Blockchain’s Role in Financial Inclusion
Capital markets are experiencing significant changes due to evolving monetary policies. In this context, blockchain technology presents a compelling alternative for enabling seamless, borderless transactions.
Who Benefits from Blockchain?
Two main groups stand to gain from blockchain: financial institutions and the 1.4 billion people without access to formal banking. Tradable assets increase efficiency for institutions, while enhancing accessibility for the unbanked.
To actualize blockchain’s potential, the industry must focus on both sectors.
Jenny Johnson, CEO of Franklin Templeton, recently emphasized the importance of leveraging blockchain for asset management, highlighting that the sector has seen an 80% rise in costs over the last decade with revenues down by 15%.
Franklin Templeton’s new tokenized money market fund serves as an illustrative case, reducing transaction costs significantly. Such advancements not only streamline operations but also bolster the entire ecosystem, benefiting the underserved.
For instance, while transaction networks can efficiently handle massive institutional transactions, they can also facilitate fast remittances, substantially impacting families relying on such funds.
Equitable Infrastructure
Blockchain technology’s credibility is further established by major players like BlackRock and Fidelity, alongside humanitarian efforts from organizations such as the United Nations Refugee Agency. Their adoption highlights blockchain’s dual capability: fostering both efficiency and equity.
Addressing Institutional Interests and Human Needs
The financial landscape generates nearly $1.4 trillion in revenue from transaction banking, of which operational inefficiencies cost about 10%. Yet for the unbanked, the stakes are even higher—remittance costs can significantly burden working families. Global remittances exceeded $900 billion in 2024, with fees averaging over 6% worldwide.
The convergence of these needs highlights the significance of blockchain in mitigating financial exclusion.
Conclusion: Building for Tomorrow
Blockchain’s transformative potential relies on thoughtful design that accommodates both institutional and individual needs. By forging partnerships across various sectors and prioritizing inclusion, the industry can ensure technological progress serves to connect, rather than divide, global economies. The choices made today will determine if blockchain becomes another tool for the privileged or a bridge for the unbanked.
