Digital Financial Services for the world's poor can be accelerated with Blockchain

The Bill and Melinda Gates Foundation have the Level One project to use Digital financial services (including blockchain for identification) for financial services for the world’s poor.
Digital financial services (DFS) are among the quickest and most effective ways of turning millions of unbanked citizens into formal financial customers. For the first time in history, digital and mobile technology make full financial inclusion not only possible but profitable.
At the heart of the Level One Project Guide is a national system, enabled by shared, open, standards-based components. The system is designed to accommodate variability in local rules, structures, and the existing regulatory framework. The system either provides or contracts for core shared operating components including the interoperability service for transfers (IST) and the fraud and risk management service (FRMS). Structured as a cost-recovery or not-for-profit model, the by-laws and operating rules for IST and FRMS commit to providing low-cost payments capabilities that can support the needs of the poor.
They developed one model for a country-level digital financial services system designed to bring the poor into the formal economy. They created a working digital financial services prototype to demonstrate how the system works.

Today, more than two billion adults do not have a bank account or access to other formal financial services—services that can help people protect their earnings, weather personal financial crises, send and receive payments, and better manage their farms and small businesses. And because of this, many families lack the tools they need to escape the cycle of poverty.
Today, two dominant trends have emerged, which may help to accelerate access to effective, efficient and affordable financial services for the poor:
1. mobile technology has spread at a remarkable pace in the developing world. According to a study done by the World Bank, 90 percent of the world’s poor are now covered by a mobile signal, giving us a unique opportunity to reach vast segments of the population who may not live near a physical banking location.
2. Digital payment technologies can reduce the cost of financial transactions by more than 90 percent. One reason why is that digital payments can eliminate the need for a physical location to do banking—something that can be extremely challenging in many areas of the developing world.
They have observed these trends, learned from their experiences in more than 30 countries, seen what emerging new technologies can do, and ultimately, incorporated those lessons and potential into the Level One Project Guide—a vision of how an inclusive digital financial services system can work for the benefit of poor people. The underlying design principles of the Guide include:
• A push payment model with immediate funds transfer and same day settlement
• Open-loop interoperability between providers
• Adherence to well-defined and adopted international standards
• Adequate system-wide shared fraud and security protection
• Efficient and proportional identity and know-your-customer (KYC) requirements
• Meeting or exceeding the convenience, cost and utility of cash.
By utilizing an open, digital approach to transactions, and partnering with organizations across the public and private sectors, the Level One Project Guide aims to provide access to a robust, low-cost shared digital financial services infrastructure sparking innovation from new and existing participants, reducing risk, and generating substantial value for providers, individuals and economies in developing markets. Additional resources have been created to help governments, NGOs and financial service providers successfully implement these changes. For example, The Level One Project Guide addresses:
• Business requirements for mobile wallet providers, Interoperability Service for Transfer (IST) providers and agent management system providers
• Developer resources like Application Program Interfaces (APIs) based on our working prototype of a system designed around the Guide’s principles
• Key regulatory issues and corresponding choices that a country regulator may face while implementing a digital financial services system
• System operating rules relevant to an open-loop, participant-governed system
Country Variations
The Level One Project Guide provides a detailed and strategic look at how they envision a shared financial services system could work to achieve broad financial inclusion. Of course, in real life countries or marketplaces may look different from each other. Despite these variations, they note that activities to date tend to cluster into one of two profiles. Countries may find that their choices differ based on their relative alignment with these profiles.
Profile #1 – Non-bank, closed-loop mobile money providers moving towards interoperability; at times including interoperability between non-bank providers and bank networks.
Profile #2 – Bank, open-loop networks moving towards enabling participation by non-banks and immediate funds transfer (IFT).
Note that while we frequently use the term “country” when referring to a payment system or system participants, we recognize that digital payment systems may also be structured as multi-country, or cross-border systems. The issues and options described in this section still apply to a multi-country scenario.

The Level One Project with The Gates Foundation from Ryan Dunleavy on Vimeo.