WeTrust
WeTrust: Blockchain-based Mutual Aid
Throughout the world, exclusion and access to banking is an issue that over two billion people face daily. Although there has been a series of efforts to bring financial services to the unbanked by financial institutions and other not for profit organizations, many are still suffering and have not received any aid.
The banking institutions that provide these services often are inaccessible or have done little to encourage the unbanked to embrace the banking system.
Those underbanked do not comprehend why they should join the banking system because savings and credit rates that they are offered are not competitive. Financial institutions such as banks offer such low interest on savings and charge high interest and collateral requirements on loans that most borrowers get turned away and begin to seek alternatives.
Microfinance banks, who are known to give loans without collateral often come up short as the lending services are provided to small businesses or individuals that have low-income and usually work within the gray economy. These have higher default rates and may lack the ability to repay the loans. Most loans given out to borrowers are not paid back due to the poor business and marketing skills.
Rather than partaking in traditional financial means, those underbanked in most developing countries participate in a system called reciprocal aid, where participants are both the shareholders and customers. These organizations put customers first, rather than shareholders in the traditional banking case. These reciprocal aid organizations are created based on an existing social tie a common background such as religion, ethnicity, or educational affiliation. The list goes on and on. These reciprocal aid organization or thrift collector agencies (as they are called in Africa) can also be known as rotating savings and credit associations (ROSCA) in the United States. However, there are some transparency issues with ROSCAs which are usually closed-off from the rest of the world and only exist in certain locations.
WeTrust is a collaborative platform powered by blockchain. It was created as an alternative to traditional financial and microfinance services which are not sustainable for the unbanked. WeTrust seeks to advance the reciprocal form of lending and insurance by leveraging the power of blockchain technology.
WeTrust wants to make to make ROSCAs more efficient and trustworthy through the launch of “WeTrust ROSCAs”, an autonomous, frictionless and decentralized application. The goal is also to amplify the benefits of reciprocal aid organizations namely: easy access to credit and fair savings and lending rates. On the other hand, we want to reduce the management costs and the security issues related with trusting a centralized authority. Furthermore, WeTrust makes ROSCAs globally accessible to anyone (as it is connected to the internet).
The WeTrust ROSCA Dapp is a credit and savings platform which allows users to lend and borrow from each other at self decisive interest rates with low friction. WeTrust is built to create a competitive alternative asset class for savers, promote group savings in a way to reach individual saving goal and create an inexpensive path for the two billion unbanked to obtain and track savings and credit.
The WeTrust application is designed to serve multiple audiences but specifically built for the unbanked or underbanked who need access to credit and other individuals who have access to financial institutions but want alternative solutions to savings and credit. Contrary to popular belief, the unbanked and underbanked population does not reside exclusively in developing countries, but also in developed ones, where banking retailers can be at times inaccessible.