Unlocking the Future: Stellar’s Financial Inclusion Framework and Its Impact

The Big Idea Behind Stellar’s Framework

The Stellar Development Foundation (SDF) partnered with PricewaterhouseCoopers (PwC) to cook up something quite ambitious: a framework designed to evaluate how well emerging blockchain projects are serving the unbanked masses. Released on September 25, this strategic guide dives into how blockchain can revolutionize access to financial services.

Why Financial Inclusion Matters

Financial inclusion isn’t just a buzzword; it’s about giving everyone a seat at the financial table. With traditional banking charges typically hovering around 2.7% to 3.5%, folks in emerging markets often get stuck on the outside looking in. Enter blockchain, the Robin Hood of financial services, aiming to slash costs down to 1% or less while speeding up transactions and dodging inflation like Neo from The Matrix.

Parameters for Success – What’s Inside the Framework?

SDF and PwC didn’t just throw darts at a board and call it a framework. Instead, they outlined four crucial parameters for assessing any project aimed at boosting financial inclusion:

• Access: Think affordability and ease of start-up.
• Quality: Aimed at ensuring services genuinely meet users’ needs.
• Trust: Establishing reliability and security in the technology.
• Usage: Encouraging real engagement with the services.

More than just boxes to tick, each of these parameters is further defined through sub-parameters. For example, ‘access’ also considers connectivity and affordability, keeping everything measurable and actionable.

Structured Assessment: The Four Phases

Now, let’s talk about the nitty-gritty. The duo introduced a four-phase assessment process that projects should follow:

1. Identify a solution, target population, and jurisdiction.
2. Address barriers preventing access to financial services.
3. Utilize charts and guidance to highlight roadblocks to user onboarding.
4. Implement targeted solutions focusing on key parameters to maximize impact.

This is no cakewalk, but SDF and PwC believe it’s the best recipe for financial success.

Success Stories – Blockchain to the Rescue!

So, what’s the proof in the pudding? This framework has already spotlighted two types of blockchain solutions that are making waves:

• Payments: Through wallet analysis in countries like Colombia and Kenya, researchers noted how blockchain apps lowered transfer fees to an impressive 1% or less, effectively unlocking the power of electronic payments for underprivileged groups.
• Savings: Take, for example, a stablecoin application in Argentina. It has become a safe harbor for individuals eager to shield their wealth against the relentless tide of inflation.

Even in the bustling world of crypto, Stellar is leading the charge toward enhanced financial inclusion with their recent partnerships, such as helping charities reach Ukrainian refugees and teaming with Moneygram for a wallet accessible in 180 countries. Yet, not everyone is on board—the Bank of International Settlements recently warned that crypto can amplify risks in emerging markets.