Community Research and Development Information Service - CORDIS

Fintech solution could help reduce financial exclusion

An EU-backed digital technology platform provides a secure, instant and user-friendly method of payment for all consumers. It will enable the unbanked population to participate in the global financial economy.
Fintech solution could help reduce financial exclusion
With increasing connectivity and the widespread use of smartphones, mobile banking and payment applications have become mainstream. This is contributing to an increase in the number and volume of non-cash transactions. According to the World Payments Report 2017, global non-cash transactions saw sharp growth during 2014-2015 to reach a volume of 433.1 billion. Yet, existing IT systems involved with these transactions have some limitations, particularly if they are centralised. High maintenance costs are transferred to customers where growing bank fees lead to financial exclusion.

The EU-funded BILLON project addresses these challenges through a blockchain-based instant payout system that is compliant with current financial regulations. It uses distributed ledger technology (DLT) to create free current accounts that are able to make ultra-low cost payments with real currencies like the euro, the British pound and the Polish zloty. The provider of this DLT is Billon, a Warsaw-headquartered blockchain technology company, which is also a Financial Conduct Authority-registered e-money institution in the United Kingdom. As explained in a press release, Billon’s light and distributed architecture allows users to save money, documents and identities directly on its blockchain granting full access to the end user or confirmed entities.

Blockchain and DLT

A blockchain is a particular type of data structure used in some distributed ledgers that stores and transmits data in packages called blocks, according to a World Bank report. These are connected to each other in a digital chain. DLT is a special type of electronic data processing and storage system. Distributed ledger refers to a database shared across a network of multiple sites, geographies or institutions. It gives participants or nodes joint rights to write, read and store entries in the ledger. DLT has the potential to transform payments, securities settlement and back office functions by substantially cutting costs. This allows direct peer-to-peer transactions to bypass intermediaries. Applications are also possible outside the financial sector to maintain databases, for example in healthcare.

Billon has been in the spotlight lately, thanks to the revolutionary potential of its technology for direct payments. It was featured in the annual FinTech50, a list of the most innovative European companies from the world of finance and technology. The 2018 FinTech50 was selected from over 1 800 FinTech companies in Europe.

Regulation and financial inclusion

Enterprises across Poland and the United Kingdom are already using Billon’s blockchain solutions to transfer e-money, the digital equivalent of cash as qualified by the EU’s revised Payment Services Directive. The Directive was introduced to make EU-wide electronic payments cheaper, easier and safer.

Quoted in a press release, Robert Kałuża, co-founder and Chief Operating Officer of Billon, says the introduction of the Directive “has significant benefits for those previously excluded from financial systems.” For example, it enables them “to accept remuneration in a digital form for temporary or irregular work, without the need for a bank account or credit card, which can be costly.” Billon is set to capitalise on these regulatory changes.

The ongoing BILLON (Disrupting the economy – FinTech blockchain solution revolutionises direct payments. Secure, low-cost and simple bank-free payments for everyone) project aims to disrupt the market of alternative payments.

For more information, please see:
BILLON project

Source: Based on project information and media reports

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