Could Stellar Be the Answer to Enable Financial Inclusion Around the Globe?

Thursday, May 7, 2015

When the internet first came round in the mid-nineties, people didn’t expect to see impactful tools like open-source libraries like Wikipedia or renting sites like AirBnb or car-sharing ones such as Uber and Lyft. As an open tool, the internet has laid the foundation for these products to be born, reaching audiences far and wide with powerful applications that impact most of our daily lives, whether we like it or not. But a lot of important industries have been left behind in the process. This, however, might be starting to change.

Vumi is an open-source messaging app that doesn’t rely on data. Instead it relies on SMS technology, using airtime. Currently being used by NGOs UNICEF, USAID, and the Gates Foundation, the technology helps organisations have wider reach with audiences in Africa.

The messaging application is the product of South Africa’s non-profit Praekelt Foundation. The technology company is currently working on a new feature which would help girls with an easy way to save money. This is important because most adolescent girls — like the majority of African adults — don’t have access to basic financial services like saving accounts. In fact, only 37% of women have bank accounts in the developing world. Research from Women’s World Banking has shownthat poor women are inherent savers, putting away 10% to 15% of their earnings for emergencies. This means that they can have an enormous impact on their families and communities.

Using a Bitcoin-inspired, open-protocol for financial services calledStellar, Praekelt’s developers are now building financial services into the messaging app, enabling girls to store mobile airtime credit as a means to save.

“Payments have not kept up with the internet,” argues Jed McCaleb, the creator of Stellar. “Money works fine in the developed world,” he continues. “The people who actually get screwed are the people who pay 10% remittances or those who can’t get a bank account. They are the ones that will benefit most from Stellar.”

According to The World Bank, 2.5 billion people who make up about half of the world’s adult population are so called unbanked or financially excluded.

Source: Memeburn (link opens in a new window)

digital payments, financial inclusion