America continues to face the problem of economic inequalities distribution between people of color and Whites.
African-American families have a tiny fraction of the wealth White families possess. This situation threatens economic insecurity, with far fewer opportunities for economic mobility.
Narrowing this gap may need a robust strategy that prioritizes economic and financial inclusiveness for all regardless of race or color.
Advancing and making use of Fintech Technology innovations could help America solve economic inequalities in financially impoverished communities.
Fintech leverages technology and innovation’s power to rival out traditional methods in delivering financial inclusiveness in disadvantaged communities.
Traditional and conventional financial services delivery methods seem not to be inclusive enough, and there is much exclusion based on credit level status.
If you’re from a low-income background, your ability to participate in mainstream production, like starting a business, is shuttered due to lack of capital access.
More Insight About Economic Inequalities
According to a 2017 report from the Association for Enterprise Opportunity, Black households have lower incomes and less collateral than White families creating a wealth gap compounds into a credit gap for Black entrepreneurs. They’re more likely to be denied loans or receive less their desired loan request.
According to the report, Black-owned business owners are three times more likely to say a lack of credit is their biggest challenge.
Access to both startup capital and professional networks is one of the significant drivers of lower entrepreneurship rates among Americans of color.
When a person of color is not in a good financial position, getting approved for a credit line is almost impossible.
Every creditor or every bank you talk to is pretty much interested in knowing and assessing your credit score and history, and in the end, you’re more likely to be excluded from approval.
So, how can Fintech bring about the badly needed sense of inclusion into the financial sector, which traditionally is perceived to be so exclusive?
Fintech technology and Blockchain technology have the potential to democratize the process of delivering and accessing credit facilities through decentralized ledger financing and borrowing model.
Distributed Ledger Fintech can allow credit facility access through Decentralized Distributed Domain (DDD), something that could end up devaluing or even totally rivaling out the bureaucratical traditional credit system, implemented particularly by monolithic banking players.
DDD could be a decentralized digital vault network on which distributed ledger blocks could uniformly replicate across all members and have the potential of self-updating instantaneously in real-time.
Any activity performs like money transfer, credit accumulation, savings transfer, stock investment, auto block assignment for new members, etc.
What the end-user would need is a mobile phone with an application and the necessary login credentials. The network could be secured with impermeable cryptography, eliminating loopholes for unauthorized or dubious access.
The business operation of Decentralized Ledger Fintech could include but not to the following functionality aspects;
- Members can create and manage their accounts without the interference of central players.
- Members can save for self-investment projects or personal credit accumulation for a long time (nest egg).
- Members can borrow and lend to reputable and accredited entities (persons) on the network through Single peer to peer or multi-peer to peer arrangement.
- Members can choose how to save their money.
Go more in-depth on how you can maximize your wealth opportunities through Fintech and Blockchain technology to reduce your economic inequalities.
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