MIT Solve

Solution Overview

Solution Name:

BlockPaisa

One-line solution summary:

We aim to support small and medium businesses by offering them digital banking services (banking app+credit card), and Online Marketplace.

Pitch your solution.

Small and medium businesses represent about 90% of all employer businesses, create 60-70% of all job opportunities and contribute to about 50% of GDP globally, yet they face many challenges.

Imagine you are a small business owner who is running a restaurant, your annual revenue is $20,000-$40,000. The pandemic has negatively affected your business. You are having problems in the following areas:

1. Your sales are decreasing
2. Your existing banking services charge high fees and are do no fit your needs
3. Your invoicing and bill payment is still manual: more money and time
4. Business expenses are ramping up

How BlockPaisa can help you:

1. Online Marketplace: increase your sales by selling online with minimum fees compared to all competitors, 3% commission
2. A debit card and a mobile banking app + in-app bill payment, mobile invoicing & business growth tracking dashboard
3. Zero-interest lending via a credit card

Film your elevator pitch.

What specific problem are you solving?

Worldwide over 730 million people live in extreme poverty, COVID 19 can add another 40-60million to the burden. A sustainable solution to end global poverty is to provide diverse sources of income; one can be connecting the unemployed with employment opportunities and the other is to help them start their own small businesses.

We see that a sustainable and effective approach is to support Small & Medium Enterprises (SMEs) who represent 90% of all businesses and create 60-70% of employment opportunities globally.

Globally there are over 400 million SMEs and 50% have unmet financial needs of $9+ trillion with access to no or poor banking/financial services. Our target customers are 1.2 million SMEs residing in Canada who have unmet financial needs and struggle with their existing banking services. A small number of them resort to a bank loan due to their low credit-score, high collateral requirement & high-interest rates. Similarly, 64% of SMEs struggle with their cashflows, and 69% dislike using their bank's mobile banking apps because of poor or insufficient features.

We interviewed 85 small businesses in Toronto; and found that 55% have decreasing sales, 40% lack financial means to run their businesses, and 5% lack technology and talent.

What is your solution?

We provide the following services to small and medium businesses in the first year:

1. Mobile Banking App: Regular banking services plus advanced features such as mobile invoicing, in-app bill payment, and a dashboard for small business owners to track their business profit, expenses, and revenue in real time (Link 2min video: | 1min video: )
2. Prepaid Card: Connected to their mobile banking app, they can load money onto their card and use it everywhere for their business-related expenses (transactional data is sent to their mobile app to create real time dashboard showing their business growth including expenses, profit, loss and revenue)
3. Online Multi-Vendor Marketplace: Small businesses can list their products and services and start selling online (Demo link: https://marketplace-blockpaisa.ca/)

In the SECOND year, along with what we provide in the first, we will also provide:

4. Small loans to SMEs: interest-free and collateral-free lending
5. Credit card: They will be provided with credit in the form of small loans via the credit card

Order of services launch:
May 2021: Marketplace is already launched
Q4 2021: Mobile Banking app and prepaid card launch

Q4 2022: Credit card and lending to small businesses

Who does your solution serve, and in what ways will the solution impact their lives?

Globally there are over 400 million SMEs and half of them of unmet financial needs of $9+ trillion dollars with access to no or poor banking/financial services. Our target customers are the 1.2 million SMEs residing in Canada who have unmet financial needs and who struggle with their existing banking services. We will start more locally with around 430K SMEs based in Ontario with a focus on brick-and-mortar type businesses. To be specific, we aim for Small and medium sized businesses from any sector (brick-and-mortar type) registered in Ontario (or anywhere else in Canada) whose annual revenue is at least $20,000 and above (no more than $25million) and have at least 5 employees or more (no more than 500).

We embarked on a customer discovery journey and interviewed 85 small businesses in Toronto; we found out that 55% of them have decreasing sales (mostly due to the pandemic), 40% lack financial means to run their businesses, and 5% lack technology and talent for their business growth

Our main customer acquisition strategy consists of direct reach out and face-to-face meeting with SMEs owners, as we believe this builds trust and strong relationship with our clients; this will allow us to hear their challenges from them first hand. Other channels can include word of mouth, social media, pop-up shows, community events, and accessing existing SME clients of banks who offer them services.

*Other Potential Market we are Testing*:

Similarly, we have done our customer discovery interviews with 50 small business owners in Afghanistan, and we are planning to reach clients in this emergent market with limited resources.

Progress: The customer discovery phase was started in October 2020, and we wrapped it up by February 2021. We conducted 50 customer discovery interviews with the help of two customer support workers (field workers) in Afghanistan. The majority of the interviews were conducted in the Kabul province in Afghanistan, and some were conducted with Afghan small business owners based in the two cities of Pakistan, Peshawar and Quetta (a large number of Afghani migrants live in these two cities).

Outcome of the Survey: Of the small and medium business owners that we interviewed, 50% were revenue generating and 50% were pre-revenue.

When this question was asked: “What are some major challenges you are facing now or have faced in the past regarding your business?” about 85.1% said decreasing sales and fewer customers; 72.3% said lack of financial means to setup, run or scale my business; about 12.8% said lack of digital skills and right talent.

Similarly, when they were asked: “When you need financial means or money to set up, run or grow your business (now or in the past), where do you seek it?” 89.4% said personal savings; 66% said family and friends; and it was surprising to know that only 2.1% was recorded for banks, credit unions and other (angel, VC, and crowdfunding).

We also found out that about 25.5% said they are using credit cards. When they were told about the services of BlockPaisa that consist of interest-free credit card, 95.7% said they need these services right now.

Which dimension of the Challenge does your solution most closely address?

Scale safe and private digital identity and financial tools to allow people and small businesses to thrive in the digital economy.

Explain how the problem you are addressing, the solution you have designed, and the population you are serving align with the Challenge.

We are focusing on this challenge:

"Scale safe and private digital identity and financial tools to allow people and small businesses to thrive in the digital economy"

How We are Aligned: our target population is small and medium businesses, and we aim to provide them with:

1) Digital e-commerce tools such as our Multi-Vendor Marketplace to sell their products and services: digital tools

2) Digital banking services which include of a mobile banking app and prepaid and credit card: financial tools.

Hence we strongly believe that our solution is in line with the challenge.

In what city, town, or region is your solution team headquartered?

Toronto, ON, Canada

What is your solution’s stage of development?

Prototype: A venture or organization building and testing its product, service, or business model.

Explain why you selected this stage of development for your solution.

We have selected the Prototype stage because we are beyond idea stage.

1) Our Mobile Banking App: 75% Complete and will be doing Beta-testing this July

(Link 2min Demo video: https://www.youtube.com/watch?v=aryF-gMvrWQ | 1min Demo video: https://www.youtube.com/watch?v=_qbshZ4Yeo0&t=2s )

2) Our Online Multi-Vendor Marketplace is launched and we are currently working on onboarding small businesses

(Demo link: https://marketplace-blockpaisa.ca/)

3) We have conducted 85 customer interviews in Toronto, and 50 customer interviews in Afghanistan

4) We have close to 200 early customer signups

5) KYC and AML process (have outsourced this with a third party solution called KYC-Chain)

6) Prepaid Card conversation is in progress with Peoples Trust Group as a banking partner

7) Have 18 people on the team with the core team working full time

8) Have received $35,000 ($30 in cash) grant from Lo Family Social Venture Fund

9) Member of University of Toronto Entrepreneurship: co-working space and mentorship

Who is the Team Lead for your solution?

Diva Turial as the CEO

More About Your Solution

If your solution has a website or an app, provide the links here:

Website: https://www.blockpaisa.ca/ LinkedIn: https://www.linkedin.com/company/blockpaisa/?viewAsMember=true

If you have additional video content that explains your solution, provide a YouTube or Vimeo link here:

Which of the following categories best describes your solution?

A new application of an existing technology

What makes your solution innovative?

Our Unique Advantage: Our solution is innovative as we are using blockchain in our mobile banking app and provide interest-free lending, and are different than our competitors in the following ways

1. Prices: we compete at very low prices, with no premium accounts or any hidden fees.

- Marketplace: simple and straightforward FREE for the first year, and as low as $1.99/month thereafter, and 3% commission on items sold, no items listing fee (lowest from all competitors)

- Mobile banking and prepaid debit card: only $1.99/month for all premium features for the first year, and $4.99/month thereafter, with no hidden fees

2. Targeting Niche Market that our competitors don't: all competitors mentioned below, none specifically provides services to brick-and-mortar type small businesses but our main focus is on them

3. Very Simple and Easy Customer Onboarding Process: We have given special importance to make the onboarding process very simple and easy for customers, as that is very important for them, and very profitable for us.

4. Comprehensive Service Package for small businesses: An online marketplace increasing their venues to sell more, plus a very simple, easy, and most useful digital banking comprising of in-app bill payment, mobile invoicing and growth tracking dashboard which none of our competitors does.

5. Interest-free Lending: higher interest rates of 5-30%+ with traditional lending which is a big deterrent for small businesses. We offer zero-interest loans. Instead of interest, we ask for only 1% of their annual revenue as our fee.

Please select the technologies currently used in your solution:

Artificial Intelligence / Machine Learning
Big Data
Blockchain

Select the key characteristics of your target population.

Women & Girls
Rural
Low-Income
Middle-Income
Minorities & Previously Excluded Populations

Which of the UN Sustainable Development Goals does your solution address?

1. No Poverty
2. Zero Hunger
8. Decent Work and Economic Growth
9. Industry, Innovation and Infrastructure

In which countries do you currently operate?

Canada

In which countries will you be operating within the next year?

Afghanistan

How many people does your solution currently serve? How many will it serve in one year? In five years?

We have currently 200 early customers signups

2021: will increase it to 500 signups

2025: 1-2million

How are you measuring your progress toward your impact goals?

included in the above question

About Your Team

What type of organization is your solution team?

For-profit, including B-Corp or similar models

How many people work on your solution team?

Co-founders: 3 full time

Business Development Team: 3 part-time

Marketing Team: 3 part time

Credit Risk Management Team: 3 part-time

Development team: 1 full time, 2 part time contract

Customer Discovery and Support Team: 3 part time and casual

How long have you been working on your solution?

8 months

How are you and your team well-positioned to deliver this solution?

Co-Founders:

MARKETING & OPERATION TEAM

1. TEDDY VAN EIJK | Masters in Disruptive Innovation | Masters in International Business | Operations

2. ANDREA SOLINAS | Masters in International Marketing | Masters in International Business

3. KALYANI KANWAR | Masters of Business Administration Digital Marketing | Social Media Marketing

CREDIT RISK MANAGEMENT TEAM

1. GUSTAVO MENA | Master of Business Administration | Masters in Disruptive Innovation | 10+ years’ experience in Credit Risk Analysis

2. FABIAN SCHWEINZER | Masters in Finance | Masters in Business Analytics | Auditing & Credit Risk Analysis Experience at KPMG

4. VINCENT TORRES ZELAYA | Masters in Finance | 10+ years’ experience in Credit Risk Management, Accounting & Auditing

BUSINESS DEVELOPMENT TEAM

1. VALENTIN VOELCKEL | Masters in Business Analytics | Masters in International Business | Data Science

2. LUCCIANO HERNANDEZ | Masters in Finance | Master of Business Administration

3. NOE URBINA | Masters in Business Analytics | Masters in Finance | Data Science

What is your approach to building a diverse, equitable, and inclusive leadership team?

Currently, our team represents over 10 different countries and cultures and speak 15+ languages.

Our approach is to bring people from diverse cultures and nations with different and complementary skills.

Our co-founders come from different countries as well

DIVA TURIAL (Afghanistan, Pakistan, Canada, US): Co-Founder & CEO | FEMALE

JULIO ZAVALA (Mexico, Boston): Co-Founder & CTO | MALE

ALEXEY SMIVIN (Russia, Switzerland, Sanfrancisco): Co-Founder & CFO | MALE

One of our top values is to make sure our team comes from very diverse backgrounds, because we believe that "diversity is always a strength"

Partnership & Prize Funding Opportunities

Why are you applying to Solve?

We hope to gain the following from SOLVE:

- Mentorship, guidance, and support on our prepaid card program (banking partnership, KYC, and AML)

- Network in the fintech industry (in payments and card program specifically)

- Access to mentors and advisors in the field who can regularly advise us

- Pre-seed funding if applicable

- introduction to investors and guidance on strategies to fundraise

Link to PITCH DECK: (we were not sure where else to share this, please the pitch deck if needed for better understanding of our solution)

https://drive.google.com/file/...

In which of the following areas do you most need partners or support?

Business model (e.g. product-market fit, strategy & development)
Financial (e.g. improving accounting practices, pitching to investors)
Public Relations (e.g. branding/marketing strategy, social and global media)
Product / Service Distribution (e.g. expanding client base)

Please explain in more detail here.

NA

What organizations would you like to partner with, and how would you like to partner with them?

We just happened to stumble upon this opportunity on the last day of its due date so we didn't find time to search for potential organizations or MIT faculty and initiatives, but we would love to partner with any relevant parties. If we were invited to the next step, we will find those and will reach for support and partnership.

Do you qualify for and would you like to be considered for The ASA Prize for Equitable Education? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

No, I do not wish to be considered for this prize, even if the prize funder is specifically interested in my solution

Do you qualify for and would you like to be considered for The Andan Prize for Innovation in Refugee Inclusion? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

No, I do not wish to be considered for this prize, even if the prize funder is specifically interested in my solution

Do you qualify for and would you like to be considered for The HP Prize for Advancing Digital Equity? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

Yes, I wish to apply for this prize

Explain how you are qualified for this prize. How will your team use The HP Prize for Advancing Digital Equity to advance your solution?

How We are Aligned: our target population is small and medium businesses, and we aim to provide them with:

1) Digital e-commerce tools such as our Multi-Vendor Marketplace to sell their products and services: digital tools

2) Digital banking services which include a mobile banking app and prepaid and credit card: financial tools.

Hence we strongly believe that our solution is in line with the challenge.

Do you qualify for and would you like to be considered for the Innovation for Women Prize? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

No, I do not wish to be considered for this prize, even if the prize funder is specifically interested in my solution

Do you qualify for and would you like to be considered for The AI for Humanity Prize? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

No, I do not wish to be considered for this prize, even if the prize funder is specifically interested in my solution

Do you qualify for and would you like to be considered for The GSR Prize? If you select Yes, explain how you are qualified for the prize in the additional question that appears.

Yes, I wish to apply for this prize

Explain how you are qualified for this prize. How will your team use The GSR Prize Prize to advance your solution?

Worldwide over 730million people live in extreme poverty, COVID 19 can add another 40-60million to the burden. A sustainable solution to end global poverty is to provide diverse sources of income to the people; one can be connecting the unemployed with employment opportunities and the other is to help them start their own small businesses.

We see that a sustainable and effective approach is to support Small & Medium Enterprises (SMEs) who represent 90% of all businesses globally, but what is more important is that they create 60-70% of employment opportunities in our communities. Hence supporting individuals to start their own small business, and supporting those who already have their business running will help in two ways, first, when more people start their own small business they can generate their own sources of income, and second, these small businesses will provide more job opportunities for those who are not able to start their own businesses.

How We are Aligned: We are using blockchain (hence Block-Paisa as our name) and we are focusing on small businesses as a means to alleviate global poverty and bring more income-generating activities to our communities. Our target population is small and medium businesses, and we aim to provide them with:

1) Digital e-commerce tools such as our Multi-Vendor-Marketplace to sell their products and services: digital tools

2) Digital banking services which include a mobile-banking app and prepaid and credit card: financial tools.

Hence we strongly believe that our solution is in line with the challenge.