hiveonline digital community finance

hiveonline has developed a community finance platform that addresses the microbusiness cashflow challenge and levels the playing field for unbanked entrepreneurs worldwide. 

It's a modular solution that gives communities an app customised to their needs, based on common services - digital accounting, an alternative behavioural credit score, structured and blended/incentive lending products, with the opportunity for cheap digital money.  Aggregated risk reduces barriers and cost for lenders to lend to communities with confidence.  It's low data, tolerant of dropped signal and runs on any browser enabled device, including feature+ phones, with USSD integration for simple phones.

We’ve piloted with savings groups in Niger and are configuring for farmers' cooperatives and fishers in Mozambique. It gives communities access to growth capital, incentivises collaboration for sustainable environments, increases employment opportunities, helps strengthen financial literacy and transparency, empowering socially constrained rural women and unbanked agricultural businesses.

450 million small businesses make up over half the world’s economy. They can’t build trust and don’t get the opportunities that big companies get, to credit and markets. It’s a universal problem but in Africa, where 66% of people and most small businesses are unbanked trust is an even bigger problem.

Most African businesses can’t access the formal financial system. And neither entrepreneurs nor communities can save or borrow via the formal financial system. Social protection, insurance or guarantee schemes hardly exist leaving entrepreneurs vulnerable to economic shocks. Building and supporting community finance groups help them save and borrow from a communal pot, strengthening women’s financial inclusion, social protection, and empowerment. 

The savings group market is estimated at c. 50 million members worldwide, although it may be much higher. In Africa, our addressable market expands from savings group members to the African farming sector, and then to the 100 million strong African microbusiness market. It’s a rapidly growing market, at nearly 3% a year, by 2025, that’s nearly 20%.

hiveonline unlocks access to affordable credit, insurance and savings for communities in the informal economy. We have started with providing a ditgital solution for community saving groups developed in tandem in Niger with CARE to seamlessly mirror Savings and Loan Associations (VSLA) group meetings. 

By recording group transactions and other commitments made and met with digital accounting, we allow groups and their members to build a financial history and develop a reputation score which can then be shared with formal banking institutions or MFIs, which previously viewed groups as too risky for lending, or simply couldn't access them.  Structured loans incentivise sustainable behaviour like crop care, communal processing or investing in common infrastructure such as solar energy.

It's a Progressive Web App, that runs on any browser enabled device, but looks like an app.  It doesn't need updating, and is very low data use, designed for low technical and functional literacy.  But it's based on robust blockchain technology, so transactions are tamper-proof, and communities can build wealth without relying on a bank or financial institution.  We use a coin pegged to national currency, so it looks just like money to our customers.    

The first iteration of the hiveonline digital commuity finance platform aims at addressing the needs of unbanked female entrepreneurs in Africa who are members of savings groups. End-user and partner engagement has been built-in as vital to our initial roll out and development approach. To understand the needs of the savings group members in developing our VSLA app, hiveonline partnered with CARE in Niger, founders of the VSLA program in 1991 and recognized and trusted leaders in the communities where they work. In partnership with CARE, the app was tested across groups, where field officers were responsible for the initial training and collecting feeback which was then analyzed by the hiveonline team to make product improvements and release new features. Based on this structure, we gained valuable insight into digital needs and capacities of the groups. We are utilizing a similar approach on a second configuration of the platform for cooperatives and farmers associations in Mozambique where we will work directly with cooperatives and farmers in the design and development of the app. 

hiveonline's digital savings group solution fosters the creation of good jobs and sustainable entrepreneurship by giving micro-businesses the access to capital, networks, and technology they need to grow businesses while building financial resilience. By digitizing savings groups with blockchain, members can save, produce, transact, and build financial reputations, allowing them to access new markets and grow their credit history. The women are entrepreneurs seize the opportunity to grow businesses, despite challenges of functional and technical literacy - and tell us what they want! Roll out of the platform can be designed to foster digital literacy and promote inclusion.

hiveonline isn’t the only organization set out to boost financial inclusion through the digitalization of village savings and loan associations. In fact, many NGOs, mobile money providers, and private firms have already developed independent solutions. Yet, hiveonline stands apart in both terms of long-term sustainability and potential value for users that goes beyond just digital accounting through the use of blockchain. 

The hiveonline platform front-end can be configured dependent on needs, connectivity, and user feedback and can support any written language. As groups transact, they build a reputation or alternative credit score which can be shared with banks or MFIs to qualify for formal lending to expand their businesses - unlike Trustpilot, based on facts, not opinions.  Structured loans blend money, produce and services to incentivise sustainable behaviours while managing the challenge of cashflow, and aggregated pools help lenders manage risk.

The hiveonline blockchain backend has the power to bring affordability to microtransactions and microloans. Built on the Stellar blockchain with a stablecoin structure, transfers out of the hiveonline network will cost a mere 0.5% compared to the cost of mobile money like MPESA (3-8%) or traditional banking. Not having to physically carry and transport cash, we believe MFIs can reduce the cost of lending while expanding their coverage.

The same traceability provided by the hiveonline digital Savings Group Platform can additionally provide efficient distribution and confidence in use of funds for government support schemes, e.g. for COVID relief, or donor funding, making the solution even more scalable. 

hiveonline utilizes a number of innovative tech solutions for its digital community finance platform. These include: 

Progressive Web App: The app is a responsive website with app-like functionality. It can be accessed via URL, loads on any device with a browser and internet, can be installed with icon on desktop, Non-sensitive Content cached locally, and Updates automatically on internet connection.  We're partnering with innovative mobile operating system KaiOS, making cheap feature phones that only need charging once a week into smartphones.

Blockchain: All financial records are stored on the Stellar blockchain. This provides tamperproof record keeping with a distributed ledger, security and encryption, tracks the local currency via a stablecoin (we do not use a volatile cryptocurrency), and opens up the pathway to e-Money regulation

MicroService Design: Back-end services are built as composable components linked with APIs. This means they are configurable for adjacent use cases while new Front End Apps can link with existing services. It also allows for reuse and replication of functionality and APIs for integration with other services and external systems

Data Management: Alternative credit scoring based on commitments made and met gives customers the opportunity to demonstrate reliability, regardless of who they are.  Digitised records and remote reporting make group data management easier for users and NGOs monitoring their savings groups programs, or government agencies tracking impact over their agricultural populations, while maintaining user privacy (GDPR compliant) and giving users the opportunity to monetize their data.

The hiveonline digital community finance platform is currently operational, though we are always incorporating user feedback and making improvements in design and usability. 

To trial the current saving group app, go to vsla.online to sign up for an account or reach out to the hiveonline team via our website for a personalized demo for your NGO or Savings Group. 

Whitepaper: https://www.hivenetwork.online/digitizing-vslas/

Journal of Digital Banking article: https://www.hivenetwork.online/2020/05/hiveonline-research-published-in-the-journal-of-digital-banking/

In partnership with CARE in Niger, the hiveonline distributed community finance platform has been currently tested and piloted with 126 Savings Groups, approximately 2000 members in varying regions from urban to rural. Feedback from testing sessions was incorporated into app design taking into account specific challenges that the users had, such as low-literacy and poor connectivity. A configuration of the hiveonline community finance platform is currently being developed for cooperatives in Mozambique within the cashew sector. Additionally, we are in discussions with a number of NGOs who have shown strong interest in rolling out the solution to savings groups in their network. Our long and short term roll out targets are listed below: 

Adapted to organic growth, our strategy remains to scale based on projects with distribution partners supporting increasingly large customer/beneficiary networks, to seed support units in-country, then switch to direct to customer expansion over time.  Overlapping communities in any country provide enhanced credit information and network benefits to both communities, and as our network grows, we introduce additional services, scaling our reach and impact to build financial resilience for increasingly generalised customers. Our incentive based loans and aggregated capital encourage communities to invest in sustainable environments and common goods, building businesses sustainably and adopting agroecological approaches.

Our product is scalable by design because of the common, cloud-based service platform, while our team, already established in three countries, can grow to additional countries thanks to leadership that has experience building and running operations in 54 countries with teams of up to 2,000. Currently working in 2 countries with 4 more in the pipeline, focusing on Africa. 

Our high-level goals are: 

• Number of customers reached = c. 30 million
• Assets per group x2
• Capital increase per customer x3
• Universal Access to lending (groups and customers)
• Reduced cost of lending
• Uptake of assurance services (insurance, pensions)
• 30% of informal businesses formalised 
• Increase in Public goods per community (infrastructure, clean energy, education, health)
• Reduced youth unemployment/migration (where base data available)

Specific Barriers and Risks of the hiveonline digital platform include. 

Regulatory Risk: In order to unlock the benefits of e-money including affordable micro-transactions, it is required to obtain an e-money licence in countries where we operate. Some regulators require customer data to be held in country, which poses problems for cloud/blockchain solutions. (e.g. Tanzania). Notably, the platform can operate accounting and lending without the license. Some regulators are wary of blockchain, although this has shifted significantly in Africa over the last year.

Mobile adoption:  Low level of technical and functional literacy, lack of familiarly with digital tools especially older women; Building of trust of digital money or platforms. 

Trust: hiveonline will need to establish trust with end customers

Adoption: As the platform scales, some lenders may see it as a threat because of transparency to customers; mobile money providers may see it as a threat which could prevent them partnering with us for cash in/out

Technology: Not all lenders sufficiently digital to integrate with the hiveonline system (eg.if they are not digital) 

Strategy: Short-term planning and donor funding cycles of partners that are often project-specific. 

hiveonline has taken a number of specific precautions and strategic decisions in order to mitigate the risks and barriers listed above. They include: 

Regulatory: The hiveonline strategic roadmap seeks to align with countries that have a favorable environment for e-money and blockchain regulation. We have started discussions with FSD Africa and partner with in-country organizations with knowledge and experience in the regulatory landscape. The digital accounting portion of the platform can also stand alone without e-money. 

Mobile/ Technology Adoption: The hiveonline solution has been developed for groups in the world's least developed country, Niger. Ease of use has been built into the platform from day one with feedback on the specific needs of these users. It can be used on any phone with a browser, not just smart phones or tablets

Trust: hiveonline partners with in-country NGOs who have built the trust of savings groups and are aware of the opportunities and challenges of digitalization

Adoption: We plan to mitigate the risk of telco competition by focus on and access to last-mile customers

Strategy: In addition to building partnerships for initial roll out with NGOs, hiveonline is fostering commercial partnerships such as MFIs and other lenders. We are also mitigating the scaling challenge by seeking growth capital to build the team for more rapid roll out and regional development and configurations to the platform

The hiveonline prides itself as an inclusive, diverse, and impact- driven team. We are seven full time members across offices in Denmark, Sweden, and Rwanda. hiveonline additionally has one full time intern based in Rwanda and two part time teams on secondment from consultancies in Sweden.  We recruit first for values - Honesty, Curiosity, Diversity and Integrity, using Agile and transparent leadership to keep the team engaged and involved We are half female, half African, 7 nationalities and speak 10 languages.

The team at hiveonline has used years of experience in building financial and technology solutions for international banks to build and deploy the hiveonline distributed finance platform. And we are excited to be bringing this knowledge to level the playing field for community businesses and micro-entrepreneurs worldwide.  

hiveonline is led by CEO and co-founder Sofie Blakstad who worked for eight major international banks in everything from IT infrastructure delivery to business transformation, ran programmes in 60 countries worth over USD 1bn, and supported startups. Sofie advises the UN, International Financial Institutions and the Sustainable Digital Finance Alliance. Sofie’s second book, Fintech Revolution was named “One of the Best Fintech Books of All Time” . Sofie has been included in the Top 100 Women in Fintech two years running and is a 2020 Fellow in the Cartier Women’s Initiative. 

The team has backgrounds from African startup, the World Bank, Economist Intelligence Unit, Deloitte, 10 commercial banks and elite post-graduate Carnegie Mellon University in Kigali, with over a century in Technology, Finance and Research.

hiveonline’s global financial services experience means scalability and compliance have been built in from day one. Our technical architecture is based on comparable scalable services that interact to deliver the needed functionality, across many different countries and growing easily with more users. This also means that the hiveonline platform is not just limited to savings groups. The hiveonline platform has been developed for all aspects of community finance, with different apps all using the same robust underlying platform.

hiveonline's success is founded on partnerships.  The hiveonline currently partners with NGOs and MFIs to build the distribution infrastructure for our savings group and cooperative solutions to communities. By partnering with NGOs we can amplify our impact by rolling out with pre-existing Groups - VSLAs, SILCs, Cooperatives, etc - in their networks while further aligning development to the needs of those communities by combining adoption of the platform with market-based interventions or digital literacy programs. 

For example, the hiveonline was developed and piloted in tandem with CARE and tested within their network of savings groups. Further, hiveonline has recently expanded its initial solution for VSLAs to farmers associations and cooperatives. To this end, we have partnered with AMPCM (Mozambican Association for the Promotion of Modern Cooperatives) and Norges Vel in Mozambique, who have local knowledge and a long-standing history in the communities and are able to facilitate direct feedback and testing for product iterations with the cooperatives and their members. 

Key partners supporting our activities further include: Financial Institutions, providing liquidity for the digital money and financial products;  Merchants, providing goods and services;  Stellar blockchain, our underlying infrastructure; Telcos - short term (pre-licence) Mobile Money, data partners; KaiOS, the mobile operating system rolling out to 17 million new users in Africa for distribution; NGOs, MFIs, Banks and payments networks such as Mastercard. 

hiveonline’s business model is based on giving vulnerable entrepreneurs financial resilience, which is especially relevant in economic downturns. It has three key customer groups:

• Users: Entrepreneurs, in community business groups, who want to grow their businesses and maintain financial resilience 

• Service providers :Financial Institutions, digital platforms (KaiOS) and merchants, who want to sell goods and services to these entrepreneurs

• Platform data users: NGOs and other agencies, who want to enable these communities to be economically resilient and self-supporting

The platform builds bridges between these customer groups to enable 

• Aggregation of risk and leveraging of collective strength for informal business communities to borrow from Formal FIs and merchants 

• Distribution of traceable relief to informal businesses

• Access to merchant services and additional financial products for informal businesses

• Ability to continue building resilience despite isolation and social distancing

• Accurate accounting for low literacy community finance groups 

• Use of complex products such as structured and blended/behaviour incentive loans

• Reduced reliance on single sources of lending, cash and middle men

• Monitoring and maintaining community savings groups in vulnerable populations for NGOs

• Insights into the behaviour of rural communities

We have multiple revenue streams reflecting the different needs of our customers:

• Distributors such as NGOs pay for foundational adaptations of the platform

• Entrepreneurs pay transaction fees and subscriptions

• Financial Institutions and Merchants pay commission on sale of their products 

• Governments and IFIs pay for traceable distribution of benefits

• NGOS, Merchants and Financial Institutions pay for analysis and data collection

 Current revenue is primarily from sponsored projects as we deploy our distribution network through partnerships.  As our customer base grows the primary revenue stream switches to regular revenue from commission on lending paid by lenders, introduction fees on other services such as insurance, merchant services, and transaction fees.  Other revenue from data/research to NGOs and merchants, and from customer subscriptions, forms a regular but smaller revenue stream.  Our customer acquisition cost is low at about 1.2-3.5 USD/customer because of our partnership based model, common cloud and blockchain based back end and low cost in-country resources, while our customer LTV, while modest, is between 35-560 USD (depending on country).  Customer stickiness is high because of reduced lending costs and low-cost mobile money, added to the fact that every time customers use the platform, their reputation/credit score improves, adding incentive for re-use and an element of gamification for more sophisticated customers.

We are forecast to be cashflow positive by end 2020 with a modest profit of c. EUR 150,000 (168,655 USD) for FY2020 enabling us to keep 6 months’ runway on hand, based on revenue of EUR 500,000 (562,185 USD) in 2019 and EUR 800,000 (899, 496 USD) in 2020.   Regular revenue overtakes project funding in 2022, with projects tailing off as our distribution moves from the partnership model to direct to customer.

We are a partnership based organisation who recognises the importance of the ecosystem to deliver holistic community solutions; we provide the financial “glue” that helps partnership ecosystems deliver sustainable impact.  For this reason, we are seeking assistance from Solve to further develop these partnerships and help us scale our and roll out our solution to communities of savings groups and unbanked entrepreneurs.

We're also a research based organisation, with several published works, and would welcome the opportunity to collaborate with leading academic institutions to progress the development of new knowledge in our field.  

We've been lucky enough to be selected by other accelerators - Techstars, Cartier Women's Initiative and Mastercard Lighthouse MASSIV Impact programme, and learned that accelerators can add so much to our business, worth much more than money.  So we particularly value the mentorship, support with strategy and insights on building strategic approaches to deliver impact, that SOLVE can give us, as well as the incredible network opportunities.  

We would love to partner with insurers and capital partners with big ambitions to expand financial inclusion to the next billion, such as Munich Re and the Inter-American Development Bank.  Implementation partners who we can complement in their support for communities include export value chains and education providers.  We’d also like to explore how our existing and developing partnerships with NGOs can benefit further from partnering with key foundations such as Bill and Melinda Gates, while stronger ties with UNEP, Save the Children and the World Bank Group would increase our impact reach, as would a partnership with Vodafone, who supports many of the countries we’re targeting.  Finally, growth capital is important to scaling our operation fast enough to make a difference in the current economic crisis, so we’d love to explore how our business could fit with the portfolios of venture firm partners.

From the MIT Solve Partnership List we have identified some key partners that we would be interested in forming collaborations with.These include:  KSF Impact, Munich Re, Save the Children, SOCAP, United Nations Environment Programme, Vodafone Americas Foundation and The World Bank Group. 

These can help us with: partnerships for ecosystem delivery of services, such as Vodafone and NGOs, providing services or partnerships with portfolio companies which can benefit our customers and increase the impact on communities, such as micro-insurance or education.  World Bank Group would help both with valuable insights about capital flows to Africa and microfinance, the impact of COVID and how we can support debt cancellation and distribution of funds, and how we could support confidence in disbursement through our reputation system, showing distribution of funds and proof of impact.

We have previously advised UNEP on sustainable applications of blockchain technology and would welcome the opportunity to revive the discussion in the light of increased demand for digital financial solutions and alternative currencies, to progress our aspiration towards digitising social and natural capital, to improve both the economic and environmental impact on the communities we support.

The hiveonline community finance platform has the opportunity to drive impact for refugee resilience and livelihood promotion. Refugees face of the same set of barriers to financial access and growing their small businesses that our savings groups members face. Additionally, savings groups have recently been expanded as part of the programming for market-based solutions in refugee camps. 

We have recently entered into discussions with NGOs and private impact firms on how our solution could best be tailored to the needs of the refugees they are supporting, by integrating with their existing solutions. The existing platform could be rolled out to drive financial inclusion of savings groups, with minor modifications to include data from sustainable hardware like solar or biofuel stoves, green energy or water purification, while modifications could be made to distribute emergency funds to the group level, or foster group lending to support community enterprise. 

The hiveonline community finance platform is uniquely positioned to boost the livelihoods and resilience of women and girls. Studies have shown that the benefits Savings Groups cannot be understated. Women who have joined these groups have proven to save more, increase their position in society, grow their household businesses, and be more resilient to financial shocks or environmental crises. They build resilient communities, because they are the community - each responsible for between 5 and 15 people.  Yet many Savings Groups worldwide, continue to be excluded from the formal financial system. 

Digitization of Saving Group operations with hiveonline can result in rapid acceleration of financial inclusion in developing countries and provide wide benefits for group members by boosting access. 

This includes reaching the last mile by providing KYC, credit history, digital identity and transaction history, dispelling negative assumptions that members are not creditworthy or too poor to require or want financial services.  In Savings Groups and Cooperatives, incentivised lending enables and rewards activities which build more sustainable communities.

Making Savings Groups and Cooperatives digital reduces friction in provision of other services as it adds a degree of formalization to both groups and individual members. Services such as micro-insurance to strengthen local resilience and government socio-economic programmes such as agricultural extension services and healthcare can reach those in need much faster within a digital Group network. NGO or government emergency aid relief and communications, for example COVID, can further leverage the platform for ease and transparency of distribution.