1 Convenient Financial Access for AllSCET Financial Inclusion Collider Challenge: Saad Hirani | Wing Vasiksiri | Wyckliffe Aluga
2 Agenda The Problem With Financial Inclusion in PakistanOur Proposed Solution Our Product & How It Works Product Wireframes & Screenshots Value Proposition Makeup of Market Opportunity Market Validation & Research Revenue & Business Model Competitive Analysis Risks, Threats Timeline Team, What We Need Appendices
3 Pakistan’s Inclusion IssueAdults with Bank Account Distance to Bank 13% Lack of Financial Infrastructure Restrictive Regulations 6% The 6th Largest Population in the world, and arguably the fastest growing lower-middle class suffers from a lack of access to basic financial services and is reliant on the cash economy 13% of Adults (and 4.8% of women) in Pakistan have an Account at a Financial Institution. Governance Failures Lack of Suitable Products Adults with Saving Accounts
4 Game Changing Hybrid Cost StructureOur Solution Concept Affordable, Bank-less Financial Services Focus on increasing use of mobile payment + Financial Services at an affordable cost through a medium already possessed by most of the lower-middle income class – cell phones. Anyone can Send, Receive, Deposit or Withdraw money at the cheapest possible rate, from agents deployed nearby them Game Changing Hybrid Cost Structure
5 Afford the Lower IncomeClasses a Chance Through a Tailored Adaptable Product
6 Chance Open an Account at Significantly Low CostSend money to anyone anytime Deposit Money or Have Money Transferred to You Withdraw cash anywhere anytime Save money & Be More Aware of Finances and Liquidity All that by simply texting
7 Wire Frames [Sending] Interface through Text with Multiple OptionsSECURITY / IDENTITY VERIFICATION Transaction Confirmation & Record
8 Distribution Model Chance Sales Team Master Agents Retail AgentsTrains and distributes e-cash to the master agents Master Agents Supervise and distribute e-cash to local Retail Agents Retail Agents Allow customers to deposit and withdraw cash Customers Customers can send and receive the e-cash
9 Creative Cloud TechnologyUser mobile phone SMS Bot API Load Balancer Task Manager Database 90% of population has mobile phones, SMS bot API purchasable from Microsoft, Load balance program to allow multiple access at quick point (same function withdrawing can’t be used to send etc. at the same point) – boxed part is completely automated and being updated in database at all times Independent, secure technology that is non-dependent on internet connectivity
10 Value Proposition Safe Storage Mechanism to Increase SavingsAllows Risk Sharing and Expansion of Geographic Networks Makes it Easier to Pay for, Receive Payments for Goods and Services Improves Allocation and Deepens P2P Lending / Formalizes Credit Market
11 Market Make-Up 100m Total Addressable Market: $147m 80%Unbanked Population in Pakistan 92% Adult Cell Phone Users Get paid in cash by factories 2018 Target Market: $1.5m 80% Income Under $10k / Year Avg. Revenue / Customer $2py Conservative Estimate
12 Market Validation & ResearchInterviewed lower-middle income workers paid daily cash wages in 4 different factories to gauge if they would use product, as well as the viability of product to such customers Average Income of $1250/Yr (Average GDP) Typical Blue Collar Workers (90M, 40F) Everyone had access to own cell phone for personal use Cash based Income 27/130 said that they do send money ~22% people saved (80% of these < Rs 500) 64 of 130 people said that they would trust sending or receiving money via phones on text All people had texting capability in Urdu or English: 40 Frequent, 18 Usual and 72 Occasional ‘Texters’
13 Business Model & RevenueWithdrawal Fee Cut Reinvestment of E-Cash Receipts Licensing Fee Data Sales to Banks, Research etc.
14 Competitive Analysis ScalabilityCater to Banked Consumers Limiting TAM Most Firms Cater to One Bank/ One Service Provider Accessibility for consumers
15 Risks & Challenges Regulation Taxes & The Want for a Cash EconomyMinimum deposit requirements, taxation on every transaction fee Taxes & The Want for a Cash Economy A significant number of people are happy to operate on cash for the sake of evading taxation Adaption & Introduction of Scale Convincing grocery stores etc. to act as agents, banks & microfinance inst. to act as master agents Unpredictability, Corruption, Fraud Record rates of corruption in Pakistan
16 Project Timeline Six months Now One year Three monthsContinue negotiations with financial institutions Hire developers, team on ground in Pakistan Launch 6 month pilot program with 200 Known Customers Build MVP of product Begin training master agents Acquire pilot license Acquire agents in dense population area for B-Testing Iterate product from pilot data Acquire full operation license Three months One year
17 Our Team Wyckliffe Aluga (CEO) Wing Vasiksiri (COO) Saad Hirani (CFO)Product Development for 7 Startups Experience in MF in Kenya Experience in Operations & PM Significant Experience in Data TALA On Ground Connections, Experience, Partnerships Financial Modeling, Growth Fin-Tech Background
18 What We’re Looking For Mentorship, FeedbackConnections with Fin-Tech Industry Leaders, Banks, Lawyers Possible Executive Board Members Workers / Executors ‘The Ninjas’ Need developers, on-ground team (sales & marketing) Partnerships with Banks and MF Institutions To create relationship for deposits, master agents Possible Data Customers in the Future Funding (Seed Equity) To Develop Beta Product, Hire & Expand Team ($100k) To Front Minimum Reserve Requirements - $2m (IRR +)
19 Appendix
20 Appendix 1: Regulatory AspectsMinimum Capital Requirements Application for Permission Operation Regulations Security and Confidentiality Laws Unable to perform banking functions or act as custodians Solution: Partnership with banks / MF banks Must acquire pilot license followed by operating license Solution: Operate a Beta with one master agent using pilot license Required minimum capital of 200 million rupees Solution: Partner with microfinance institutions and banks, along with fundraising Must abide by state bank confidentiality standards Solution: Hire a lawyer to ensure we comply with all standards
21 Appendix 2 - Market Validation & ResearchInterviewed lower-middle income workers paid daily cash wages in 4 different factories to gauge if they would use product, as well as the viability of product to such customers Low-income workers from 4 factories in Karachi earning an average income of Rs 12,000 / month i.e. $1350 per year – all unbanked Participants worked in factories as packers, security guards, supervisors, cleaners, operators, drivers, gate-keepers, helpers etc. All received income in form of monthly cash based payments from supervisors at factories, had cell phones for personal use 103 people said they do not send money, 27 said that they do send money (mostly via friends, by themselves in lump-sum, via cell phone credit) ~22% people saved (80% of these < Rs 500) for causes like children (education), marriage, miscellaneous and healthcare 64 of 130 people said that they would trust sending or receiving money via phones on text All people had texting capability in Urdu or English: 40 Frequent, 18 Usual and 72 Occasional ‘Texters’
22 Appendix 3: Fraud PreventionPut checks on the identity and legitimacy of customers, especially new new customers and those acting on behalf of others. Have a transaction limit Record keeping and established systems of identifying and reporting unusual or suspicious transactions Train our agents to spot activities that raise a suspicion of money laundering, and to put clear processes in place for reporting back to the us for crosschecking.
23 Appendix 4: Distribution Model
24 Appendix 5: Pricing Model & Example1 Master Agent, 15 Agent, 100 Customer, 10 Transaction / Customer Model
25 Appendix 6: Financial Projections
26 Appendix 7: Partners, TractionPartnerships, Conversations Market Indicators of Industry Health 45% Conversations with Habib Bank Limited (Largest bank in Pakistan) on relationship banking / master agent Conversations with Akhuwat Microfinance & Aga Khan Agency for Microfinance to act as Master Agents Interest from CEO of 21C Girls to Develop Product Technology and Join as Mentor / Board Member Of All online shopping will be on mobile by 2020 9000 ATMs unable to meet consumer demand 43% Increase year on year increase in micro-savers 100% Increase in mobile money transactions in 2015 65.8 million Branchless Banking transactions occurred in 2015
27 Appendix 8: Product WireframesSECURITY / IDENTITY VERIFICATION Transaction Confirmation & Record
28 Appendix 9: Transactions from 0-1Karachi Peshawar Mini Mart Send Money for rent LandLord Open account and Deposit free Factory School Pay School fees Withdraw Paid Cash Send Money to his wife John His Wife Grocery Store Pay Bill Power Bill
29 Appendix 10: The Big PictureUnderstand Purchasing Power The transactional data will also allow us to see who consumer sends money to and how often they do so Data from the underbanked This previous market has been untapped by banks and the transactional data of this specific population segment does not exist Generate Potential Credit Score Eventually we will amass enough data from each consumer, based on their spending and savings habit, to generate credit scores Consumers Savings Habit By seeing how often consumers make deposits and withdrawals we can understand how or even if this segment saves Population Density By analyzing the locations and frequency of interactions of our agents we will have a better geographical understanding of the country