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- Back in 2019, the Federal Reserve estimated that almost 63 million people do not have a bank account.
- Most people who use the traditional banking systems aren’t satisfied with their financial tools.
- As per the data by MyBankTracker, the most common complaints related to the bank were excessive / hidden fees, bad customer service, check/funds essential bouncing, and expensive debits charged first.
Decentralized Finance, or DeFi, uses the revolutionary blockchain technology that utilizes smart contracts to provide financial services. Most of the time, these financial tools offered by DeFi are on par with those of central financial intermediaries like banks and so on. People are free to lend, borrow or trade cryptocurrencies through the DeFi platform. As the crypto sector evolved, powerful DeFi tools like yield farming, collateralized borrowing, and lending services were introduced.
How DeFi Gives a Sense of Financial Inclusion to Users?
Financial inclusion requires individuals to have easy access to financial institutions and requirements that match their income, credit, savings, and so on. Currently, the accessibility to banks is the greatest factor determining economic development as it provides a safe place to store wealth. However, many factors weigh down from having a bank account at all, such as the availability of banks near them, minimum balance fees, or no trust in banking institutions. Moreover, most banks do not give access to government-issued IDs. Back in 2019, the Federal Reserve estimated that almost 63 million people do not have a bank account.
In What way DeFi Provides Better Financial Service Than Banks
Clearly, people demand a much more convenient and affordable alternative to the traditional banking systems. This is where DeFi comes in. DeFi allows anyone from any region to use DeFi Wallets to access financial tools. Most people who use the traditional banking systems aren’t satisfied with their financial instruments. Therefore, they leverage the DeFi applications to manage their money more securely and privately efficiently. The most common platform for building DeFi applications is Ethereum.
DeFi rose to height in 2020, making Ethereum a power platform that offers the best DeFi services. However, many alternatives such as the Binance Smart Chain have come that are faster and cheaper than Ethereum. As per the data by MyBankTracker, the most common complaints related to the bank are excessive/hidden fees, bad customer service, check/funds essential bouncing, and expensive debits charged first. However, with DeFi, all such problems are eliminated, and people can confidently manage their assets.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
