1. What are the state of affairs in terms of financial inclusion?
WeTrust’s vision is to leverage social capital, trust networks, and blockchain technology to create a financial system that has aligned interests with all of it’s participants. 2 Billion people in this world do not have a bank account and the existing financial system has many contradictions. One cannot get an affordable loan without having well-paying job and good credit, while legitimate insurance claims directly reduce an insurance firm’s profits. The un-banked and un-insured are most hurt from this lack of access and misalignment of interests, and are always in search of alternative financial solutions.
2. What is financial inclusion and why is it important?
Financial inclusion is well defined by wikipedia as “the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable.”
Financial inclusion is important because ability to access healthcare, education, better jobs, etc… is dependant upon access to credit which facilitates good healthcare, education, etc…
Lack of financial inclusion often prevents further quality of life improvements, as a result.
3. Who are the major players in the financial inclusion/ microfinance arena today?
Many NGOs such as: Accion labs, Omidyar Network, Gates Foundation, Kiva, M-PESA, Grameen Bank are all major players in this financial inclusion/ microfinance area. That being said, WeTrust is significantly different from these players because we are decentralizing the entire process and aim to eliminate the middleman completely. These organizations although are non-profit, still charge significant fees since they’re integrated with the traditional financial system which by its very nature has lots of bureaucracy.
4. How big is this market and how many people could potentially be affected?
Our initial product is a ROSCA dApp, which addresses the needs of over 1 Billion people who currently participate in ROSCAs globally. However, we believe a social capital and trust network driven financial system can also be very useful for people in developed countries that do have access to banks and insurance companies. A ROSCA can be seen as a zero-sum insurance organization, with minimal expense ratio, whereas insurance companies on average have ~30% of policyholder premiums go toward operating expenses, advertising, and profits. There is a tremendous opportunity to bring value by improving the efficiency in lending and insurance.
5. Are there any other use cases that would benefit from this technology?
The banking and insurance industries are quite massive already!
6. How much are microfinance banks charging today?
Microfinance can help, but oftentimes the end borrower has to pay extraordinarily high interest rates on the loan. This is not always transparent to the ‘lenders’ who believe they are participating in a charitable cause. Numerous studies have been conducted on this topic such as this one, and this one, which show that microfinance can create severe unintended consequences.
7. What is community banking and insurance? Give me some context.
Community banking and insurance can mean many things. In the ROSCA context, it is This grassroots organization leverages personal reputation and social ties -- and draws upon 2,000 years of resilience and effectiveness in offering credit and insurance to communities around the world.
Specifically, a ROSCA is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending. ROSCAs are commonly built along clan, geographical, social, or professional networks. In countries around the world, ROSCAs have a variety of different names such as: susus (Ghana/ Caribbean Islands), tandas (Latin America), hui (China), chits (India), cundinas (Mexico), etc.. For more, find the whitepaper at WeTrust.io for more details!
8. How will YOUR solution benefit the world?
WeTrust’s vision is to leverage social capital, trust networks, and blockchain technology to create a financial system that has aligned interests with all of it’s participants. 2 Billion people in this world do not have a bank account and the existing financial system has many contradictions. One cannot get an affordable loan without having well-paying job and good credit, while legitimate insurance claims directly reduce an insurance firm’s profits. The un-banked and un-insured are most hurt from this lack of access and misalignment of interests, and are always in search of alternative financial solutions.
We believe that today’s banks and insurance companies play an important role in society. However, in contrast to other industries where undifferentiated products result in low margins, they thrive because of their important role as a “trusted third party”. Yet, our research shows that there is an alternative to this dependency on a “trusted third party”, one which can help reduce the friction necessitated by centralized intermediaries and result in a world where everyone has access to fair, market-priced credit and insurance.
9. Why use the Blockchain?
With blockchain, the communal savings and lending circles (also known as ROSCAs in the US) can now be used anywhere. It doesn’t matter whether you don’t like how expensive existing financial service are or if you have no access to them at all. Communal savings and lending circles could be a great opportunity for blockchain to re-think the way we think about savings, credit and insurance.
10. How will you onboard non-tech savvy users onto your platform?
Because of the very nature of our product, our initial users will have to be somewhat tech savvy and either have to own a computer or mobile device. We believe this isn’t an issue as mobile device penetration is exponentially increasing year over year with a 72% penetration rate by 2020 (or, 5.6B people worldwide) according to GSMA. Our initially markets will be focused on individuals with strong social capital and trust networks (e.g. current students & alumni, fraternities & sororities, etc.), but due to differences in each other's financial situation, there exists a opportunity for one more fortunate to help another less fortunate.
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WeTrust interview