MIT Solve

Solution overview

Our Solution

Bondhu app

Tagline

Bangladesh’s first ever short-term micro-financing solution

Pitch us on your solution

Problem:

About 90% of Bangladeshi population lives on a shoestring budget, often struggling to meet unplanned and sometimes regular expenditures. This creates the need for reliable sources for them to obtain quick short-term financing, for which no specialized services currently exist in Bangladesh.

Solution:

By introducing “Bondhu” app, we will be offering the first ever platform in Bangladesh dedicated to providing quick short-term financing to individuals in need. Individuals will be able to open an account and based on successful verification, they will be able to apply for short-term financing with quick turnaround.

Positive Effect:

Despite the clear need for short-term financing by majority of Bangladesh population, no solution has been presented to fulfill this specific need. Bondhu app will be equipped to serve this particular need and eliminate the need to resort to more complicated sources of financing options.

What is the problem you are solving?

In Bangladesh, the average basic expenditure per household has been estimated to be around BDT 23,512 (only includes Food, Rent, Medicine, Telephone, Clothing & Transportation).

The lower income group, which makes up for 40% of Bangladesh population, earns on average BDT 10,657 every month. As a result, almost 40% of the entire population often struggle to meet their basic or routine expenditures.

The middle income group, which makes up for 50% of Bangladesh population, earns on average BDT 25,763 every month. As a result, almost 50% of the entire population struggle on the face of unanticipated or unplanned expenditures.

Therefore, nearly 90% of Bangladesh’s population has the potential to be in need of quick short-term financing.

In addition, there is simply no direct solution available to the people of Bangladesh to obtain quick short-term financing.

Research shows that about 41.10% of short-term financing is met by asking relatives / friends / neighbors, which is an unreliable source at best and might cause embarrassment to fund seekers.

Bank is used by about 16.9% to obtain short-term financing, which often results in fund seekers to go through a complex and lengthy application process and almost always requires collateral.

Who are you serving?

We conducted both primary and secondary research to determine the need for short-term financing in Bangladesh.

Secondary Research:

We found that there are 2 distinct group who are most likely to be in need of short-term financing in Bangladesh: Middle Income Group & the Lower Income Group.

The Middle Income Group is comprised of 50% of the entire population of Bangladesh earning an average monthly income of BDT 25,763 and the Lower Income Group consists of 40% of Bangladesh’s population with average monthly income of BDT 10,657.

Incurring monthly average basic expenditure of BDT 23,512, both of these group either struggle to meet the basic expenditure and/or find themselves needing extra cash in the face of unplanned or unanticipated expenditure e.g. medical emergencies.

Primary Research:

We conducted a Pilot session for “Bondhu” app for 3 months and observed the following:

Employees/Individuals enrolled: 70

Total Amount Borrowed: BDT 533,000.00

Profit: BDT 32,000.00

Based on the research results, we have designed “Bondhu” app to deliver the following:

Simple and easy application process
Diligent and expedient approval process
Quick disbursement of short-term loans
Future salaries used as collateral

What is your solution?

Our solution, Bondhu, will be available as web and mobile application. This Fintech application will allow individual employees to seek and obtain small funds against the salary they will receive, through their current employment, in the immediate month.

Approval Process:

After an individual employee registers with us, we will verify the following to approve him/her as a potential client:

Personal Information:
- Identification (NID, Passport, Driver’s License etc.)
- Present/Permanent Address (Utility Bills, Bank Statements etc.)
- References (Existing clients, Current/Former Employer etc.)
Bank-related information (If account holder with Partner Bank?)
- If YES, we will seek permission to obtain the banking records of the individual employee for the recent 6 months
- If NO, we will not be able to accept the individual employee as a client
Information regarding current Employment:
- Place of Employment
- Employment History
- Length of Employment with current employer (min. requirement of 6 months)
- Current Salary or Remuneration

Loanable Amount (L) calculation:

We will calculate the disbursable amount of based on the following information:

Current Salary or Remuneration (S)
Number of Days in a Month: 30 (to remain constant)
Number of Days Worked in the running month (D)
Our Service Fee of 6%

L = [S * (D/30)] * (1 – 0.06)

Disbursement of Approved Loan Amount:

The amount of loan will be paid to the client (based on their preference) through:

Direct Deposit; OR
bKash account (cash pick up from approved bKash agent)

Loan Recovery Process:

The Loan Recovery process will entail the following steps:

Upon approval of loan, client(s) will be required to sign a “Pre-Scheduled Payment” request (authorizing Partner Banks to deduct amount owed)
Partner Banks will deduct the amount owed immediately after the receipt of next month’s salary by client
After deducting the amount owed, Partner Bank will retain fees (2%) owed for their service and transfer the rest to “Bondhu”’s account.

Partnership agreements with local banks:

Our partnership with local retail banks will serve the following purpose:

Reach agreement with local banks to execute and process “Pre-Schedule Payment” from clients to ensure recovery of loan payments
Reach agreement to obtain access to recent financial data of applicants for verification purposes
Instant disbursal of funds via Direct Deposit (upon approval) Reach agreement to transfer funds to clients’ bKash account (upon approval)

Select only the most relevant.

Provide equitable and cost-effective access to services such as healthcare, education, and skills training to enable Bangladeshi society to adapt and thrive in an environment of changing technology and demands

Where our solution team is headquartered or located:

Dhaka, Bangladesh

In which sector would you categorize your solution?

Finance
Other

Our solution's stage of development:

Prototype