Fintech has been the normal organic evolution of the banking sector in societies with high percentages of banked economies. In other economies where technology, especially mobile telecommunications, developed much quicker than banking, peer to peer finance and micro economics played a huge role to partially transform these societies into cashless transactions. Mobile wallets and e-payment solutions achieved a great deal in national financial inclusion, especially in rural areas within unbanked populations.
The paradigm shift from cash dealings, supported by economical instabilities, found the perfect solution in e-money. Currencies have always been a means to exchange value whether in their banknote formats or digital ones. Crypto currencies primarily introduced the concept of decentralization and created the solution to bypass the centralization of authority within national central banks. For global governmental adoption the issue of central regulation remains the main dilemma that countries have started to work with. The concept of public blockchains and reliance on general consensus for validation of transactions in blocks of a blockchain maintained by anonymous individuals has to be managed through a mechanism that provides the required national security.
Digital currencies are still preferred over crypto as governments still believe in the control of liquidity and money supply whether paper or digital, the only difference digital will always be in the system and monitored, while paper is deemed to retire. However, if the open competition issue introduced by cryptocurrencies is controlled, national reserves can normally be shifted to crypto.
On the other hand, there are established economies, many of them in third world countries, have realized the benefit of adopting Fintech strategies to catch up on the race of banking their societies. But would Blockchain-based Fintech directives allow them to do so?
It is, with no doubt, realized that the development of a Fintech ecosystem is essential due to many drivers:
1- Demand: Individuals, SMEs and financial institutions will benefit from seamless financial management techniques provided by technology. In countries where national resources are primarily driven by foreign direct investments (FDI), remittance and services rather than industry and local production aiming to become regional business hubs relying on their consumer market size driven by huge population will focus on priority areas related to payments, micro-lending, and infrastructure enablement.
2- Funding: In those countries, appetite for Fintech funding is limited due to lack or primitive legal and regulatory directives. The need for releasing a national strategy and influence to venture capitals to invest in Fintech startups is essential.
3- Regulation: Water can be tested with small steps, starting from mobile wallets, e-KYC, digital lending and e-commerce. For a licensing framework to be developed it needs to emerge from actual use cases. To enable this to happen, the concept of Sandboxes using real test customers within a controlled environment is the way forward to develop the perfect fit strategy laying the foundations suiting the market needs and following the steps confirmed by other leaders in the race.
Sandboxes primarily aim to support innovation while maintaining control, protecting consumers, developing trust for investors and providing means for collaboration.
4- Talent: Human resources benefiting from a population of young educated global citizens supported by national direction of technology education is key. Employment opportunities and encouragement of SMEs as well as providing supporting professional services is a major pillar of the Fintech strategy, in the form of accelerators and incubation hubs.
5- Governance: All supporting entities collaborate to support the strategy from legal frameworks to telecommunication regulatory bodies as well as financial regulators and anti-money laundering authorities.
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Catching up on the financial inclusion race by Blockchain Fintech
JACS.tech
May 28
Fintech has been the normal organic evolution of the banking sector in societies with high percentages of banked economies. In other economies where technology, especially mobile telecommunications, developed much quicker than banking, peer to peer finance and micro economics played a huge role to partially transform these societies into cashless transactions. Mobile wallets and e-payment solutions achieved a great deal in national financial inclusion, especially in rural areas within unbanked populations.
The paradigm shift from cash dealings, supported by economical instabilities, found the perfect solution in e-money. Currencies have always been a means to exchange value whether in their banknote formats or digital ones. Crypto currencies primarily introduced the concept of decentralization and created the solution to bypass the centralization of authority within national central banks. For global governmental adoption the issue of central regulation remains the main dilemma that countries have started to work with. The concept of public blockchains and reliance on general consensus for validation of transactions in blocks of a blockchain maintained by anonymous individuals has to be managed through a mechanism that provides the required national security.
Digital currencies are still preferred over crypto as governments still believe in the control of liquidity and money supply whether paper or digital, the only difference digital will always be in the system and monitored, while paper is deemed to retire. However, if the open competition issue introduced by cryptocurrencies is controlled, national reserves can normally be shifted to crypto.
On the other hand, there are established economies, many of them in third world countries, have realized the benefit of adopting Fintech strategies to catch up on the race of banking their societies. But would Blockchain-based Fintech directives allow them to do so?
It is, with no doubt, realized that the development of a Fintech ecosystem is essential due to many drivers:
1- Demand: Individuals, SMEs and financial institutions will benefit from seamless financial management techniques provided by technology. In countries where national resources are primarily driven by foreign direct investments (FDI), remittance and services rather than industry and local production aiming to become regional business hubs relying on their consumer market size driven by huge population will focus on priority areas related to payments, micro-lending, and infrastructure enablement.
2- Funding: In those countries, appetite for Fintech funding is limited due to lack or primitive legal and regulatory directives. The need for releasing a national strategy and influence to venture capitals to invest in Fintech startups is essential.
3- Regulation: Water can be tested with small steps, starting from mobile wallets, e-KYC, digital lending and e-commerce. For a licensing framework to be developed it needs to emerge from actual use cases. To enable this to happen, the concept of Sandboxes using real test customers within a controlled environment is the way forward to develop the perfect fit strategy laying the foundations suiting the market needs and following the steps confirmed by other leaders in the race.
Sandboxes primarily aim to support innovation while maintaining control, protecting consumers, developing trust for investors and providing means for collaboration.
4- Talent: Human resources benefiting from a population of young educated global citizens supported by national direction of technology education is key. Employment opportunities and encouragement of SMEs as well as providing supporting professional services is a major pillar of the Fintech strategy, in the form of accelerators and incubation hubs.
5- Governance: All supporting entities collaborate to support the strategy from legal frameworks to telecommunication regulatory bodies as well as financial regulators and anti-money laundering authorities.
To achieve all the above while using the benefits of Blockchain and still maintain the needed control, a dedicated infrastructure can provide a very suitable resolution.
JACS.tech, a decentralized infrastructure for Internet 3.0 services and application, could play the needed role of the global platform perfectly suited for the emergence of the aspired Fintech ecosystem of the countries aiming leading roles in the financial technology marathon. Not only that public blockchain mechanism will ensure eventual global reach will be achieved but the concept of using early adopters as enablers within almost a near-live sandbox ecosystem will naturally come in place.
Community will be incentivized to spread the uptake of the applications deployed over JACS infrastructure while application developers will focus on their services while leaving the communication infrastructure to be handled seamlessly over the JACS public chain.
JACS expands the reach not only to active Internet users, but also to things and machines wanting to intercommunicate over the global network using its abundant real address space.
As a Fintech startup wouldn’t a community of a few million active users be the perfect playground of a Sandbox?!
WEBSITE: https://www.jacs.tech/
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