Fidutam

Fidutam is an accessible and cost-free microlending application enabling low-income and underserved groups to obtain bank accounts.

Current banks generate their revenue by disproportionately marketing to populations who are likely to handle larger sums of money at a time, driving profit. Consequently, nearly 2.5 billion adults worldwide are ALICE: asset-limited, income-constrained, but employed. Over 90% of all ALICE are unbanked, having extremely limited or no access to financial services. 

Without a bank account, cashing checks, paying bills, and raising personal capital becomes extremely difficult, and almost all financial interactions become riskier and more expensive. They also have no financial support or backing, leaving them and their money vulnerable. It is because of this that the unbanked population represents a significant portion of the global poor: they come from the lowest-income and resource-underserved communities, in which over 93% of individuals are economically and financially limited.

The root cause of unbanking is identification and access. In 2021, 11 in 12 unbanked individuals cited a lack of adequate ID–an SSN, taxpayer or government-issued photo ID, or proof of address–or proximity as the primary reason for not having a bank account. A follow-up study over 2 years in Nigeria, China, and Pakistan’s low-infrastructure communities confirmed this data.  However, current solutions attempt to offer low-cost financial planning and prepaid debit cards, ignoring the causal factors of the unbanking issue. These solutions have had little traction among the unbanked. With a lack of effective solutions, the unbanking crisis and its resulting poverty do not persist globally.

Fidutam is a cost-free decentralized application that enables financially underserved communities to successfully open bank accounts. The application is a microlending platform that is hosted through instant messaging and made available to users via a SIM card. Users participate in registration at economic development ministry centers, churches, and other Fidutam-partnered community checkpoints, who help with SIM card distribution, account set-up, and fund distribution.

After having the SIM card installed (takes under 2 minutes per person for a 2G phone) and texting the Fidutam chatbot on WhatsApp or WeChat, users are instructed to take a selfie image. By pinging the phone’s satellite coordinates, the user's location is also stored. They then manually enter their full name and other personal information, if known. These three data are converted into a digital signature on the blockchain. This blockchain-based ID supplants the copious amount of ID requirements by banks that exclude immigrants, POCs, etc. from opening accounts. Each signature has a public identifier, which is visible on the public blockchain server, and a private identifier, which contains all the information of the user and the bank account identification. Storing accounts on the public results in each ID costing only one-third of a cent. 

On Fidutam’s instant messaging-based platform and with the generated ID, each account has a microloan of $50 to $100 loaded onto it. After spending $25 of the money linked to their accounts, users then earn a 0.35% monthly interest that they can use to raise or build their capital.

Fidutam is catered to the 2.5 billion people across the world in need of bank accounts, particularly minorities. Given the new global socioeconomic landscape as a result of the COVID-19 pandemic, the share of the world’s workers living in extreme poverty rose to 6.9% for the first time in two decades. According to the UN’s 2022 SDG #1 (poverty) report, the number of ALICE-status workers is continuing to rise, making solutions like Fidutam of paramount importance. The ever-expanding exclusion of low-income individuals from the economic benefits and support that having a bank account entails will drive already marginalized individuals further into poverty.

Unbanked women, immigrants, and racial minorities in particular are effectively cut off from the global market, making it difficult for them to engage in simple financial tasks. This includes investing in goods and businesses, making purchases, generating recurring revenue or income, and even managing one’s assets. Without the financial padding of a bank account, unbanked individuals are left exposed to the unforgiving and capricious international economy. They won’t be able to maintain their standards of living in retirement, leave their children or family members with monetary support, or purchase essential items. As Kathy Pierre, a youth educator and ALICE worker from Pennsylvania, says, “we are struggling but getting through. With one accident, one emergency, everything will come crashing down.” As the designation indicates, unbanked individuals are in need of trusted and accessible bank accounts.

By implementing this solution on a country-wide scale, Fidutam can significantly reduce poverty and bankruptcy rates, both in developing nations and the United States. A streamlined method of accessing bank accounts could also enable a wider range of international trade and output by nations with previously high unbanked populations, such as Indonesia and Nigeria. Most importantly, Fidutam can ensure that all people will be equipped with the tools and resources to live comfortably and mobilize upward through starting a business, investing, or purchasing real estate, all of which will benefit both their families and their posterity.

As a person of color and a Nigerian, I’ve seen the devastating effects that racial hegemony in banking and finance can have on communities. I’ve seen Black-owned businesses crash, families denied essential loans and purchases, and entire unbanked neighborhoods fall into poverty. Living in the US, I see the negative effects that poverty has on minority groups on my TV every morning; it facilitates further discriminatory acts, from police brutality to institutionalized racism. 

My background spans research, entrepreneurship, and advocacy. This year, I was named a Research Science Institute (RSI) Scholar, which is the most prestigious pre-collegiate research distinction in the world, and have been conducting research at Harvard-MIT for several years. I also released a cryptotoken on the Ethereum MainNet called OkezCoin. As a STEM promoter and advocate, my workshops, mentorship, and innovation sessions have reached over 60,000 youth and professionals. With my experience both in the technology and community organizing sectors, I am well-equipped to lead, build, and implement Fidutam.

Since launching Fidutam in 2020, I have assembled a support and advisory team of 24. This group includes 11 on-ground, low-income, and unbanked individuals able to share their firsthand perspectives, 7 research and development advisors from Consensys, IBM, and more, and 6 business advisors from Capital One, Wells Fargo, OPay, and more. With our business advisors, in particular, we are developing working partnerships with the companies that they represent.

Fidutam has also received international recognition, including winning $150,000 in awards, and receiving honors from the NASDAQ and NASDAQ Center for Entrepreneurship.

As I began to conduct academic research, host STEM workshops, and advise companies like H&M and Aleph Farms on an international scale, I found that the significant lack of people of color in these fields could be linked back to a lack of financial stability. The more places I went, the fewer people like myself that I saw in these circles.

Since then, I have been applying my existing skills in research to look at social and economic determinants of banking and racial bias with World Economic Forum partners and the United Nations. Through these insights, I have begun to turn Fidutam into a tangible solution.

Fidutam has already begun engaging with its audience of interest (unbanked individuals, especially women, minorities, and immigrants). In March 2022, we hosted a virtual kickoff call with 103 low-income and unbanked families from Chicago, IL, Allentown, PA, and the Bronx, NY to provide feedback on our early prototype. The demographic breakdown of our mini-pilot users is as follows: 96 families of color, 22 female users, and 51 immigrant users (note that these demographics overlap). 

We supplied over 200 banking IDs with our application via WhatsApp for four weeks. Following the tests, we hosted feedback sessions across multiple days, in which we received feedback regarding the application and product design/deployment from each user. One of our users used the micro-capital they received from Fidutam to start up a small e-commerce store that they grew to make $5,000 in profit.

As we are now preparing our main pilot in Nigeria, we have sent a written proposal to the Nigerian Federal Ministry of Finance. In the report, we detail our deployment strategies over a 5-year span. We have also begun working with on-ground nonprofits and government economic development officers on the city level, starting with Enugu and Jigawa.

Fidutam is the first-ever effort to foster a needs-responsive approach to providing financial accounts for unbanked populations. We have built a novel, blockchain-based solution to combat unbanking. The nature of our blockchain enables us to bypass conventional authentication, allowing immigrants, undocumented individuals, and those with only basic forms of government identification or no ID to register for bank accounts. With state-of-the-art encryption, we ensure the safety of our users’ data, creating private signatures based on the pixel values from images of the user’s face, name and personal data, and location–different for everyone. 

The use of a decentralized ledger reduces the setup costs of our bank accounts by three orders of magnitude, making our solution accessible to anyone. Our technology focuses specifically on financial documentation, which is proven to be the biggest barrier to entry for the unbanked. Using microlending, we are able to scale without needing extremely high amounts of funding. With our instant messaging system, nearly anyone with a phone can access a bank account through Fidutam.

Our solution represents a key step towards a more inclusive and diverse financial infrastructure. Fidutam’s solution brings banking to some of the most isolated and underserved communities, allowing them to mobilize upward. Most importantly, given the low costs of documentation and processing using Fidutam’s decentralized technology, banks will see moderate to high-profit margins from the checking accounts of newly banked individuals as they grow over time. We are directly engaging the communities in need as well, working with organizations on-ground to distribute the solution, and hosting workshops reaching over 4,560 unbanked youth and adults across 3 countries. With Fidutam, the unbanked will no longer represent untapped potential and instead the future of the economy.

We hope to have completed our Nigeria pilot in Enugu and Jigawa in collaboration with the Central Bank of Nigeria and each city’s Ministry of Finance and Economic Development, where our application will be piloted with 15,000 unbanked individuals, 52% of whom are women. From this pilot, we hope to see the financial recuperation of these micro-economies with Fidutam and gain insight into the success and impact rates of our product.

After successfully piloting in two Nigerian cities, we will then work with the Central Bank to scale to the most underserved Nigerian cities, piloting to 10,922 Nigerians by the year-end, and beginning to work on policy regulations and scaling to China, the most unbanked country in the world. We anticipate that we will be in the late stages of distribution and implementation schema design within the next year. 

We will also be hosting product demonstrations at homeless shelters in the United States in collaboration with J.P. Morgan, PSECU, and Goldman Sachs in cities with high unbanked populations. 

Our pilots are held in hubs and public and nearby areas for the communities in need (e.g., shelters and churches). Fidutam’s application can scale to the most remote people and areas of the unbanked world, from women refugees, to homeless urban dwellers, to undocumented immigrants, to war or disaster-torn settlements. The application simply requires a phone, not access to the internet, money, a physical location, etc., making it the most accessible currently existing alternative to acquiring a bank account.

Fidutam’s impact goals for the next year have been verified by the advisory team. We hope to see Fidutam materializing an equitable financial ecosystem in the near future.

Fidutam uses several technologies to build its solution, namely SIM cards, blockchain, asymmetric Pretty Good Privacy (PGP) encryption, instant messaging, GPS tracking, and image hashing. Our solution can be installed into any mobile phone via SIM card, meaning it requires no internet or additional digital access to use.

To create the digital certificate that enables bank registration, a 2G device sends an instant message to the Fidutam application through WhatsApp or WeChat. Fidutam then prompts the user to enter their name, age, and address if known. Using offline GPS tracking, the user’s location is pinged and saved. Fidutam then asks the user to take a picture of themselves. This image is assigned a unique hash value, determined by the color of each pixel. The user’s image and written data are then encrypted using PGP into a public and private key. The public key is saved on a visible blockchain server, linked to the user’s ID. The private key is saved and used to access and open a bank account. This enables users’ information to be accepted by banks, as their private identification is verifiable, but is also secure and linked to the user’s unique account. A user’s bank ID cannot be stolen or forged thanks to the security provided by Fidutam’s use of the blockchain. We use the Hyperledger Fabric blockchain to host Fidutam’s bank IDs.

With each bank ID being stored on an immutable, decentralized, distributed ledger, the cost of obtaining documentation for opening a bank account is 0.33 cents. Following the ID setup, users can then open their accounts entirely through instant messaging, allowing users to interact with their bank accounts. For example, a user could generate a Fidutam bank ID, then open and manage a no-fee checking account with a $75 starting balance all through WhatsApp. They could then manage their spending, savings, etc. through WhatsApp as well.

Fidutam has served 212 unbanked individuals with our piloted solution and reached 11,476 low-income youth and adults with our community outreach efforts, such as demo workshops. The 212 users of our platform only tested the pilot version on-and-off (though with a frequency greater than or equal to 3 days per week) for 7 months, however, and have not used our solution independently for an extended period of time as their main form of financial access. Even still, Micayah, one of our users in the 212-person beta we hosted in January 2022, made $5,163 from a $75 microloan from Fidutam. The pilot was to gauge user interest, receive feedback, and understand if our product would be successful when implemented.

Between the end of the year or mid-2024, we project to have scaled our solution to 28,934 Nigerian unbanked individuals and 13,227 unbanked Americans across 7 states. Fidutam will also be preparing to deploy its solution long-term to 10,922 additional Nigerians across 5 cities. We also hope to host workshops for 15,000+ low-income youth and adults by the end of 2023 as well.

The two biggest barriers that may affect Fidutam’s pilots are funding and authorization. 

[1] Fidutam’s work and development are not yet generating revenue or profit and is therefore paying out-of-pocket from previous awards and support totaling $150,000 USD for patenting, product design, and on-ground implementation. Though few solutions like Fidutam exist, those that have aimed to combat a similar issue have suffered from a lack of financial sustainability and low-cost operations. Even though setting up IDs costs a significantly small amount, the costs will still compound as our product scales. There are also additional costs that are incurred from instant messaging hosting. Therefore, additional grants, individual investments, and funding are needed for patenting, our Nigeria pilot, and blockchain hosting. So far, Fidutam has been able to fund itself to complete tasks and create impact, surmounting this barrier.

[2] Our secondary barrier to our impact is authorization. Many previous solutions could not scale or be used because they were not approved by banks or formally registered services. Fidutam is an entirely new form of identification for banks, and so it is necessary that it comply with all financial legal requirements in all countries to be implemented on a wide scale. As of now, we have not yet run into compliance or compatibility issues, though these are bound to arise as we bring our solution to more areas. Due to this, Fidutam is working with on-ground, federal, and corporate experts to ensure the proper and legal implementation of our solution.

J.P. Morgan, Visa, PSECU, and Goldman Sachs: Receiving advice and support from them regarding technology, implementation strategies, and product development. In talks with their innovation teams on how best to scale Fidutam to communities in need.

OPay and Nigerian Federal Government (Bank, Ministry of Economic Development): Getting connected with on-ground Nigerian payment services and banks to roll out the solution with unbanked Nigerian communities. Looking at gender, socioeconomic, and humanitarian disparities as they affect banking, financial services, and economic development accessibility on a continent-wide and semi-global scale.

Wells Fargo, Capital One, and Discover Bank: Receiving support and working on partnerships to establish them as our partner banks to be hosted on Fidutam’s instant messaging platforms; supplying no-fee checking accounts to Fidutam’s unbanked users, and determining/analyzing returns from the growth of the checking accounts provided.

United Nations (UNESCO and UNICEF): Helping to organize pilots in select unbanked communities and financial education workshops hosting, as well as determining how Fidutam helps to further the goals and impact of SDGs #1: poverty, #8: decent work and economic growth, and #11: sustainable cities and communities.

We provide value to the unbanked by providing them with IDs to set up accounts at no cost, and without the need for internet, electricity, another device, or physical bank access. We also connect them to online no-fee checking accounts, allowing them to save, grow, and use a small amount of capital more effectively, providing them with invaluable economic access. By offering an instant messaging and blockchain-based solution we allow them to complete all of these steps through the use of their mobile phone, and our implementation with on-ground ministries and bureaus ensures that there is high trust and transparency between the user and our products.

Several banks, credit unions, NGOs, and on-ground organizations are in support of Fidutam’s solution, recognizing the need for equability in today’s financial landscape. The economic growth and trade potential of so-called “3rd World” countries like Nigeria are nearly limitless but held back by significant poverty and lack of access. With Fidutam, banks are now able to foster this economic growth, which will yield a high return on investment with each account, especially since the cost of generating one bank ID is so low given Fidutam’s use of blockchain.

The unbanked desire to engage in the economy and leverage financial services to mobilize upward and lift themselves out of poverty, but have never received a solution that addresses their main access barrier: documentation. With Fidutam’s intuitive solution and approach, the unbanked will not only be given access to bank accounts but will also be able to manage and control their finances with high levels of autonomy. They will be able to generate revenue for themselves, invest, and own capital, and as their accounts grow, the returns for Fidutam and the banks facilitating their economic growth do as well.

As a social enterprise (501c(4) organization), Fidutam will not solicit payments from any of its newly-banked users or on-ground facilitators. We have already been able to earn over $150,000 in awards and gratuity, used for development, processing, software, planning, and implementation. We intend to begin by securing additional non-dilutive investments and through several fundraising rounds, including donations and grants. As a member of the Softbank Corporation through the Masason Foundation, I have access to device and supplies support, as well as a small funding network from Fidutam.

Fidutam also plans to earn revenue through a partnership with banks whose online services will be hosted through Fidutam’s instant messaging platform on WhatsApp and WeChat. As users’ accounts with the micro-lent balance continue to grow, Fidutam, as well as its partners facilitating the accounts, will receive a small percentage of the returns, mirroring a standard no-fee checking account. Our users are still able to reap all the benefits of growing their accounts and retain a majority of their funds. I have begun talks with Fidutam’s advisors and partners on such a revenue model.

With this plan, we anticipate that Fidutam will continue to be a profitable, sustainable, and effective solution to banking the unbanked.