Even if you aren’t in the technology field, you would have had to be living under a rock to have not heard anything about Blockchain. Blockchain is the “ledger” that enables cryptocurrencies like Bitcoin to be bought and sold, and is increasingly being investigated for use in other financial types of transactions and in the case of Papua New Guinea being looked at as a method to bank the unbanked. 80% of Papua New Guinean’s do not use banking facilities, some by choice, some by virtue that they don’t need it, and some just because they have no way of even getting to a bank. There is also the requirement for Banks and Financial Institutions to perform significant due diligence on it’s customers with the primary starting point being KYC (Know Your Customer). When you open a bank account you must have some form of approved identification, and that’s just the first hurdle. What happens when you have regionalisation of registries (eg: Births), but you have moved locations? (You need to plane ride to get anywhere out of Moresby) What if you happen to have more than one name? Or have been married in accordance with tribal or religious beliefs, but never registered that marriage – but taken another name?
Now imagine that the 80% unbanked, pretty much equals the 80% of the population without a mobile phone, 90% of population without internet access, and then 80% of people living a subsidence life with only 20% of the population in formal sector employment.
So, 80% of people in PNG may not have access to any clear form of identification, making the governing principles of simply opening a bank account extremely difficult for the majority of Papua New Guineans. Yes – there are other forms of obtaining identification, one being the “vouch for” system (highly dubious at best), “statutory declarations” again, just because a Commission of Oaths has signed and stamped it, doesn’t make it true. The Superannuation Funds could provide a single source of ID, however they too are only capturing the formal sector and only companies that are registered with the Funds. Some smaller companies don’t have to be contributing to Super, and as we well know – SME’s are generally the backbone of any nation and PNG is numbered amongst them.
So any Financial Inclusion program to get the unbanked banked, is going to have to address how to correctly identify Papua New Guineans. And at the moment, Employer ID (which is easily faked), drivers license, birth certificate and passport are the main ID’s. However, lets not forget the National ID program setup to resolve some of these issues, but ultimately is a siloed system where you do still have to vouch for a person (I know – I have done this). And still, it doesn’t gamechange the PNG identity system, it doesn’t make it easy for Banks, it doesn’t make it easy for anyone.
So how does Blockchain come into the picture?
At the moment – I think Blockchain could be a lost opportunity for PNG. The focus is certainly around Financial Inclusion, and the Bank of Papua New Guinea is driving a program to investigate monetary transfers via Blockchain. But that isn’t the problem, we already have lots of methods to transfer monies, some have failed and some are succeeding – already the Bank of Papua New Guinea led National Payment Gateway is going to create more and more choice. Adding another may create more confusion for people, and unless we look seriously at Internet/Computer Literacy we could be opening ourselves to plenty of other issues (read my previous article). At least with the formal Banks and Microfinancing units, people have a place to point the finger if things go wrong.
Where should we use Blockchain technology?
At it’s heart, Blockchain is a record and customer management tool. If we were building a new National ID system today, we should be gamebreaking and using Blockchain principles. Imagine a Niugini ID System, that the following agencies and sectors could use to validate, add, and update:
- Birth’s, Death’s & Marriages
- Inland Revenue Commssion
- Passport Control and Issuing
- Drivers Licensing
- Superannuation Member ID
- Credit Bureau
- Telecommunication Companies
- Companies Office
Therefore not only creating a single source of truth, but a vehicle to now allow realtime verified payments integrating Banks to Customers. An integrated KYC system. Be able to now apply for a passport online, as you are NID verified. Be able to vote in national elections on your NID authorised mobile app. Be able to pay your taxes automatically; apply for Finance without needing to actually see someone; connect a mobile phone number to your NID; and of course be able to open a Bank Account via a mobile phone.
People keep talking about Blockchain being a “game changer” but there is just a lot of fluff and hot air about Blockchain, not only in PNG, but also Australia, NZ and the rest of the world. And the reason is simple, no-one wants to reinvent the wheel, maybe they have already spent millions on API’s that allow integration, and the R&D for Blockchain is just too costly and heaven forbid, something else comes along that is better – or Blockchain gets hacked or, or, or… you get the picture.
Geez – we still have companies operating systems that are 20+ years old, that think IT is where you find nerds to help you fix your shaky mouse problem. How do we make those companies see IT investment especially in technology like Blockchain isn’t a cost, it’s a priority to ensure their business is going to be around in the future. How many BCP’s state investment in technology is critical to the continuity of our business? How many company strategies identify time working on gamebreaking strategies will account for increase in revenue? Is it because they don’t trust it? Do you, reading this blog, ever wonder how Uber came to be so dominating in just a few years, or why some of the most valuable companies in the world are tech companies… The gamebreakers (not gamechangers), disrupters and innovators.
Papua New Guinea is in a unique situation (having jumped the PC generation) being a nation built on mobility, it can take advantage of technologies such as Blockchain to create an integrated Government/Commercial record system that would be the envy of the world. The rest of us are playing catchup, PNG has an opportunity to take the lead.