An Expensive System by Design

The traditional banking system wasn’t built to be lean. Banks shoulder hefty operational expenses across IT infrastructure, compliance, staffing and branch networks, and the complex coordination costs of upstream and downstream industry chains. These costs ripple through the entire system, leading to two main challenges:

The Unbanked and Underbanked

Even in 2024, 21% of adults worldwide have no bank account. Many banks require minimum deposits just to break even on operational costs, effectively shutting out lower-income users. And for those who do have accounts, as many as 30–60% are underbanked, unable to access loans, remittances, or investment services without turning to alternative financial services.(Source: Lucidity Insights)

Friction Costs: A Hidden Drain on Profits

In today’s banking landscape, every financial transaction carries a hidden layer of friction. Because each bank operates as a separate entity with limited mutual trust, funds must often pass through third-party clearinghouses to reach their destination. While this structure helps ensure security, it introduces complex and layered fee mechanisms. Businesses must absorb fixed fees, percentage charges, and intermediary costs, as well as hidden foreign-exchange losses. This is especially pronounced in cross-border payments, where currency conversion fees, bank processing charges, and card network fees stack on top of each other. The result is an opaque and unpredictable cost structure that makes accurate forecasting difficult and gradually eats into corporate margins, becoming a significant barrier to global business growth.