According to a report by the World Bank, approximately 1.7 billion people do not have access to traditional banking services worldwide. In developing countries, the rate of financial exclusion is even higher, with around 56% of adults having no access to formal financial services. The unbanked and underbanked communities do not have access to credit, savings, and infrastructural support that helps in wealth creation and financial growth.
However, DeFi is now providing a ray of hope to these communities. The emergence of DeFi platforms such as Aave, Sushiswap, and Compound allows anyone with an internet connection to save and earn interest. These platforms do not require any KYC/AML checks or identification, enabling the unbanked and underbanked to access financial services, regardless of their status.
Moreover, DeFi is not just about earning interest, it is also about equitable access to credit facilities. Since DeFi is entirely decentralized, it eliminates the need for intermediaries, making borrowing rates significantly lower than traditional banks. This makes it easier for individuals in these communities to access loans and other forms of credit. DeFi also allows individuals to use their assets, such as cryptocurrencies, as collateral, leading to an increase in the availability of credit facilities.
Another significant advantage of DeFi is its ability to provide financial services 24/7 without the limitations of traditional banking hours. Anyone with an internet connection can access and transact on DeFi platforms at any time, providing flexibility and convenience for those with busy schedules.
In conclusion, DeFi is a groundbreaking technology that has the potential to revolutionize the financial sector. It is providing access to financial services for the unbanked and underbanked communities around the world. DeFi has the ability to reduce the wealth gap by providing access to credit facilities, investment opportunities, and other forms of financial services for individuals who have been ignored by the traditional financial sector. DeFi is enabling financial freedom for the unbanked and underbanked communities, leading to increased economic growth and sustainable development.