Understanding FinTech and Decentralized Finance (DeFi) for Financial Inclusion

Abstract

For a very long period of time, financial inclusion researchers have been addressing the barriers that prevent unprivileged people from accessing and using financial services. Financial exclusion is an underlying social problem that dates from the creation of the first financial system. Without the access to the banking and financial infrastructures, the unbanked are perpetuating a vicious cycle of poverty. Blockchain is leading this transformation of allowing unbanked and underbanked people to have access and interact with the finance industry. The promise of a digital economy is starting to take shape, as financial technology (FinTech) companies are evolving the concept of democratization of access. Decentralized finance (DeFi) is expanding the possibilities of financial technology by creating an ecosystem based on transparency, accessibility, and efficiency. We are witnessing a paradigm shift for most of the financial services which are remodeling the accessibility and usability of these services, addressing the excluded and underserved population.