The Unbanked. Who are they and why do they need attention?


The Unbanked. Who are they and why do they need attention?

Over one billion people lack access to even the most fundamental financial services. They can’t get a bank account, a credit or debit card, a loan, a savings account, and, depending on your country of origin, even some public services we take for granted, like a pension.

“Being unbanked doesn’t just mean not having access to payments. It means not having an option to ever get a fair salary or a credit score. It means you will never obtain a loan. Having your own apartments is just a dream, but most of all, you can never get old.” 
Dejan Roljic 

Ignoring the Unbanked won’t solve the Problem

Most people in the Western World are blissfully unaware of this issue. In the United States, only 6% of people are unbanked, with an even smaller number in the EU, at 4%. These numbers may seem small, but they still amount to tens of millions of adults. This will serve as some indication of what the situation looks like in regions where banks only serve about half of the population. Oftentimes, a lack of trust can be the major factor for exclusion.

Throughout the world, there are entire swathes of populations that can’t count on the banking sector in their daily lives. The reasons are many. Either because the financial services are too expensive, because there is a lack of trust in financial institutions or because they don’t have the needed documentation. 

As of recent data, approximately 1.4 billion adults worldwide do not have an account at a financial institution or through a mobile money provider. This number is staggering, considering the advancements in technology and the global push towards digitization.

The technology NAKA has developed will allow everyone with an Internet connection to access basic financial services. It is our deepest conviction that access to financial autonomy is essential for everyone, especially when the lack thereof makes financial wellbeing a virtual impossibility.

But what does it mean to be Unbanked? 

Defining the Unbanked 

If we want to be able to take a look at the unbanked, we need to know what being unbanked means. To do this, we should differentiate this term from the underbanked. Before we keep moving, let’s take the time to present these definitions, according to the FDIC

UnbankedThis term describes households without a checking or a savings account. We can define it as not having access to the services of a bank or similar financial organization.

UnderbankedAn underbanked household is one that, even though it has a bank account, still lacks complete access to other traditional financial services, like credit cards or the possibility of having a loan. 

History shows that banks have charged excessive fees that put a strain on businesses and their low-income customers as well, but leaving them excluded from the financial sector puts an even greater strain on their daily life and future prospects.

The case for the LATAM region is particularly worrisome, so let’s dive into it to paint a picture of this dramatic situation. 

But LATAM is on the right track

Latin America has been a source of preoccupation when it comes to financial inclusion. If we take a hard look at the numbers, 70% of LATAM’s population still remains unbanked or underbanked. This pressures people to make their purchases in cash, which has a cascading effect on the economy, reducing opportunities for both customers and businesses.

The effort to power the LATAM region still has challenges, like internet penetration, for example. While Mexico and Brazil have internet penetration rates of 76% and 81%, respectively, countries like Honduras and Haiti lag behind with rates of just 48% and 39%, according to The World Bank. This data helps define Latin America’s diverse digital landscape, where a staggering 32% of the population, or 244 million people, still lacks internet access, according to the same source.

But the tide is finally turning as fintech solutions begin to enter the market and shape the economy. In recent years, LATAM has witnessed a rapid expansion of its fintech sector, which has doubled in size over the past three years. 

  • eCommerce is exploding: The eCommerce landscape in the region is witnessing rapid growth, propelled by the strategic priorities set by local policymakers in South American countries.
  • LATAM goes eCash: Digital cash solutions are emerging as popular choices and alternatives. They enable online purchases with cash payments at local retailers. eCash has experienced growth globally, with its highest popularity observed in Latin America.
  • Cryptocurrencies are here to stay: When it comes to cryptocurrency adoption across the region, Latin America exhibits robust grassroots adoption. According to Mastercard's survey, two-thirds of consumers in Latin America want greater flexibility to use crypto and traditional payment methods interchangeably in their day-to-day operations.

How NAKA Can Help the Unbanked

“When you’re unbanked, there is no pension for people who didn’t receive their money via bank account and paid taxes. You need to ensure you don't get sick. If you get sick, you can't work; if you don't work, you can't buy food, pay rent, or buy medicine.” 

Dejan Roljic 

NAKA is an ecosystem inspired by Satoshi Nakamoto’s vision and designed to empower the unbanked population who primarily depend on cash. 

NAKA’s Ecosystem bridges the gap between legacy systems and decentralized solutions in the payments industry. The NAKA Payment Network leverages blockchain technology to streamline payments while adhering to industry standards and best practices. 

By using the NAKA Network for payment processing, we can blend blockchain’s autonomy with EVM compliance, allowing merchants and acquirers in general to accept NAKA Card and a more diverse range of payments without the need for any upfront investment in infrastructure or training.

Together with the NAKA Card, we can lower costs significantly for everyone involved. It’s the perfect way to cut intermediaries and make the entire process more efficient.

Here’s the best part: By making the NAKA Card endlessly customizable and available to businesses of all sizes and verticals, NAKA has ensured companies in areas like El Salvador, where most of the population don’t have access to basic financial services, can still enjoy all the benefits of our entire Ecosystem, while taking the first steps towards true financial freedom.

We welcome a diverse range of Ecosystem participants and offer customizable partnership programs to suit their specific needs. 

NAKA Acquirers Program: The NAKA Acquirers Program is giving acquirers access to a much wider payment acceptance as it can tap into previously cash-using customer base and consequently helping to expand merchant portfolio. 

NAKA Issuers Program: The NAKA Issuers Program empowers various entities to become card issuers, enabling them to offer unique benefits to their client communities.

NAKA ISO ‍Program: The NAKA ISO program is a simplified Acquirers program where an ISO partner offers NAKA acquiring services to their clients through a master acquiring agreement with a selected NAKA acquirer.

Do you want to be a part of this change that can make a huge difference in the life of the Unbanked? Find out about our exclusive programs and become a NAKA partner

NAKA is the best of both worlds. Full integration into the demands of traditional systems with the speed, reliability and economic advantages of a high-tech model that removes middlemen.