The LTP Team had the pleasure of interviewing Ashish Gadnis, one of the Co-founders of BanQu, a software technology company on a mission to connect refugees, the displaced, and the world’s poorest to the global economy through a secure, portable digital identity that maintains transaction history through a proprietary blockchain-based platform.
BanQu aims to gather all meaningful data about the person into a profile that will allow people to step out of poverty. The wide mobile phone adoption in African countries allows BanQu to create a personal digital profile comprised of various records of personal financial and other activities. That profile is recognized and accepted by financial institutions as a legitimate identification information and will allow people to access formal financial services and enable US-based financial institutions to actively participate in the Community Reinvestment Act (CRA).
The company’s vision is to create dignity through identity. At its core, BanQu leverages blockchain to bring transparency to the first and last mile of economic activity, enabling anyone in the world to prove (and own) their identity, their economic history, and their network.
Following up on our recent conversation with Hamse Warfa, Co-founder of BanQu, our interview with Ashish was just as illuminating:
LTP: We at LTP are long-time fans of what BanQu does for the vulnerable part of the global population. But for the part of our audience that may not yet be familiar with what you do at BanQu, please share your experience/profile and what BanQu is trying to achieve.
Ashish Gadnis: There are five major unsolved problems that face the 2.5 billion people living in extreme poverty and the 67 million people who are refugees/displaced due to ongoing conflict:
- Lack of a transaction identity/history that allows them to establish proof of existence and one that respects their past.
- Lack of access to reasonable finance (especially women farmers and microentrepreneurs) that helps break the extreme poverty ceiling.
- Lack of portability (in a secured and safe manner) of education, health, work, movable assets, property, etc., so that they can reintegrate into host communities or return safely to their home countries.
- Lack of last-mile transparency and fair trade across all aspects of supply chains that operate in and out of emerging markets where these people live and work.
- Lack of “bankable” information that allows for a long-term and permanent economic development of extreme poverty zones.
LTP: What is the scale of the exclusion problem around the world? What regions/countries are in a particularly severe need for a solution to enable inclusion for large groups of the population?
AG: Exclusion is in two forms:
1. Crisis Exclusion: 67 million and counting
When a disaster or emergency happens, millions get displaced. There are live examples of this in Venezuela, Syria, Yemen, Myanmar, Haiti, Nepal, Sudan, Nigeria, etc. Each of these examples (natural or man-made) has created exclusion and manifests itself in different forms: war refugees, flood victims, drought-induced famine, etc. And in each case, the people suffering the most lose the basic notion of existing dignity, respect, and self-esteem which are all related to an individual’s identity. About 20 years into the Somali conflict, there are over 500,000 refugees in Kenya that are stateless and have no means to enter the world economy.
The UN recently published a report which highlighted that refugees will spend 17 years in a refugee camp on average. There is no better definition of exclusion than these statistics. While aid keeps pouring into camps worldwide, refugees still are stateless, identity-less, and reduced to a number.
2. Ongoing Economic Exclusion: 2.5 billion and counting
Most models of financial inclusion today actually “certify poverty” – e.g., giving the poor of the world money but keeping them confined in their existing circumstances without a fully transparent supply chain connecting them to the global economy and a path out of poverty. This is because people living in extreme poverty cannot prove their economic history or assets or transactions.
For example: on an average, a Congolese woman farmer will interact with at least five INGOs and social businesses programs; yet when the program ends, the mother is left with nothing and has to “restart” with another INGO or MFI. Why is that? Because, she cannot own her economic history, which prevents her from participating in the local, regional, and/or world economy.
LTP: Financial exclusion may have different hallmarks depending on a country/region (high barriers imposed by the formal system, underdeveloped financial system, lack of options, etc.). If you agree that there is a variation of the hallmarks of this problem, how does it differ from region to region in your opinion?
AG: It absolutely differs from region to region. But there three common threads independent of the region:
- It’s very, very expensive to be poor no matter where you are from, whether it is the favelas of Sao Paulo to the subsistence coffee farmer on Lake Kivu in Congo.
- Everyone has access to poor people data except the poor themselves.
- There is little to no collaboration on the ground between INGOs, social entrepreneurs, aid organizations, or multinational corporations.
LTP: What are the main obstacles holding back financially excluded groups of the global population? And what are the problems that organizations face in eliminating those obstacles?
AG: The main challenges are not with those that are excluded. The main challenges lie in the resistance to adoption by intermediaries or brokers who push back on a “democratized information” network that brings full transparency to the last-mile. Transparency, while a huge benefit, is also the largest obstacle because all transactions by all parties are transparent and exposed to the participants in the trust network.
LTP: Technology startups take different approaches to enable financial inclusion – building identity, offering free remittance services, and alternative financing options to name a few. BanQu has taken the approach through building economic identity on distributed ledger technology (DLT). First, can you explain the components of the economic identity that BanQu builds?
AG: First, the notion of “identity or universal identity for every human” is so 2015! Everyone is scrambling to create an identity solution on the blockchain without realizing that identity in itself has no value if it doesn't show the history of transactions.
For example, most refugees or people in extreme poverty zones have an ID of some sort, so a lot of the startups and FinTechs completely miss the point even though they have good intentions. The real value is transaction identity. We have coined the term “economic identity” because that's what we do – on the DLT.
An economic identity is one that values, documents and connects core components like land rights, harvest information, mobile money transactions, education, etc. This is the first step out of extreme poverty. This is the first step out of the stigma of being a UN Refugee for the next 17 years.
LTP: Secondly, why use DLT? How does that fit your mission?
AG: It’s simple. Non-bitcoin DLT represents the true democratization of information in a way that, for the first time ever, folks living in extreme poverty (and refugees) can actually own and monetize their personal data to get access to better credit, better resources, and not be treated as just a number.
LTP: How does BanQu collaborate with the formal system and regulators to achieve its goal? Please share some of the collaborative work that you are doing with financial institutions.
AG: At BanQu, we believe in 100% collaboration with regulators, financial institutions and local norms and cultural belief systems. For example, we support and strengthen the local co-operatives and implementation partners while providing secured transactions capability so that local banking and KYC regulations are met.
LTP: What milestones does BanQu have in 2017?
- Revenue generating
- Launched certification of assets, records, etc., using smart contracts
- Expansion of global footprint and global team
LTP: Finally, name one fact that surprises people when you discuss financial inclusion. Also, what is something our audience can do today to help?
I think the biggest fact that surprises people the most is that the core definition of financial inclusion – as its deployed today – really means that we are certifying poverty. A real life example of this is microfinance. If microfinance was indeed the silver bullet, Bangladesh wouldn’t have the highest and most successful MFIs while having extremely high poverty rates!
Also, donors globally are surprised to know that their donations don’t really make it to the last mile as intended. This is because every donor dollar has to go through some supply chain that has 3-5 intermediaries. The more the intermediaries the lower transparency. Donors can demand that supply chains (not just for physical goods but also value chains where education or health is being funded) leverage the DLT so that they can have an auditable view of how their funding is deployed.