategists sitting around a conference table in London.
Educative experiences like these are why we consciously seek talent from different regions across the world: to gain insights into diverse economies and financial sectors, both stable and politically "volatile".
This diversity helps us to design effective communication strategies and to develop tailored product solutions (some as straightforward as ensuring that user interfaces are available in the appropriate languages). It also fosters "cultural competence" among our team to navigate different markets and build trust within unbanked communities.
By recognising the impact that cultural factors have on financial decision-making, we can develop localised strategies that resonate with and empower the unbanked. Circumstances that compel populations to use blockchain technology create more loyal and committed communities. To find world-class thinking and building in crypto, just look to emerging economies in places like Latin America, Nigeria and Turkey, to name a few.
Those Web3 communities are vibrant and growing. Their voices must be heard and their talents recognised.
As a CMO committed to fostering inclusivity, I recognise the immense value of diversity within a team in understanding and serving the unbanked population. By consciously hiring talent from regions with different experiences of banking and financial sectors, we gain cultural insights and expand our ability to design user-centric DeFi solutions. Through collaboration, advocacy, and education, we strive to empower the unbanked and bridge the gap between traditional finance and decentralised opportunities.
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