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How Tech Breakthroughs Can Shatter the Bonds of Poverty

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Digital financial services help the poor access banking, insurance, and lending services.

Digital financial services can help the poor access banking, insurance, and lending services, writes Kosta Peric of the Bill & Melinda Gates Foundation.

Credit: Bill & Melinda Gates Foundation

Unbanked poor who cannot manage their financial resources remain trapped in a vicious circle of poverty, but digital financial services (DFS) can help break this circle by providing banking, insurance, and lending to the poor in emerging markets, writes Kosta Peric with the Bill & Melinda Gates Foundation.

He says with DFS, the impoverished can manage their money digitally, storing value securely and transferring it instantly. "The global revolution in mobile communications is...enabling the poor to connect to reliable and affordable financial tools through phones, kiosks, and other digital platforms," Peric notes.

However, he says the infrastructure needed to ensure universal access to DFS is still in a fledgling stage of development, and he cites three crucial technology ingredients needed to facilitate universality. Digital identity and authentication are needed to reliably guarantee new customers are who they claim to be, and one proposed solution is a "tiered know-your-customer" strategy in which more advanced services are offered as higher levels of authentication are proffered.

Peric also lists distributed ledgers as an important digital financial network component, while the open sourcing of DFS technology is the third vital element. "Our foundation is looking with keen interest at ways to apply open sourcing principles to this dynamic and critically important field," Peric says.

From The Huffington Post
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