INTRODUCTION

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• As we can see, the integration of the banking industry and the innovation in the digital era is obstructed by monetary malpractice by the centralized financial system. Demonstrating a reluctant attitude to the acceptance of the new digital technology.

• This means that only a few can have access to wealth management by specialized companies. All this limitation, forces us to grow in an elitist and separatist world and we end up playing part in this monopoly.

• Firstly, cash continues to be the predominant form of money, especially in developing economies, although we know that this will not change in the next ten years. Secondly, electronic and digital money is gaining more and more popularity. And thirdly, new types of money could be demanded in the not too distant future as technology advances so rapidly. It seems that it is not easy to accept the new change by the centralized monetary system, but it is observed that there is a lot of tendency to accept it by the client.

• Firstly, cash continues to be the predominant form of money, especially in developing economies, although we know that this will not change in the next ten years. Secondly, electronic and digital money is gaining more and more popularity. And thirdly, new types of money could be demanded in the not too distant future as technology advances so rapidly. It seems that it is not easy to accept the new change by the centralized monetary system, but it is observed that there is a lot of tendency to accept it by the client.

• The reality is that there is an urgent need in our society, where the benefits of the banking system should happen to everyone, and not just to a few. It has been observed for years that this pattern of decentralization predominates in an interrupted manner.

• Today, we can meet many people who share this thought and discuss several solutions to the problem. Our response to so much uncertainty leads us to the conclusion of making the leap to the new digital age. We can say that we are entering a new world where the DAO Decentralized Autonomous Organization presents an alternative independent governance of human influence, leaving it in the hands of something much simpler, more transparent and more reliable such as smart contracts. These are just some lines of open code that all users can review and decide if they agree, or not, before proceeding with its execution.

• The history of banking began with the bank prototype about 4000 years ago. With which we can say that the modernization that has come since then has not been entirely consistent with the era in which we live in. In 1973 the first call could be made from a mobile phone, and it was as a result of this when we began to familiarize ourselves with this technology. As the years go by, a system of free and unlimited messaging with innovative projects is created that makes us believe in the evolution of adapted technology in the time in which we find ourselves.

• Having said that, ¿why does everything that encompasses the centralized banking system continue to this day, with the same method as thousands of years ago?

• Since 2009 Blockchain has become a potentially disruptive technology. Its task is to execute as a ledger of transactions distributed throughout the computing network. This network is in charge of tracking together an immutable record of transactions among other functions, which are mainly offered by banks.

• Initially, the most outstanding Blockchain technology application was the best known cryptocurrency called Bitcoin. But at present, there is a total capitalization of 340 billion dollars among all cryptocurrencies, which confirms that more and more users adopt this system. The combination of the algorithms with the smart contracts will allow completely new financial services, which, the entire cryptographic community and its new members that arrive on a daily basis, wait for anxiously.

• The companies or individuals that adopt a focused approach within the community around truthfulness and a democratic infrastructure, where investment services will always be delivered according to the expectations of the community, these will be the leaders of tomorrow.

PROBLEMS

PROBLEMS FOUND

• Many people have lost control over their own heritage, which is limited by the

Central Banks.

• Since the poorest or lowest standards of living of the population, we have observed that they have been excluded due to the costs which are higher than the income that these can generate.

• A third part of the world population is unbanked.

• Nowadays, if you are unbanked, you can only use cash, which limits you in many negotiations such as sending money, requesting micro-lendings, saving and even managing big purchases.

• The Central Banks are unable to end with the previous problems due to these high costs.

FINTECH Vs TRADITIONAL BANKING

• It is not a question of a new discovery, but of a reality. Every day we face thousands of monetary disadvantages worldwide, from accounts being blocked due to irrelevant reasons, excesses of commissions for any type of account maintenance or cards, high interest rates in loans and/or mortgages, even for any movement of the balance or transfer, an abuse of charges is generated by the Central Banks. And because of all this, and because there isn’t an alternative, we see ourselves obliged to continue using the financial system set.

“Raising a change of the current financial industry as a fight, such as David against Goliath, and Fintech against the traditional banking system, this is not a correct exposition, as it does not succeed in the diagnosis of the situation.”

• The real threat to the financial traditional sector is neither the new technological companies, nor regulation or the negative interest rates. The new habits of the users are the ones that can knock down the current business models.

FINANCIAL EXCLUSION

• In spite of being a relatively new concept in the academic world and in the area of the public policies, the term of financial exclusion was used for the first time in 1994 to show the process of retreating in the financial institutions of the most disadvantageous environments and the widespread closings of bank branches in these zones in disadvantage of some countries (Leyshon, 1994). In 1995, the World Bank confirmed that everybody should have access to the bank transactions, savings accounts, access to the credits and to the insurance services, and to be able to request all types of financial services.

RISK FACTORS

• It is demonstrated as a dominant factor of risk the spatial and geographical aspects:

• The removal of some bank entities in some areas, difficulty of access in the rural zones or in zones of low population density, etc. This reality can be seen in our closest geographical environment.

• A study by the British entity Joseph Rowntree Foundation identified the following groups as especially vulnerable to the financial exclusion:

  • Unemployed people

  • Young women without a job, education or formation

  • Tenants of council houses

  • Single-parent or divorced families

  • With disability, mental health or drug addictions

  • Prisoners, ex-prisoners or relatives of prisoners

  • Members of ethnic minorities

  • Immigrants

  • Asylum seekers and refugees

  • Homeless

  • Old age pensioners

  • Women

  • People with basic/simple bank card

  • People with low income

FINANCIAL EDUCATION

– 1ST PRINCIPAL: The financial education has to actively promote itself and must be available in all the stages of life constantly.

– 2nd PRINCIPAL: The programs of financial education have to be carefully monitored so that they satisfy all the needs of the citizens.

– 3rd PRINCIPAL: The consumers must receive education and knowledge on the financial and economic matters as soon as possible, starting from school.

– 4th PRINCIPAL: The plans of financial education must include general instrumentsof awareness regarding the need to improve the comprehension of the problems and financial risks.

-5th PRINCIPAL: The financial education that they are given by the lenders of financial services must be contributed in an equitable, transparent and impartial way.

–6th PRINCIPAL: The instructors in this field have to possess the adequate formation and the adapted resources to give such courses on financial education in a fruitful and confident way.

– 7th PRINCIPAL: One must promote the national coordination of the interested parties in order to obtain a clear definition of functions, to facilitate the exchange of experiences and to rationalize and prioritize resources.

– 8th PRINCIPAL: The providers of the financial services of education have to evaluate regularly and, if needed, update the plans that they manage, that is to say, adapting them to the best practices of such field.

“Financial exclusion is deeply linked to the social exclusion, due to the majority of the people who are in a situation of poverty or social exclusion, it is very difficult for them to access the financial services.”

THE SOLUTION

• The banking system can be defined as the degree of participation that the people and the companies have in the financial formal services that a country offers. Its degree of importance takes root in a measure that a population has more of a banking system, the levels of economic growth are superior, providing that while it is major, the access to the financing of the economic agents, it turns into a mechanism to increase such productive capacities and to improve such levels of income.

• The banking system is directly related to the meaning of incorporation. A major access of the population of minor income to the financial services can be turned into a decrease of poverty, allowing them to take part in activities to improve their income and to promote saving.

• Between 2011 and 2014 the percentage of adults who had an account went from 51% to 62%, a trend that meant an increase of 13% of points in the account ownership in developing countries and for the role played by technology. Especially, the accounts of mobile money managing in Africa to the south of the Sahara, these are helping to extend and intensify rapidly the access to the financial services. Parallel to these advances, such information also reveals big opportunities to stimulate the financial incorporation of the women and the poor people.

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