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, hashed identity, and biometric authentication make Leaf’s platform extremely secure, transparent, and accessible. The refugee can travel without cash and rest assured that their money will be safe and accessible no matter where they go. 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 and hashed verifiable credentials so that a refugee could lose their documentation or phone and still access their finances. 

60% 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. 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 Q4 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 identity management system will create decentralized, secure identities based on hashed verifiable identity credentials and available to those without smartphones, allowing for heightened PII security and privacy. Decentralization of the system eliminates the requirement for centralized authorities. This gives users power to directly control their digital identifiers (and others, including Leaf, the ability to help build the identity). This identity is interoperable between the worlds of centralized, federated, and decentralized identifiers. If a phone/documentation is lost, the user is still able to reconnect to Leaf through Leaf's identity system using a broad range of verifiable credentials.

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 is the first to successfully deploy a product based on the integration of blockchain and USSD/SMS technology. Leaf’s core technology is a USSD application, which allows mobile devices to send and receive text from an application. Leaf’s novel application is powered by a blockchain back-end and integration with SMS. 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 internet. Security will be enhanced by biometric authentication that does not require storing customers’ biometric data. By using existing mobile networks as the infrastructure for providing services, Leaf can operate almost entirely virtually instead of relying on a heavy physical presence. This allows for the creation of a money transfer system accessible to those without internet or smartphones that is significantly faster, more affordable, and more secure than any high-tech option available today. All this will help migrants and refugees enter the formal economy through innovative use of technology.

Leaf uses blockchain technology for transaction storage and to facilitate cross-border asset transfer. Blockchain helps dramatically reduce transaction costs, improve security, facilitate instantaneous transactions, and enhance transparency as a back-end system. Initial development of the platform is being conducted on the open-source Stellar distributed ledger platform. Leaf creates Stellar accounts and federated addresses on behalf of users, resulting in individual custodial wallets.

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 initial target market is East Africa, a region where internet connectivity is inconsistent and the standard for government issued IDs is lacking. Leaf’s solution allows those with fewer credentials to create full, verified identities through verifiable credentials and deterministic, distributed hashes that allow external entities to authenticate identity without exposing PII.

Identification systems may find benefit in incorporating Leaf for two primary reasons: supplementing digital identity through Leaf’s identity management system and expanding access to financial services for people with limited identity. Because Leaf is built to W3C standards, it can send and receive data with other systems built to the same standard. Identity systems often struggle to translate value to the real world once creating a digital identity for participants. Leaf can consume that digital identity, add its own information if possible, and start offering participants digital banking services (savings and remittances). Leaf will add transaction data as people use its system, supplementing a holistic digital identity with economic and financial identity.

As this economic identity grows, Leaf can facilitate handing over the customer to formal financial institutions and adjacent services that typically would not serve these customers today.

Leaf has designed its solution to be extremely accessible and transparent to users, partners, and funders.

Leaf is an integration hub with a core competency in sending and receiving data securely with outside entities. Leaf has experience creating and consuming public-facing APIs with partners across multiple verticals. Documentation on how to interface with Leaf will be publicly available. An outside entity looking to integrate with Leaf can do so through a token-based authentication system in Leaf’s public sandbox and private production environments. In addition to transaction history, Leaf will have various types of data on its customers (structured, unstructured, metadata, etc.) that will be easily transferable to outside partners to facilitate banking, cash assistance, loans, employment, etc., assuming customer approval of the data transfer. This data can be useful in creating a broader digital identity. Leaf streamlines and standardizes economic identities for people from all over the word with different identifiers (government documents, KYC information, business documents), making the process smoother when migrating the data to a digital identification system.

Specific to identity, Leaf manages a complete digital identity as well as an independent hashed version. The independent hashed version can be stored in a distributed manner through a blockchain to verify identity data without storing multiple copies of PII. Any validator node on the blockchain will be able to authenticate Leaf customers’ identities through the hashes. The distributed nature and being built according to global W3C standards ensures access to identity even if Leaf is unavailable or down.

Leaf will have a public facing solution that allows people to verify their identity. The system is built according to W3C standard, meaning the identities themselves will be compatible with anyone else building to W3C. This allows the Leaf user’s identity to absorb information from any external source (approved by the user) to further build the base of identity data and avoid creating multiple disparate identities. These private yet interoperable DIDs (decentralized identities) will allow Leaf users to transition into the formal financial system with a complete verifiable identity and an economic history that Leaf has helped create and document. For external entities looking to integrate with Leaf’s core financial services, they will be able to access Leaf programmatically through an API with token-based authentication, depending on the type of service.

Leaf’s solution to intermittent internet access is to store identity information in many locations.  The obvious problem is that a Digital Identity is made up of data points containing personally identifiable information. The primary concern with this is customers’ safety, but there are a number of regulatory jurisdictions that also dictate how this information is secured.  

Leaf solves this problem by saving deterministic hashes created with salted identification data.  Salting data means adding a value that is not known outside of the entities allowed to access the data. This salting prevents others from being able to brute-force decode the hashes.  

Leaf’s identity services manage a complete digital identity, but also an independent hashed version. The independent hash version can be stored in local computers to verify identity data without storing multiple copies of PII. When connectivity is limited, the entity verifying identity can search the hashed database. If someone trying to establish their identity has the personally identifiable information and access to the salting algorithms, they can create the deterministic hashes stored in the detached database.  

If enough information can be matched to the hashed data, an identity match can be assumed.

The data added to the hash database can be government documents, KYC information, business documents, authoritative attestations, and any other information useful in identification.

Users do not need to understand any of this in order to use Leaf’s core services or access their identity. Leaf’s platform is available over USSD and in local languages to make it accessible.

Leaf completed a successful beta with 100 users and then limited functionality to revamp the wallet’s backend during COVID-19. The next product launch is anticipated in late August 2020. Over 1,200 refugees have already pre-registered for Leaf’s services.

Leaf estimates that it will directly impact 7,821 users during the first 12 months. At the end of year 5, 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), an Ecobank partnership (33 countries throughout Africa), and expand to Colombia/Venezuela/Chile through a partnership with a financial institution. 

Leaf will scale to other markets once established 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. 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 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. Leaf has run focus groups made up of the current 1,000 refugee pre-registrants to address the stress points regarding the collection of personal data.

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.

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: Nat Robinson (CEO), Tori Samples (CTO), Lead Software Developer, and a Blockchain Developer. Five 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. The Leaf team is distributed among the United States 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 is partnered with Beyonic/MFS Africa, an African payment processor licensed to collect and disburse funds. Funds travel from individual mobile money accounts to the Leaf system on Beyonic’s rails. MFS Africa connects more than 200 million mobile wallets on the continent through one API, while Beyonic focuses on domestic payments and collections coupled with secure front-end functionality. Leaf was recently named a finalist in the Ecobank Fintech Challenge, giving the company access to Ecobank’s 33 African markets and their API through a partnership. Leaf has also formalized  a partnership in DR Congo with a company called Flash CFC that gives Leaf access to a network of 2,500 agents. This will also enable pay-in and pay-out through mobile money in DRC.

Leaf completed the Western Union/Techstars startup accelerator program and is now formalizing a partnership with Western Union (already approved by WU’s compliance team) to use their retail locations as Leaf service points.

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 has received $565,908 since June 2017 in grants and investments from accelerator programs. Leaf won $44,000 of that through pitch competitions: LaunchTN competition (1st place, 06/2017), Vanderbilt University Sohr Grant (01/2018), SXSW “Best Bootstrap” award (03/2018), and PitchTX (03/2018). Leaf is a 2018 Catalyst Fund company (backed by The Gates Foundation and JPMorgan Chase), resulting in a $100,000 award and technical assistance in 2018 to increase access to financial services (05/2018). Leaf participated in the National Science Foundation’s (NSF) I-Corps program that grants $50,000 for customer discovery (11/2018). Leaf completed the Techstars/Western Union Accelerator in 2019, entailing an equity investment and convertible note ($145,000 combined). The company received a $225,000 SBIR grant for technical R&D (01/2020).

Leaf was recently awarded a $250,000 grant from Colorado’s Office of International Trade and Development office, which is pending while the company procures matching funds.

Leaf is procuring a capital injection of $1.3M through a combination of convertible debt and equity in 2020 to get us 30 months of operations, 66K customers and $8.5M revenue. $950,000 will be allocated to operations, including team growth (~$423,000), sales and marketing (~$281,000), compliance (~$170,000), and product development (~$76,000). Leaf will hire a Foreign Exchange/Risk Manager, East African Regional Director, Marketing Manager, Senior Developer, and customer support staff. The sales and marketing budget will be used for customer acquisition and partnership development. The compliance budget will focus on KYC/AML monitoring. Finally, the technical product budget will be used to develop Leaf’s donations and microloan platforms as well as blockchain development and maintenance. Leaf is currently negotiating the terms of a convertible note seed round.

Leaf projects $594,663 in operating expenses in the next 12 months. Leaf’s current cost drivers are team growth, sales and marketing, compliance and product development. 

Team growth ($264,778). Hiring additional engineering staff, a foreign exchange/risk manager, a regional sales director, a marketing manager, and a customer support team

Sales & Marketing ($175,895): Roll out customer acquisition initiatives and new partnership development

Compliance ($106,416): Expand current KYC/AML monitoring programs

Product development ($47,574): Build bulk payments feature, donations capabilities, microloans integration and enhance blockchain identity management system

Most of the tech build is complete and the cost of scaling the blockchain system is extremely low. Leaf does not need to build an agent network, though it will have limited on-ground support to bolster customer trust. Leaf’s partners span a variety of industries including aid agencies, telecom operators, and financial institutions. Leaf will continue to pay partners to avoid building its own rails and integrations, at least in the beginning. Leaf can eventually buy licenses to provide revenue flexibility in East Africa but will ride on partners’ regulatory rails as much as possible, especially short-term. Leaf’s cost buckets are mostly semi-variable and variable, with a small percentage of fixed costs to account for equipment, rent, and licensing. Salaries are Leaf’s largest semi-variable cost, followed by marketing and partnerships, and customer service support.  Variable costs including partner transaction fees, direct labor salaries, and cloud storage. Leaf’s cost structure can scale to meet global demand.

Leaf is applying to the Mission Billion Challenge Global Prize to utilize ID4D’s cross-sector community. ID4D’s goal to enable the underserved to access services through enhanced identification systems is 

in line with Leaf’s ultimate goal: to use innovative technology to increase access to services and livelihood  for underprivileged and underserved populations. 

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 of great value that Solve can offer.

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 in talks with the World Food Programme and UNHCR Rwanda but has yet to formalize a partnership. Leaf is interested in partnering with these aid agencies and governments to become the distribution channel for cash assistance cards. Leaf is able distribute funds at lower costs due to its ability to process small amounts of money very affordably and transparently.