China’s BSN, Digital Silk Road in Line With Open Finance Concept
The Open Finance (OpFi) concept somewhat aligns with the ideal behind the Blockchain Service Network (BSN) initiative launched by China in August, a Zilliqa platform’s Senior Vice President has said. Han Wen Chua says the BSN, as well as China’s goal to establish a digital Silk Road, is an institutional manifestation of OpFi at scale and in many ways as he explains his platform’s continuous push for blockchain development in the OpFi space particularly among ASEAN countries.
“When taken beyond a specific geographic market, integrating Open Finance services with BSN will be key to enabling free trade across key markets,” he said. “The future of Open Finance will ultimately rest on a robust network of interoperable financial services offerings and composable digital assets.”
Described as any product that has components that enable the various traits associated with decentralized finance with any centralized core component, the OpFi ecosystem is reportedly getting bigger following the spotlight it got after digital banks were introduced across the ASEAN region.
With Southeast Asia seeing 7 in 10 adults either underbanked or unbanked – only 27% of the region’s inhabitants reportedly has a basic bank account – and only five of the ASEAN countries fully digitised their traditional identification systems, Zilliqa projects that the ASEAN Financial Services market is to generate $345 bln revenue by 2025 including fintech taking up $38 bln followed by OpFi with $7 bln.
“With the rise of fintech, the proliferation of DeFi, and a large online population, the OpFi ecosystem will only continue to grow,” says Chua who hints at their platform’s target of an estimated 10% share of the region’s OpFi market. “Whether it’s digital payments (10% CAGR), digital remittances (17% CAGR), or digital lending (29% CAGR), our research has shown there has been a significant growth in market value across the fintech ecosystem, signalling to a growing OpFi ecosystem.
Though OpFi is not wholly predicated on the inclusion of blockchain, growing and promoting the use of blockchain-enabled fintech solutions across Southeast Asia is expected to bring greater financial accessibility to the region.
Promoting OpFi across ASEAN countries has been enhanced by the region’s highly connected societies with two-thirds of its population online and 90% of them choosing to access the internet via their mobile devices. However, despite the uptake of digital infrastructures, Chua added that millions of people still continue to lack access to financial services and identity documentation. He said:
“Promoting open finance across ASEAN can result in unprecedented opportunities for individuals to accrue and build wealth, enabling them to access permissionless Store-of-Value and Medium-of-Exchange, in the form of digital assets with a simple swipe or tap of a screen. When taken in the grand scheme of things, to enable Open Finance is to enable individuals to become self-sovereign. With the region’s existing rates of connectivity, the willingness to adopt the digital infrastructures is there, but formalising that access in a tangible, meaningful way, is what’s been lacking.”
Whether powered by blockchain-enabled technology, centralised fintech offerings, or a hybrid mix of the two, Chua notes that OpFi has the potential to radically address existing deficiencies across the region. This includes enabling a decentralised digital identity system that could finally include individuals who have been excluded from current identity infrastructures at a lesser long-term cost and in a far more reliable and interoperable system.