Tumoni

The US-Central America remittances corridor is the second largest in the world and represents over 20% of the GDP of the primary recipient countries. However, the lack of financial information on the roughly 80% of the Central American population who remain unbanked prevents established financial services providers from accurately assessing the risk level of these potential customers. As a result, most Central Americans inevitably pay a steep price for this status quo. Traditional players collect $2.5B per year in unnecessary remittance and account fees while locking out 21M adults from accessing modern financial services, representing approximately $15B/year in lost revenue opportunity.

Traditional banking and remittance providers are expensive and rely on complex in-person processes to verify and serve customers. This creates negative or unattainable experiences for low-income consumers, who lose trust in these traditional providers and consequently stay unbanked.

Moni is built to fit the needs of these millions of people forgotten by the financial system’s incumbents. Our tailored identity verification processes will allow Central Americans in the US to open an account with their national IDs and send free remittances to their loved ones. On the recipient end, we will offer Central Americans access to a bank account with no fixed monthly fees or minimum balance requirements through our simple digital interfaces.

Our vision is to build a borderless financial services solution for all Central Americans. Over time, we aspire to raise our customers' disposable income and provide Central Americans, for the first time, with affordable financial services in savings, lending, insurance, and investment products. 

Our vision is to build the first financial services super-app for the 44M Central Americans, beginning with a unified digital banking and low-cost remittances app.

We will initially offer US-issued accounts and cards to Central American migrants based in the US and their loved ones back home, building a closed-loop money flow to send remittances without going through SWIFT or other intermediaries.

Our app will include a proprietary KYC process that accepts Central American national IDs + fully tailored processes and interfaces for a population with a lower avg. financial literacy level.

Growing up in Central America, bank accounts and cards were always reserved for the rich. Loans always came with extremely high-interest rates, and insurance was not an option for most. Twenty years later, nothing has changed.

Financial exclusion was always around us. Central America is the most underbanked region in the continent (>80% unbanked) and is also the recipient of the second-largest remittance corridor in the world ($30B/year, representing 20-25% of the countries' GDP).

For most of the population, the absence of historical financial data makes every interaction with financial services expensive because they must rely on different intermediaries (remittance intermediaries, loan sharks, family members).

We want to reduce the cost of remittances by 70% to give the unbanked a valid reason to open accounts and then build a complete financial services ecosystem for them from there. Since 65% of them have a smartphone and internet access, we will do it via digital services.

We are a team of engineers and managers with family roots in Central America. Two of us lived there most of our lives and have experienced (directly and indirectly) the struggles Tumoni wants to solve. 

We have interviewed over 60 users so far and continue to do so every week to reduce biases and adjust our product development roadmap accordingly. 

We are also talking to community leaders to start spreading the word and building a waitlist, and the initial feedback has been overwhelmingly positive.

Additionally, we have complementary skills:

• CEO launched and re-launched fintech products in 9 different countries at SumUp. 
• CTO raised $1M and developed a hyperlocal volunteering platform (DiveIn).
• CRO founded an intercity transport company in Central America (C.A. Express).
• Chief Architect invented the world's first personal firewall (Zone Alarm) and has been building companies in Silicon Valley since the 90s.

We are advanced in developing our mobile banking and remittance applications. Our customers will undergo an adaptive identity verification process, after which they can use our platform to receive, save, spend, and send money.  

In the backend, our customer and back-office applications connect to our core services via REST APIs, with an identification, authentication, and authorization layer in between. Our card and account products leverage a third-party Banking-as-a-Service (BaaS) provider, a BIN sponsor, and a Know-your-Customer (KYC) service for the core banking ledger, the regulatory licenses, and the identity verification process, respectively. Our internal systems will connect to these partners via an abstraction layer to give us more flexibility to change, update, or remove external service providers based on our needs.

None yet.

Central Americans are systematically excluded from accessing financial services at home and abroad. In the US, most don't have a Social Security number or speak English fluently – immense barriers to opening a bank account and sending remittances to their families. In Central America, high fixed fees and dependence on physical branches keep most of the population unbanked. 

Solve could help us find the right partners (BIN sponsors, organizations, community leaders, investors) to transform Central America from the most underbanked region in the continent to a success story for digital financial inclusion.

Our solution is innovative because:

• It shifts remittances away from the slow and expensive international banking rails and moves them to the global and instant card networks.
• Our machine-learning-enabled KYC process is connected to foreign databases that can verify the identities of immigrant minorities in the US
• Our interfaces will be tailored for users with lower levels of financial literacy and include an in-depth section to educate them on financial topics and help them save.

Reducing part of the $2B in yearly fees that current providers make on the US-Central American corridor would mean giving back to the migrant workers and their families, which would in turn positively impact the region's broader economy.

• Serve 4M Central Americans with a unified banking and remittances solution
• Reduce the cost to users by at least $250M per year (reducing fees by >70%)
• Build a credit history on users to offer loans at risk-calibrated lower rates (as opposed to current providers)
• Democratizing financial services by lifting access barriers (complex KYC, minimum account balance, fixed fees, etc.)

Our main UN SDG is 10.c, focused on reducing the cost of remittances from 6% to 3%. We want to go for 0%.

Our main performance indicators will be active users, card spend volumes, remittance volumes (account-to-account and account-to-intermediary), and cash withdrawals. 

Traditional Financial Service providers have forgotten the 80% lowest-income share of the population over the last 50 years. Their value proposition and pricing model don't make sense for the unbanked.

Based on our 60+ user interviews and the needs of a region that relies on remittances for >20% of GDP, our unified remittances and banking solution could be the most efficient path to democratize financial services for all Central Americans.

The short-term outcome would be to open accounts for the unbanked and underbanked users, but the long-term outcome would give $3B in unnecessary remittances and banking fees in fees back to the population that worked hard to earn it. Additionally, it would set the bases for them to develop a credit history that would give them access to loans at fair rates (by adjusting it to their actual risk level and enabling safer and cheaper collection mechanisms). 

Driving financial inclusion through technology would accelerate the region's socioeconomic development.

Our MVP product will be an Android banking and remittances app paired with a debit card. Our customers will undergo an adaptive identity verification process, after which they can use our intuitive app to receive, save, spend, and send money.  

In the back end, our customer and back-office applications will connect to our authorization, authentication, and authorization services via REST APIs. Our card and account products will leverage a third-party Banking-as-a-Service provider, a BIN sponsor, and a Know-your-Customer service for the core banking ledger, the regulatory licenses, and the identity verification database checks, respectively. Our in-house systems will connect to these partners via an abstraction layer to give us more flexibility to switch between partners based on our needs. Our proprietary KYC processes will leverage two in-house AI modules to analyse documentation and confirm the users' identities.

We are 80% done with our prototype's back end (app REST API, admin REST API, identification/authentication/authorization layers, core services, abstraction layer, and databases). We will start working on the front end this week.

Being a diverse team ourselves (6 nationalities in a team of 6, with different ethnicities, socioeconomic backgrounds, and sexual orientations), we understand the value of diverse opinions and backgrounds to take different perspectives into account and find the best answers through consensus.

We will initially make money on the card interchange (1% in the US, 3.5% in Central America), on ATM withdrawals ($1 net every time), and potentially 30-40 bps on FX markups (TBD). We plan to diversify our product offering quickly and have launched bill payments, payment acceptance, credit scoring, lending, and insurance by Y5.

We estimate the yearly net card revenue potential from remittance senders and recipients to be $489M (growing at 7% YoY due to accelerated migration). 

For US-based users, the net card revenue potential is $295M/year from: (1) Card interchange: $325/month in card spend x 0.9% net interchange x 12 months x 3.3M Central American adult migrants = $116M (minimum, that's assuming a 50% lower card usage than the average Hispanic) (2) ATM withdrawals: $1 net per withdrawal x 3.5 times per month x 12 months x 3.3M Central American adult migrants = $139M (3) A 40 bps FX markup: $250 remittances/month x 0.4% x 12 months x 3.3M remittance senders = $40M

For remittance recipients in Central America, the net card revenue potential is $194M/year from: (1) Card interchange: $19.65 (15% of the $131 received per person) x 3.15% net interchange x 12 months x 10M remittance recipients = $74M (2) ATM withdrawals: $1 net per withdrawal x 1 time per month x 12 months x 10M remittance recipients = $120M

And this is only the debit-card-based net revenue potential. Diversifying into other financial services would expand our market by >20x. For reference, remittance providers for the US-Central America corridor charge $2B in annual fees, and Northern Triangle (Guatemala, Honduras, El Salvador) + Nicaraguan banks have >$10B in annual revenues.

Since traditional institutions only serve the 20% highest-earning share of the population (representing 50% of consumption), banking the remaining population could expand the market by an additional $10B+. And that’s before including the multi-product revenue potential from the 3.3 million Central American adults in the US earning 12x higher wages.

We are still early on in the journey, but initial interest from users signing up for our waitlist has been overwhelmingly positive. We have also seen a similar business model operating successfully in other markets (Philippines, Dominican Republic, etc.)