Leaf Global Fintech

Leaf is bringing the financially excluded into the formal economy by creating a virtual bank for refugees. Refugees in flight often face high risk of violence and theft associated with carrying their life’s savings in cash. Accessible from a mobile device, Leaf offers secure storage and transport of assets across borders—no smartphone required. Blockchain technology and biometric authentication make Leaf’s platform extremely secure, transparent, convenient, and inexpensive. The refugee can travel without cash and rest assured that their money will be safe and accessible no matter where they go. Friends and family around the world can also deposit into the refugee’s account. By allowing customers to retain more value and increasing accessible funds through remittances, Leaf gives users a better start with financial security and lessens their dependence on host countries. Leaf ultimately creates an economic identity that customers can use to establish themselves in a new country.

The UN has designated 68.5 million people as forcibly displaced, with another 100 million at risk of becoming refugees. Often, refugees’ only option is to forfeit value or carry cash across borders when forced to flee, which is dangerous, inconvenient, and expensive to exchange, making them targets in the short-term and economically excluded in the long-term.

Refugees also frequently rely on international remittances but lack a way to receive them safely. International money transfer solutions still leave the recipient carrying cash and are unattainable for those who cannot afford to pay high fees (up to 20%). Mobile banking/app-based solutions do not work for the 2.4 billion people around the world still using feature phones. Aid agencies and banks do not provide financial services efficiently to this population.  Lack of access to their own assets, friends and family who are willing to send money, and the formal financial system ultimately causes the loss of their economic identity. 

Migrants and small traders experience many of the same financial needs as refugees. They are also put at risk by carrying cash and lack accessible, digital financial services. Over 500 million people in Africa alone rely on cross-border trade for income.

Leaf is a global, virtual bank for vulnerable populations, allowing for the storage and transport of assets across borders from a mobile device (without a smartphone). Refugees can receive remittances and journey without cash, knowing accounts are safe and accessible globally. Leaf protects customers’ savings through blockchain technology without exposure to volatile cryptocurrencies. Identity is linked through biometric authentication so that a refugee could lose their documentation and still access their finances. 

Sixty percent of conflict zones already use mobile money, a USSD-based service that allows people to store money on their phone, pay for items, and send money without a smartphone—allowing Leaf to operate almost entirely virtually. Thousands of kiosks convert cash in and out of mobile money but the money cannot cross borders. Leaf solves this problem by integrating with mobile money and creating a digital wallet that stays with the refugee wherever they go. If the customer does not have a mobile money account, they can deposit or withdraw funds at any Western Union location (expected 2020). Opening a Leaf account creates a corridor for others to contribute to refugees’ accounts, making remittances immediate, accessible, and affordable, ultimately giving users a better start to their new life.

Leaf’s first market is the 150,000 refugees in Rwanda/Uganda with access to mobile money, plus 22,000 small traders on the border of Rwanda/DRC. The refugee population in this border area is tied to the 41,000 Congolese and Rwandans that have resettled in the US. Resettled refugees pay up to 20% in fees to send money home, making them eager for convenient, affordable money transfer solutions. There are over 500 million small cross-border traders in East Africa that experience many of the same financial needs as refugees: being forced to carry cash and pay bribes. Border guards also take advantage of traders. Unlike refugees, traders cross the border frequently and are generally more financially literate. Leaf’s 350+ customer interviews revealed that users are asked for bribes but let go if not carrying physical cash. The value added through increasing physical security and peace of mind during a vulnerable transition cannot be overestimated. Leaf’s 100 beta users reported feeling safe for the first time when crossing a border because they did not need to carry cash. Refugees reported that Leaf would make them less dependent upon host nations and foreign aid, decreasing tension over resources in camps.

Leaf allows refugees to retain their savings when crossing borders and opens a path for international remittances, creating a documented biometric and economic identity in the process. Digitizing financial services increases the amount of money available to refugees while increasing their financial security. 

Leaf is exploring providing micro-loans to users. As users prove creditworthiness, loan size increases for the purchase of productive business assets. Leaf is uniquely positioned to offer this type of services because of its access to the refugee market, the wallet usage and data, and the technical capabilities to send small amounts of money cheaply across borders.

Leaf offers both money storage over time and the transport of money across borders. Competitors usually offer one or the other, and very few extend services to refugees. Additionally, existing solutions require a smartphone or internet access while Leaf operates on feature phones. Leaf is uniquely tailored to refugees’ and migrants’ needs and values: affordability, convenience, immediacy, accessibility, and physical security.

 Potential competitors include banks, mobile money operators, money transfer services, international remittance apps, and the status quo (carrying cash). Formal financial institutions often will not serve refugees. Most refugees are unbanked (66% in Africa) before fleeing because of distrust of banks. Mobile money does not cross borders. Money transfer services like Moneygram charge exorbitant fees and still leave refugees carrying cash. International remittance apps like Wave Money currently do not serve Rwanda/Congo and require a smartphone.

 The use of blockchain technology and a virtual model makes Leaf cheaper to operate than brick-and-mortar financial services companies. By making at least one half of the transaction digital, Leaf removes many of the costs associated with money transfer. Settlement and crossborder costs are nearly zero because of Leaf’s innovative blockchain system. This system allows users to benefit from global asset portability and low fees but does not expose them to the volatility of cryptocurrencies or sacrifice compliance. Leaf is the only digital wallet that eliminates the need to carry cash, stays with customers across borders, and doesn’t require a smartphone.

Leaf creates individual blockchain-based wallets for users on the Stellar distributed ledger and builds an accessible means of access through USSD technology on feature phones. The company is the first in the world to deploy this type of integration. Leaf’s USSD application allows mobile devices to send and receive text on basic cellular networks using numeric inputs. The USSD application is powered by a blockchain back-end and integration with SMS and local mobile money networks. The use of blockchain makes the application secure and transparent, while USSD and SMS allow the service to be used on mobile phones without advanced functions like the internet, ensuring scalability. Security will be enhanced by biometric authentication that does not require storing customers’ biometric data. 

Leaf uses the Stellar blockchain for transaction storage and to facilitate cross-border asset transfer. Stellar helps dramatically reduce transaction costs, improve security, facilitate instantaneous transactions, and enhance transparency as a back-end system. Stellar is a decentralized, multi-currency payment backend developed by the team that started the successful money transfer blockchain platform Ripple. Leaf creates Stellar accounts and federated addresses on behalf of users, resulting in individual custodial wallets. Leaf uses custom assets on Stellar pegged to regional fiat currencies and backed 1:1 in a bank (like typical e-value). This approach allows Leaf to access the benefits of blockchain without exposing users to volatility or the risk of holding cryptocurrency.

Leaf has tested its assumptions/pricing model through a successful beta and 350 customer interviews in the US, Africa, and Latin America. The interviews showed the potential for a scalable, sustainable business to address cross-border financial needs. The beta showed market demand and technical viability.

Leaf’s beta went live in September 2019 with an Android app and USSD platform for basic phones. Three refugees in Uganda advertised Leaf organically to reach 80 users and complete 700 transactions in the first four weeks (avg. transaction size: $13.50). Test users reported feeling safe crossing the border for the first time. Leaf is the first to successfully deploy a blockchain-based financial solution for people without smartphones. 

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Refugees with limited savings often struggle to earn steady incomes and meet basic needs. The benefits of increasing savings for vulnerable communities are well documented. UNICEF’s ARCC II program provides cash transfers to refugees in DRC’s North Kivu region. A 2017 evaluation demonstrated its benefits through randomized control trials. The evaluation showed that increasing savings and access to cash helps refugees invest more in productive assets such as farm labor, fertilizer, and inputs to start a business, or by enabling household members to work. Refugees earned $4.50 more per month than compared households. Refugees were able to engage in positive coping strategies in the face of future shocks and were 21% more likely to access healthcare than the control group. A study of FINCA’s microlending operation in Uganda also noted how access to funds smoothes refugees’ re-entry into communities.

Leaf’s primary impact metric is the ratio of previously accessible funds to increased accessible funds with Leaf. This tracks increase in personal wealth retained and an increase in wealth contributed into a customer’s account by others. Leaf’s goal is to increase a refugee’s accessible funds by 60% three months after settlement in a new country. Secondary metrics include: 1) Client households provided new access (IRIS PI2845), target 7,400 in year one; 2) Total deposits (IRIS FP9083), target $10,000,000 by end of year one; 3) Decreased dependence upon host state (metric in the number of days that compares increased accessible funds to daily assistance from UNHCR/WFP), target 160. Finally, Leaf uses CFPB’s financial well-being scale to capture lives positively affected through Leaf’s services. Leaf aims for an 11 point increase (out of 100) in financial well-being after using Leaf’s services for six months. Research shows the positive long-term impact of access to financial services on areas of life such as health and education. While this is outside the scope of Leaf’s ability to measure during the grant period, Leaf is considering approximations for this ripple effect.

Leaf’s smartphone and USSD products are live with a beta group in Rwanda, Uganda, Kenya, Tanzania, and Nigeria with an expected full-scale launch in summer 2020. The product is fairly mature; feedback from the beta led to new features and Leaf is continually adding new integrations to broaden its pay-in/pay-out network.

 Leaf estimates that it will directly impact 7,821 users during the first 12 months. At the end of year five, Leaf anticipates it will directly impact 350,000 people.

Leaf’s goals for the next 12 months are to do a full launch in East Africa, implement its revenue model, and integrate with Western Union to use its retail locations as Leaf cash-in/out points. At the end of year one, Leaf anticipates breaking even with 7,400 customers. It will expand its footprint in Africa through an additional telco aggregator integration (giving access to 18 countries including DR Congo, Burundi, and South Sudan), and expand to Colombia/Venezuela through a partnership with a financial institution. 

Leaf will scale to other markets once establishing itself in Africa. Afghanistan and Pakistan have similar challenges with refugees, migrants, and 100 million people at risk of being displaced by 2040. Even if all global conflict were to cease, hundreds of millions of informal cross-border traders could benefit from Leaf’s services. Over 2.4 billion people still use feature phones and lack access to digital financial services. Almost 2 billion people are unbanked. As Leaf customers enter the formal economy, Leaf can continue to serve them through expanding its product base to meet their full spectrum of financial needs, including loans, insurance, and credit.

If Leaf’s financial assumptions hold and it can prevent just 8% of fees currently being paid by its potential customers, it will preserve $33.8MM of value in 5 years with just 350,000 customers. An economic identity complete with a credit history will help them establish businesses and livelihoods in their new country.

Leaf’s barriers include external dependencies on partners in new markets, abiding regulatory requirements, management of users’ data, and adapting to diverse cultural norms.

Leaf must work with a licensed financial institution partner in each new market (either a bank or payment services provider) or acquire its own money transfer and microfinance licenses ($350,000 cost). Leaf also must implement a model that conforms to international regulatory requirements, especially regarding new technology. Most perceived risk of blockchain is related to the cryptocurrency application of the technology rather than the underlying ledger and mechanics of asset storage/transfer. Leaf does not touch volatile/speculative cryptocurrencies and works within existing regulatory requirements.

Leaf must also gain users’ trust in relation to identity management, specifically collecting and storing personally identifiable data (PII) on two fronts: structured data (name, DOB, etc.) and unstructured data (biometrics). Leaf is mitigating this by hiring community advocates within refugee camps that can relate to Leaf’s customers and provide a human touchpoint to increase trust.

Though Leaf can offer services virtually, early research has shown that customers may prefer personal touchpoints for account creation and support. Leaf perceives that this is not a trust issue as much as a cultural communication preference. In addition to offering the product in local languages, Leaf can provide limited on-ground support.

Leaf has worked to mitigate risks across customer integrity, customer adoption, and its business model.

In terms of licensing, Leaf can use a partnership model in the meantime to operate in compliance with local and international regulations. Regarding new technology regulations, Leaf is only using the underlying properties of the blockchain for back-end transaction storage and does not touch cryptocurrency, which helps de-risk the model for authorities. If a government pauses all blockchain products for the time being, Leaf can operate through the current cash systems (less efficiently). Leaf’s management of PII follows all standard data protection and data privacy guidelines. Leaf is designed to be GDPR compliant. Users sign clear terms and conditions upon creating an account. Users maintain the right to be forgotten and data is never exposed publicly. Leaf uses a mix of best practice on-chain/off-chain identity management to ensure security.

To adapt to the cultural patterns of Leaf’s user base, Leaf will engage an agent network of support staff using an Uber-like model. Anyone with a smartphone who has completed basic training can help customers enroll using their own devices. Alternatively, Leaf will partner with telecoms to access existing agent networks, ultimately bolstering trust with face-to-face interactions.

Leaf also benefits from deep connections within the refugee community. Leaf’s CEO, Nat Robinson, spent nearly seven years starting and running a successful microfinance company in Kenya. Leaf’s CTO, Tori Samples, has fifteen years of personal experience working with resettled refugees in addition to a professional career in technology. Both speak Swahili. Relational trust becomes even more important in communities fragmented by trauma. 

The Leaf team consists of four full-time staff: CEO (Nat Robinson), CTO (Tori Samples), Lead Software Developer, and a Blockchain Developer. Four part-time staff include two Refugee Engagement Specialists, a Marketing Coordinator, and a Research Fellow. Leaf has also engaged a part-time Identity Management Consultant and a full-time summer intern who ran digital marketing for Google before entering Stanford’s MBA program. Leaf’s team is split between the US and Rwanda.

Leaf is equipped to lead this project because of its market expertise, experienced founders, and proven solution. The team has spent over 2 years laying the groundwork for its solution by conducting 350+ customer discovery interviews, building a tech product from scratch to meet refugees’ needs, working to obtain a letter of no objection from the Central Bank of Uganda, and relocating to East Africa. 

Leaf’s founders are passionate about this underserved population and have spent years getting to know its unique needs. Both are comfortable in East Africa and speak Swahili. Nat is the former CEO and founder of Juhudi Kilimo, which provides micro-asset financing to rural smallholder farmers in Kenya. In 5 years, Nat raised $22M+ in debt and equity, expanded to 20 field offices, and contributed to $30M+ in life-changing loans for 50K+ people. Juhudi Kilimo was recognized in 2011 at the World Economic Forum with the Social Entrepreneur of the Year Award, CIO Magazine's CIO 100 list, and was Africa's first certified B-Corporation. Nat previously worked for Accenture and has a JD/MBA from Vanderbilt University.

Tori has a background in technology and 15 years of personal experience working with refugees. Tori was a Data Architect at HCA Healthcare for 6 years, where she designed and developed on some of the largest datasets in the world. She holds a patent-pending in claims-based longitudinal care summarization through Health Information Exchange. She has an MBA from Vanderbilt University and is currently based in Kigali.

Leaf has used partnerships to gain traction and ensure compliance and scalability. Leaf works with a fintech company, Clic.World, which provides technology back-end services to Leaf and has regulatory clearance through a partnership and integration with Opportunity Bank. Western Union invested in Leaf indirectly through the Techstars/Western Union startup accelerator. Leaf is currently working with WU on a proof of concept to use its retail locations as additional cash-in and out points for Leaf (approved by WU’s compliance team). Leaf uses Africa’s Talking as a hosting platform for its USSD product. Leaf has spoken with the World Food Programme and UNHCR to be added as a feeder system for cash assistance cards in Rwanda but has yet to formalize a partnership. Leaf has a partnership in DR Congo with a company called Flash CFC that will enable pay-in and pay-out in this country through mobile money. Leaf is also in talks with a telco aggregator that would expand its reach to an additional 18 countries. Leaf is in talks with two companies to provide loans to Leaf users for the purchase of productive business assets. A credit scoring and data analytics company, Branch International, to evaluate potential “nano-loans” for customers that range from $2-$25 and the crowdsourcing lender, Kiva.org, to provide proven borrowers loans above $25.

Leaf’s value proposition is to 1) reduce the risk of carrying cash by digitizing cash-based transactions; 2) provide a digital method of storing value to people typically unbanked; 3) make money transfer affordable and accessible, even to people without smartphones; 4) create an economic identity for customers that can be used to access formal financial services. 

Leaf has three primary revenue streams to smooth revenue and ensure short and long-term profit. 1) Customers pay 1%-2% in transaction fees upon a cash withdrawal, thereby shifting costs to when the refugee is at a point of security rather than vulnerability (free to deposit). Friends and family abroad sending money to another person will also incur transaction fees. 2) Leaf can provide a competitive exchange rate while making a 3%-4% spread. Leaf will receive a better exchange rate from a bank as an institution than an individual would at a foreign exchange bureau or on the street, creating a spread opportunity. 3) The bulk of revenue will come from the return on the savings float during the 6-18 months a refugee is in transit. It is an opportunity cost for customers but does not involve a fee. Leaf can safely protect customers’ money in low-risk investments and still profit from the return. Investing regionally in-market will spur the local economy and increase Leaf’s average profit (eg. stable 5.5% quarterly return on treasury notes in Rwanda).

Leaf’s commercial revenue model will make it sustainable long-term. Funding is needed to get the service off the ground but Leaf can start operating sustainably as soon as it officially launches. Leaf has tested its assumptions/pricing model through a successful beta and 350 customer interviews that showed the potential for a scalable, sustainable business to address cross-border financial needs as well as market demand and technical viability.

Leaf’s mix of revenue streams ensures short and long-term profit. At 4% annual return with a $85 account balance and 159 transactions per year at 1.0% transaction fee and 4.0% forex spread, Leaf expects to earn $200 in revenue per customer per year. Due to low operational costs from completely virtual operations and new technology, Leaf projects it will break even at 7,400 accounts at the beginning of year two. This operating model is much more sustainable than a traditional brick-and-mortar model used by many financial services companies and represents a significant opportunity to be on the leading edge of digitization within emerging markets.

Leaf will scale to other markets once establishing itself in Africa. Even if all global conflict were to cease, hundreds of millions of informal cross-border traders could benefit from Leaf’s services. Over 2.4 billion people still use feature phones and lack access to digital financial services. Almost 2 billion people are unbanked. As Leaf customers enter the formal economy, Leaf can grow with its customers and offer loans, insurance, credit.

Leaf is applying to Solve to utilize its cross-sector community. Solve’s principles of an open innovation platform studying how people and computers can be connected is directly in line with Leaf’s ultimate goal: to use innovative technology to increase the quality of life for the underprivileged and underserved.

Leaf needs a minimum of two partnerships in each new market: a financial institution to hold funds and payments services provider (PSP) to move money in and out of the system. By tapping into Solve’s vast network, Leaf can locate these partners in new markets and ensure compliance. The biggest impact is the technical expertise offered by Solve and the broader network. As the ever-evolving blockchain technology is critical to Leaf’s backend, technical expertise to evaluate the usage and execution is something of great value that Solve can offer.

From a regulatory perspective, Leaf’s needs are unique to each country and consist of banking, money transfer, anti-money laundering, and data privacy. Having licensed partners or professionals with compliance experience is important to helping Leaf navigate these risks. 

Leaf is continuing to test its revenue streams and is seeking support to evaluate each option. Fundraising is also critical for the business at this early stage and Leaf could benefit from any additional support to continue sourcing investment. 

Digital customer acquisition is more important than ever before in a post-COVID world. Mentors or partners with experience rolling out digital marketing campaigns and supporting customers digitally will help Leaf to acquire and retain its customers.

Leaf is interested in the work of MIT’s Digital Currency Initiative. A collaboration between Leaf and MIT’s DCI would be beneficial to both parties through exploring use cases of the technology with society at large.

Leaf sees potential for partnerships with the Solver projects focused in East Africa. Leaf is interested in a partnership with Lynk and their efforts to connect informal workers- who tend to be unbanked- with new clients. A partnership between Leaf and Lync will improve Lynk’s platform by allowing seamless, digital payments, and will allow Leaf to tap into a new customer segment, all while creating the users economic identity and increasing their security. 

TruTrade, a Solve company, helps rural smallholder farmers receive fair prices on their crops via mobile money. Leaf sees an opportunity here to expand the farmers and TruTrade’s reach by an integration with Leaf, ultimately easing the payment process of cross-border deals for farmers and traders.

Leaf is currently providing a financial solution that was designed for refugees. Leaf stores and transports assets across borders from a mobile device—no smartphone required. Refugees can digitally store savings, receive deposits from others abroad, and manage money from a mobile device no matter where they go. Refugees can journey without cash, knowing accounts are safe and accessible globally. Leaf protects customers’ savings through blockchain technology without exposure to the volatility of cryptocurrency. By allowing customers to retain more value and increasing accessible funds through remittances, Leaf gives users a better start with financial security and lessens their dependence on host countries and foreign aid, ultimately creating an economic identity that customers can use to establish themselves in a new country.

Leaf is the first live, blockchain-based financial solution for people without smartphones. Blockchain and a cloud computing tech stack secure and power Leaf’s back-end, while USSD allows the service to be used on feature phones. Any GSM-compliant phone can run USSD apps on 2G by dialing a three-digit shortcode.

Leaf will use the prize money to increase customer acquisition through digital marketing channels such as WhatsApp and Facebook (172 million users) to catalyze the process of customer acquisition and reach its breakeven point. Non-digital channels such as print advertising at bus stations and radio ads will supplement the digital strategy. Leaf’s marketing will lay the groundwork to reach 100,000 users in the first 2 years. 

Leaf is exploring providing micro-loans to users to develop them as entrepreneurs. As users prove their creditworthiness, the loan size can increase for the purchase of productive business assets. Leaf is in a unique position to offer this type of financial services structure because of the access to the refugee market, the wallet usage and data, and the technical capabilities to send small amounts of money ($10 or less) cheaply across borders between the wallets. 

Nat Robinson, Leaf’s CEO, founded Juhudi Kilimo, a successful microfinance company in Kenya that is still operating today. Research shows that micro-loans for productive assets alleviates poverty. An estimated 25% of microfinance clients did well enough to expand and diversify their businesses and significantly increase their income and assets. Juhudi Kilimo estimated that every microloan of $1 USD (or 87 Kenyan Shillings) provided a social-economic value of  $46 USD (or 4,048 Kenyan Shillings)—creating an economic chain that benefitted borrowers, their employees, and their dependents.  This impact is significant in a country where the annual average per capita income is  $1,800 (USD). Leaf can provide a similar asset-financing business to refugees and demonstrate similar levels of economic development for entrepreneurs. Microlending allows the true bottom of the pyramid to create economic identities and provides them access to necessary capital to fuel their entrepreneurial endeavors.

Leaf’s total addressable market is the 68.5 million people the UN has designated as forcibly displaced, plus the additional 100 million living at risk of becoming displaced, plus over 500 million small cross-border traders in East Africa. Displaced people and those carrying cash across borders are often excluded from the formal financial system. A common theme is that they lack the ability to safely store and transport assets across borders. Providing money storage and transport services to refugees represents an untapped $42B annual market opportunity. 

Leaf is working to serve refugees and migrants all over the world through a partnership with Western Union to use its retail locations as Leaf cash-in/out points  (already approved by Western Union’s compliance team).  Beyond Africa, border areas in Colombia/Venezuela, Myanmar/Bangladesh, and Afghanistan/Pakistan have similar challenges with refugees, migrants, and the 100 million people at risk of being displaced by 2040. The delivery model only requires cellular infrastructure and feature phones. Leaf has already started laying the groundwork with partners in Colombia to begin serving the Venezuelan market there. Leaf will use lessons learned in East Africa to inform its distribution strategy in new geographies. It will also be able to grow with and retain customers as it expands its service offering to include microloans, asset finance, and insurance. These services will be incredibly impactful, eventually aiming to reach the two billion people still unbanked in the world today.