Brazilian startup uses blockchain to foster financial inclusion for left-behind communities
Banco Maré, a Brazilian fintech startup that uses blockchain technology to enable residents of the favelas to access basic banking services, has been awarded a $100K grant from Catalyst Fund, an accelerator programme of BFA supported by the Bill & Melinda Gates Foundation and JPMorgan Chase & Co. that spurs innovation in financial inclusion in emerging markets.
Banco Maré has been incubated by Facebook and WeWork Brazil over the last year, and in 2017 they were listed among the top 15 most disruptive fintech organisations in Brazil by Caixa, the country’s largest state bank.
Vitor Kneipp, co-founder and alumnus of the MBA programme at Saïd Business School, University of Oxford, described how the team felt ‘rewarded, renewed and validated… on 1st August 2018 we reached our two-year anniversary, totalling £2.3 million transacted. It has been a tough ride, non-linear in many senses. So, being acknowledged by Catalyst Fund and granted with mentorship, financial support and access to global networks shows that the ride has been worth it.’
The startup will use the grant to develop features that will increase convenience for their customers while creating new revenue streams and preparing to scale up.
55 million Brazilians cannot access basic banking services, and residents of the favelas often travel many miles to pay their bills. The concept for Banco Maré began when Vitor’s co-founder Alexander Albuquerque spotted a potential solution to this problem. ‘He brought his laptop into favelas, routed it through his mobile, and started paying people's bills for them,’ explained Vitor. ‘In the first month, this amounted to about £15. Two years later, we are processing £200,000 a month for 8,000 customers who are either using our app or visiting one of our four kiosks in the favelas.’
After their successful launch, Banco Maré attracted the interest of major retailers interested in streamlining payment collections by integrating systems and cutting off intermediaries. Vitor explained: ‘Making payments in high-street banks was so painful for clients, that many of them accumulated invoices and bills before making the bus trip to the bank, and in doing so, some payments were late. This prompted retailers to commission collection agencies to go after bad payers. Some retailers realised that where Banco Maré worked, they had a lower default rate and they have now partnered with Banco Maré to make it easier for clients to send money to them.’
The startup is also testing debit cards and licensing cash deposits, withdrawals and point-of-sale functions to local merchants.
Vitor credits the MBA at Saïd Business School with giving him the confidence to ask the right questions, particularly about strategy and operations. His reasons for undertaking an MBA stem from his childhood, during which he developed close personal connections to residents of Brazil’s poorer suburbs: ‘Growing up, I always believed that as a family we were not well off – we lived in the same flat all my life, we had an old car,’ he said. ‘But as I grew older, I realised just how deep the social divide is, and that I was in a privileged position compared to millions of Brazilians. This inequality is bad for us all and is something I’m determined to change. The skills and connections I have gained from my Oxford Saïd MBA will help me achieve this.’
Banco Maré’s rapid expansion has come at an opportune time. The younger generations of the favelas have access to more cash than their parents, and Vitor describes how some of the startup’s customers will come to them with the latest iPhones in hand: ‘There is an increasing amount of cash in the favelas. However, it is the habit of saving and of interacting with the financial system that we are trying to introduce,’ he said.
It is Vitor’s hope that Banco Maré will help bring Brazil’s forgotten communities into mainstream society. ‘Our mission is to provide financial structure to people’s lives, and a virtuous cycle in local communities around that structure,’ he said.