Micro-financing is a financial tool that developing countries and their citizens often address. But due to the lack of education and awareness or financial instruments, chances of fruitful interaction between banks and unbanked are low. There are several important factors which determine whether a micro-financing institution will prosper and thus help the people in a developing country.
With security to success
One of the most important factors, which determine the improvement of microfinance in developing countries is the level of security and data protection, lenders and borrowers are offered. To provide their clients with a sufficient level of data and privacy protection, and to offer secure arrangements, platforms like AssetStream are based on blockchain. It allows them to perform transactions through smart contracts, which are protected against outside interference, and only the parties involved can access them.
One of the primary purposes of microfinancing in developing countries is to help provide funding to underbanked and unbanked people. However, getting to trust them into putting their money in an online platform may not be that easy, as they most likely do not trust financial institutions, which is why they have remained without bank accounts.
Adela is a hardworking mother of two, living in Singapore. She is getting paid in cash, has never had a bank account and couldn’t see the problem in it. However now she needs additional funding to attend her son’s wedding in the Chez Republic. Because of her unbanked status, her option will be to turn to an unregulated lending company, or better yet, to a micro-financing platform.
Here is where the security and transparency, blockchain offers, will make a difference for this hardworking woman. It will be much more convenient for her to secure financing via microcredit because she will be protected from scams and unlawful practices.
Educational materials
One of the other essential missions of micro-financing platforms like AssetStream is to educate the underbanked and unbanked population of developing countries about important aspects of financing.
Let’s get back to Adela’s story. She has always received her payments in cash. She never needed to get introduced to the world of personal finances, which is why she might experience difficulties when she decides to access funds through micro-financing platforms.
In order to aid her, and many more like her, AsseStream is developing a detailed introductory guide to both personal and corporate microfinancing, to boost the financial intelligence of unbanked people. These educational materials will also be of great use to younger people, who are just getting into personal financing and budgeting. Improving the financial literacy of underbanked and unbanked people in developing countries is one of the ways to make sure micro-financing is fulfilling its mission to better the lives of people who do not have access to traditional banking.
Do not hesitate to get into microfinancing
The fact that microfinancing platforms like AssetStream are dedicating special attention to security and financial education proves that they are designed to help people in need to get access to funding. This is why people from developing countries should embrace the rising popularity of such platforms by educating themselves through AssetStream.
Disclaimer: This is a guest article. The views, opinions and positions expressed within it are those of the author alone and do not represent those of Cryptopolitan. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
