Bankomunales

We solve access to savings and credit services for vulnerable populations with no or limited access to financial services. In Colombia, approximately 30 million people do not have regular access to savings and credit services. In Latin America, this figure reaches almost 250 million people, where more than 100 million people use informal and inefficient associative mechanisms to access these services.

FUNDEFIR achieves its mission through two strategies: 1)  Banokomunales, a free application that  allows the creation of a bank between friends and family to manage money, receive microloans from Bankomunal members and make money as a shareholder. 2) BK-CLUB which aims to redirect family spending to key areas like food security and insurance that generate well being and are crucial for overcoming poverty. 

If Bankomunales are scaled globally, local communities  can achieve financial wellbeing and transform their  communities worldwide as it has been proven to do in Latin America.

We solve access to financial services for vulnerable populations with no or limited access to financial services. In Colombia 30 million people do not have regular access to savings and credit services. In Latin America, approximately 100 million people use informal, insecure and inefficient mechanisms to access financial services.

These mechanisms are known as “Rotating Saving and Credit Associations” (ROSCAs), usually functioning a group that puts a fixed amount of money monthly, and then one person monthly takes all the funds. In Colombia approximately 4 million people use ROSCAs and over 100 million people are using these systems in the Americas.

Although widely used, ROSCAS are insecure, unprofitable, and inefficient. FUNDEFIR has improved these informal mechanisms through  Bankomunales to make the ROSCA model efficient, profitable, safe and educational by the use of  simple technology. Bankomunales are managed through an application, which means that financials are managed in a transparent way that can be scaled and monitored in a meaningful way.

Bankomunales are managed through the BK-App, an application available on any type of smartphone. The BKApp allows a group of users to create and manage a Bankomunal. It solves problems for  users by simplifying the ROSCA model and by making it safe, transparent, and scalable through technology. Bankomunales are a group of individuals that, through the BKApp, use their own money to deposit, save, solicit loans and have access to services as if it were a traditional bank.  Users learn to save money through the BK-App which monitors credit, spending, savings and earnings. Users deposit what they wish, buy interest-generating shares and save money as shareholders.  Users have access to appropriately sized loans by asking for credit from the Bankomunal without the need to have a formal banking history or take more money than they need or can pay off.  Other products and services like insurance, microloans or food security are offered through use of the app as part of the “BkClub”. The BKClub is a group of services that are offered to Bankomunal members and includes loan insurance, low-cost health insurance and more. This offers users access to services and allows other providers a way to reach underserved customers. 

FUNDEFIR beneficiaries are primarily low-income people with limited access to formal financial services. Although it varies in the different countries where it has been used, current FUNDEFIR beneficiaries come from low-income communities in which 72% are women, have on average 3.5 children, 25% are head of households, 25% run their own business and 32% are homeowners.  The predominant economic activities of beneficiaries are informal trade (42%), small manufacturing (18%), and agriculture (15%). Direct beneficiaries have been in Argentina, Bolivia, Colombia, Dominican Republic, Haiti, and Venezuela, with a total of 1,011 groups and 24,045 direct members. To understand their needs, we monitor them in two ways: through data and through a community partner. Through the digital app we collect and monitor data on all member´s behavior within a specific Bankomunal. This not only allows us to send them alerts and educational tips depending on their behavior, but also allows us to create an informal credit history. Second, when we work through a partner like a local government or non-profit, we create a group of local advisors to help people create their Bankomunales. Partners are trained to monitor groups and their context so that Fundefir can respond quickly to their immediate needs. 

Our solution enables small and new businesses, especially in untapped communities, to weather economic shocks, prosper, and create good jobs through access to capital, networks, and technology.

Bankomunales facilitates income for businesses, which in turn creates or sustains jobs and stimulates a dynamic local economy. 

Bankomunales are important social safety nets, as they provide instant and appropriately sized credits managed in a democratic and low risk way.  

External funds can  be deposited to give access to external credit for  social needs, such as loans for food  during a pandemic.

The BKApp builds a strong, unofficial credit history on each user.

BK Groups go beyond the conventional microfinance model by building a grass-roots, community-based financial infrastructure without external funds- the money comes from the comunity itself.  Other microfinance institutions such as Grameen Bank, Kiva and FINCA offer external money to provide credit to groups of people, but it has been proven that the centralization of decision-making makes credit more expensive and distorts decisions when granting a loan.    BK  allows access to small loans that, due to cost problems, can rarely be financed by a formal institution; eliminates the fixed contribution system so that people can invest as they can and want; makes savings efficient and fair; it designs a system of guarantees and risk distribution that makes the model safe and profitable; and it eliminates the inefficient  system where people have to wait their turn to access finances and replaces it with one where anyone can access funds when needed. Furthermore, it takes a cultural accepted model, the ROSCA, and converts it into a model that is profitable and safe for users.

FUNDEFIR has gone from promoting simple savings circles to an effective associative credit and investment model. The model is designed so that, traditionally using cash or digital transactions, people can build and manage their own "bank", investing through shares that they rent and accessing credit, and not have to wait their turn like most applications, but when necessary.

All Bankomunales are managed through the BK App, which facilitates operations, accounting and administration of the Bankomunales. Similarly, it creates online data that makes it easier to track individual users and their groups with no face to face contact. This is currently an online version that requires internet, but we are currently in the process of designing and offline version for users that do not have consistent access to internet. This technology also takes traditional group financing mechanisms (ROSCas) and makes them automated, safe, instant and profitable.

The mobile application will allow users to connect to transactional gateways (E-wallets) in the near future, so that Bankomunales or members can cash out or transfer their funds to a formal banking service should they so desire.

The BKApp also allows you to manage a database with financial information on each of the members of the Bankomunales or BK Groups, obtaining information on their savings and credit capacity. It also allows for a database consisting of the use of the credits processed through the Bankomunal or BK Group generating the opportunity to support, through an External Credit Fund, those partners and projects that require longer terms and amounts than the Bankomunal itself or the BK Group can grant.

Between June 2015 and June 2018 (excluding the results in Venezuela),   601 groups were created using the BkApp, 9,695 direct beneficiaries and about 50,000 indirect beneficiaries (including other members of the communities) were impacted, and 36,893 micro credits granted by the Bankomunales.  $1,178,113 USD was invested in shares by the groups and $1,098,000 USD was generated in earnings belonging to the members of the Bankomunales.          $7,897,613 USD was delivered in credits using members' own money. Furthermore, since April 2020 Fundefir has granted nearly $ 30,000 USD in additional funds to Bankomunales as microloans for food security with no defaults on the loans. All of this was done through a simple version of the BKApp, which we are currently improving to have an offline version and to offer better services for our users. 

https://www.youtube.com/watch?v=aMUl4pHQK44

Our inputs are:  technology, human capital (our team) and, in some cases where we can provide external credit to a Bankomunal, (for example, the emergency food fund we created allows us to provide external funding to support families during the covid pandemic specifically for food. We have also done this in the past for creating better housing conditions for vulnerable families and Venezuelan refugees). 

Our activities, outputs and outcomes are the following: 

1) Campaigns and outreach to vulnerable communities giving them the information and support that they need to download the BKApp. 

Outputs: number of campaigns, types of requests received from communities, downloads and the basic socioeconomic conditions that are received from the communities. Outcomes: creation of Bankomunales, through which users obtain the benefits and impacts of Bankomunales. 

2) Technical support to Bankomunales, which includes monitoring and supporting Bankomunales through technology and the BKApp.  Outputs: types of transactions, their frequency, the amount, and how often users need support from the Technical team.  Outcome:  strong network of Bankomunales who know how to use the BKApp, are consistently learning about financial wellbeing and use the app to create a better quality of life through savings,  investment choices and  financial education. 

3) Offer additional credit to Bankomunales through impact-specific external funds.  Outputs: the number of users that receive additional funding; their payments on that additional funding; and what type of items did they use the funding for (for example, for housing, for food, for investing in a small business or in health care). Outcomes: tangible changes in their lives depending on how they spent the funds: on better housing, on growing their business, etc.

4) Offer services through the BK Club.  Outputs: number of people taking advantage of these services, the type of service acquired and how much, and how frequently they are accessing these services.  Outcomes: vulnerable populations have access to goods and services through the BKApp that increase their quality of life like insurance, access to recreation and other health and wellbeing services that otherwise they would not have access to in financial and social terms. 

The current number of people we’re serving: 24,045

The number we’ll be serving in one year: 36,000

The number we’ll be serving in five years: 666,000

For the next five years FUNDEFIR has a plan to reach 44,400 groups using the BK App, for a total impact of $99,900,000 USD in group investments; USD $29,970,000 in Group investment benefits; and $399,600,000 USD in Credits delivered by the groups. Total direct beneficiaries will be 666,000 and Indirect beneficiaries including members of the community will be 2,664,000.

The indicators FUNDEFIR seeks to achieve are:

1: Achieve agreements and connection mechanisms with different transactional gateways

2: Achieve 2,400 new groups in 2020, 4,800 in 2021, 7,800 in 2022, 12,000 in 2023 and 17,400 in 2024, with an average of 15 members per group.

3: Average savings per member per year of $150 USD.

4: Reach agreement with investors to create external credit of at least $ 1,800,000 USD.

Group Growth:

Year 2020: 2,400

Year 2021: 5,000

Year 2020: 10.000

Year 2021: 20,000

Year 2022: 40,000

Use of our technology as a White Label for other savings and credit methodologies in at least one national or international organization by the end of 2021

Two major barriers that we face are:

1) Entry into different countries, as they all have different financial regulations and it is often unclear to what extent Bankomunales are allowed to compete with the traditional banking systems, even though the goal is to eventually connect the to traditional banking systems and not compete with them.

2)We are currently facing funding barriers. We are not able to cover our costs of customer acquisition as we are investing the majority of our funds into technology development for quick growth in the future. 

We are currently handling legal expansion on a case by case basis. As we grow, we will  have our own legal department. To solve our funding issues, we are actively seeking grant support and also seed stage investors.

N/A

President, Founder:  Salomón Raydán- Master of Arts from the London School of Economics and Political Science. Alternative Finance Specialist. Creator of Bankomunales. https://www.linkedin.com/in/sa...

Director, Financial Specialist: Maribel del Valle Torcatt Rivas- BA in Public Accounting. Author and designer of the Bankomunal accounting system. linkedin.com/in/maribel-torcat-24325423

Director of Partnerships: José Octavio Carrillo Heredia-  Master’s in Public Policy and LLM Master´s in Law from Boston University.  https://www.linkedin.com/in/jo...

Technology Team Manager: Enrique Angrisano Chang- Master´s in Technology Project Management. Over 20 years of experience in Project Management. https://www.linkedin.com/in/en...

Manager Accounting/Administration: Hernán Valdez- Economist. https://www.linkedin.com/in/he...

Manager Tech Platform and front-end design- Eduardo Raydan: Computer Engineer. 

Salomón Raydán invented Bankomunales over 20 years ago, and for the past 20 years has dedicated himself to alternative finance mechanisms. He has since written multiple books on alternative finance for the base of the pyramid. He lives and breathes Bankomunales.

Maribel Torcatt has been with Fundefir for almost as long as Salomon—she was Fundefir`s first employee and is now the Executive Director. Maribel is a Public Accountant by training and designed the accounting and financial management system for Bankomunales. As well as Salomon, Maribel is an expert in financial behavior at the base of the pyramid and has a strong background in community work and behavioral change processes concerning financial health and education.

Enrique Angrisano is an engineer and project manager by trade, and has revolutionized management for technology development for Fundefir and Bankomunales. He has put into place processes, protocols and a management system that allows for the tech team to provide quick, meaningful responses for users.

Jose Octavio Carrillo is a lawyer by training, was the former Director of Ashoka Colombia and brings other important international experience to Fundefir as the Director of Partnerships and Outreach.

Hernan is an excellent administrator who  brings years of managerial experience to both the model and the Fundefir team itself, and Eduardo Raydan is an experienced computer engineer who is also an expert in alternative finance, thereby leading the creation of a model fuses finance for the base of the pyramid and technology.

CAF, Banco de Desarrollo América Latina: $800,000 USD. They funded a pilot expansion program and the move of the operational team and headquarters from Caracas, Venezuela to Bogotà, Colombia. 

Expolive Dubai 2020: $350,000 USD: Financing for the BKApp to create the offline version of the application and to complete the transition from a non-profit to a for-profit. 

Fundación Mapfre: $30,000 USD: Reward to Salomon and Maribel for best financial inclusion innovations and to expand the communications and marketing plan.

FUNDEFIR so far has designed 3 revenue streams and multiple distribution channels. Our revenue streams are:

1.Use of technology: we charge a monthly fee for the use of technology that includes a monitoring system for Bankomunales to achieve greater efficiency and profitability.

2.Credit Fund: Bankomunales are designed to service short-term loans and relatively low amounts. The credit fund is an additional external amount that users can request for longer-term, larger loans from Fundefir. Our data system allows us to know the individual and group capacities and have a precise financial scoring system to offer the credit fund.

3.BK-Club: By offering other services (for example, insurance with SURA, a service we already offer through the BKClub) through the BKApp we can earn a differential between the purchase price and the sale price or through the payment of commissions from the offering partner companies.

We have two distribution channels. The B2C model is oriented to:

 a) opportunity-seeking individuals in our stakeholder communities which are franchised by Fundefir to create Bankomunales and 

b) Other companies that wish to the BKApp to sell their products and services as part of the BkClub. 

The B2B model is to gain customers that currently use ROSCA models. We can achieve this through partnerships with NGOs, government or others by adapting our model to their objectives. For example, cash transfer organizations, trade alliances and cajas de compensación social.

The Bankomunales are sustainable  from the beginning of the program because members start the bank with their own funds and generate their own income based off of the initial money used to open the Bankomunal.  Depending on the investment capacity and the credits granted for each group, we have estimated that it will take between 6 and 12 months for the groups to be able to pay for the technology.

For this reason, as Fundefir is in the early development stage, we need these amounts to be paid initially by a donor or someone who can support us in operating costs until the program is fully sustainable, which not only depends on this payment, but also on the number of groups we can serve. 

This payment is distributed to cover technological costs, community advice and the local ally if they have it. The payments allow sustaining the program, as well as obtaining resources that can be reinvested in the expansion of the groups.

Fundefir also makes income  on the BKClub, which provides low cost services to the base of the pyramid for services like insurance, access to recreation or other goods. Fundefir works with providers and charges a percentage fee to the providers who wish to offer their service to members through the BKApp.

Bankomunales is a disruptive, tested model that has the possibility to not only bring unbanked and vulnerable populations out of poverty-- they can do it with their own money in a safe and responsible way. This model is very technology and data driven, which means that we need, in the long-term, disruptive partners to help us strategically grow as a company, scale our model in Colombia, Latin America and the world. Bankomunales are an important tool to be able to link unbanked populations to the formal banking sector, where they will have the opportunity to access goods and services at a larger scale. To prepare Fundefir, users and the market, we need the support of MIT Solve to exponentially grow the impact of Bankomunales  in a meaningful way with international experts and changemakers.

We need support with grant funding and creating an attractive investment model for future partners and investors for a model that we believe will scale rapidly. 

As Venezuelans, we would love to have the support, in a conversation or a handshake, of Rafael Reif. We think that it would be very valuable to have the support of the MIT D-Lab, and work together to share knowledge and efforts for financial inclusion through technology.

This prize would be used to offer Venezuelan migrant communities access to critical financial services as part of integration into a formal banking system, which is often delayed by years as migrants wait for national documentation and legalization. Furthermore, Bankomunales are adaptable to allow migrants to receive and make loans for entrepreneurship, which in turn jump starts their own economic autonomy, integration and well-being.

Fundefir has two forms of community outreach and communication: through downloading the application which allows for digital communication with users, or, through community advisors. Community advisors are always women, and are usually single mother or older women who due to their circumstances, are unable to work a full-time, traditional job. We use a franchise model and train female community members  on how to start Bankomunales, how to do basic troubleshooting and how to lead community and Bankomunal meetings. This has two important impacts: we generate trust in the community and give women a chance to become leaders and entrepreneurs in their own community, on their own time. We believe that there is incredible, undiscovered potential to empower women through this model.

From data collected from a project managed with the CAF, we found that 25% of the credits that were grants in over 1 million dollars in credits over 3 years was given for micro entreprises, for paying wages and maintaining employees in communities that would otherwise never have access to credit to be able to maintain their small business. We believe that Bankomunales have the potential to channel capital from family, friends and community members into small local businesses in a safe and profitable way like never before, creating a dynamic local economy that rewards financial inclusion, investment, savings and financial literacy from household spending to starting your own business.