Q&A: Wala CEO on tackling financial exclusion in emerging markets

Imagine life without access to crucial financial services, the convenience of having a bank account, the means to save towards a goal or put away money for a rainy day, or even the ability to send money to loved ones quickly and securely in emergencies.

This is a reality for billions of people living in developing and under-developed regions around the world.

Enter Wala, a Cape Town-based fintech startup on a mission to tackle financial exclusion using blockchain. Over the next five years, the company aims to provide zero-fee financial services to 3.5 billion unbanked consumers in emerging markets through its Wala Financial Platform.

Wala is set to start a sale for its Dala utility token on 25 October, with a maximum cap of $30-million

A whitepaper outlining Wala’s emerging market-focused expansion strategy, states that it takes into account local demand, consumer base and remittance flows.

Wala recently secured an equity investment from venture capital firm Newtown Partners. In addition, they are working with the VC firm in the launch of Dala, a new financial services utility.

The token sale which starts on 25 October aims to crowdfund $30-million and will issue participants with a share of 300 million Dala utility tokens.

Read more: Fintech startup Wala secures equity investment from Newtown Partners

But just how different is Wala’s approach to financial exclusion and what sets it apart?

“Many companies have tried and failed to attack this problem, often due to poor go-to-market, targeting the wrong set of consumers or attempting to replicate banks. Wala is different as it uses blockchain, rewards, and incentives in a novel way to target consumers who are unable to access financial services, or [are] disheartened by the traditional banking system, and on-board them in a value sharing way,” Newtown Partners marketing partner Inge Lok told Ventureburn.

Venturburn managed to chat with Wala’s founder Tricia Martinez (pictured) on how the startup began, how it amassed a financial services community of one million consumers across 100 countries, and its grand plan to tackle financial exclusion.

Ventureburn (VB): Can you tell us more about the founders?

Tricia Martinez (TM): I’m a serial entrepreneur and behavioural economist who has devoted my life to solving problems for under-served consumers around the world. My experience ranges from cash transfer solutions in Africa to small business micro-finance, to the development of an investment fund for under-served markets.

Prior to Wala, I built a cash transfer technology that provided universal income to subsistence farmers in Uganda and tracked the investment and financial well-being of its recipients. While spending my career in the financial inclusion space working directly with consumers in Sub-Saharan Africa, I have been exposed to the deeply-rooted complexities and barriers in the financial systems.

Having completed a Masters of Public Policy with a concentration in Behavioural Economics from the University of Chicago, I decided to take a different approach and began testing incentives models as a means to influence financial behaviour. From there, Wala was born.

My co-founder Samer Saab is a former consultant with expertise in product development, analytics, and process excellence. His prior experience includes consulting to large corporations across a flurry of functions including strategy, product development, process improvement, and incentive compensation.

Samer earned a Bachelor of Science and Engineering and Master of Science in Engineering in Industrial and Operations Engineering from the University of Michigan. We met at a business incubator in Chicago, 1871, while working on different startup endeavours. He founded Wala because of the belief that a simple, great product could solve one of the world’s largest problems.

VB: How did the idea behind Wala come about?

TM: Wala originated through my work directing unconditional cash transfers to subsistence farmers in Uganda. While on the ground, I observed that even though the mobile money technology and offerings were being utilised, the farmers were not securely storing their money.

Most individuals were withdrawing all of their funds and storing the amounts in a local village cash box. The limited access to affordable financial products and services proved to be the primary problem that stifled the potential growth for these consumers. No banks can reach these regions and mobile money is too expensive to justify sustained use.

To better understand the banking and financial service issues plaguing consumers, the team began interviewing rural and urban Ugandans using social platforms like WhatsApp and Facebook Messenger. Soon, men and women from all over began to seek out Wala for guidance on proper savings, investment, and loan advice with the hopes of bettering their financial standing.

Overwhelmed with the response, the team aggregated the influx of consumers into Facebook groups, which organically grew in the first month to 100 000 consumers, mainly in Kampala, Uganda’s burgeoning capital with over 1.5 million inhabitants. This is when the red light went on.

VB: How was the Wala Financial Platform created?

TM: I was determined to understand whether I could help community members on their path towards financial prosperity by influencing behaviour. More specifically, I wondered whether incentives could influence financial behaviour.

At that point, Samer and I began running lotteries, financial quizzes, referral programs, and more, all with the underlying principle to push consumers to save more.

Through the testing and development of a rewards model, we grew the Wala communities to over one-million consumers from over 100 emerging markets.

These communities have enabled Wala to build a solution with and for consumers. The Wala Financial Platform was created thanks to testing multiple prototypes with community members and getting direct input from people globally.

VB: Can you tell us more about the Dala token?

TM: The Dala token is a general-purpose utility crypto-token created to enable free banking and remittances for emerging market consumers. The token is fractionally divisible and, by design, is more isolated from the volatility of local currencies and global cryptocurrencies.

Consumers will be able to engage in the Dala ecosystem by making transfers using their own token wallets, via the Wala Financial Platform, or through other partner applications that make use of the Dala API.

Dala is designed to bring 3.5 billion consumers into the financial system. Dala will enable this by using the unique ability of crypto-tokens to bootstrap network effects, increasing engagement and uptake of financial services, initially through the Wala Financial Platform. The reach of the Dala ecosystem will expand on the back of partnerships, across borders and financial services, enabling consumers and enterprises to transact, save, lend, and invest with Dala.

Using Africa as an example, there are currently 41 currencies used in the 54 African countries. This inhibits international remittances. In 2014, 74% of the global remittance value went to emerging markets. The World Bank estimates that consumers could save $16-billion annually if remittance prices were reduced by just five percent. When used on the Wala Financial Platform and through other partners, Dala will enable seamless transfer across borders, removing cost and access barriers.

Furthermore, it will enable simple transfers from local currency into American dollars and vice versa, solving the foreign currency remittance problem between developing and developed countries. Unlike many emerging markets’ de facto reserve currency, the US Dollar, Dala is highly divisible, encouraging its use for micro-transactions.

This is a massive advantage in many places like Sub-Saharan Africa, where the smallest denomination of US dollar notes in use is $1, or up to two percent of monthly income. Together, Wala and Dala can enable a zero-fee and borderless financial platform finally bringing 3.5 billion consumers into the financial system.

VB: Why are you doing a token sale?

TM: In order to enable a completely free and borderless financial system, a new utility crypto-token is required. This is why the Dala utility token is being issued. The Dala token will be used to reward platform-enhancing behaviors and will be redeemable for value-added services or exchangeable into fiat currency on the Wala Financial Platform.

As more users join the platform, more Dala is utilised, increasing its utility as network effects grow. As its utility increases, more users will be drawn to the platform, creating a robust token ecosystem.

We believe that a completely new token is needed in order to support the provision of financial services to emerging market consumers. The prices of existing cryptocurrencies, such as Bitcoin and Ethereum, are impacted by market forces that are mostly irrelevant to the Dala token economy.

A new token will reduce the impact of the price volatility that exists in the broader cryptocurrency markets on Dala and Wala users.

VB: In which African countries do you intend to roll it out, and when?

TM: Over the next year, Wala will roll out in Uganda in a multi-stage approach that is expected to ensure efficient uptake and growth of the Dala ecosystem. Uganda was selected as the initial launch market because it is where Wala began testing rewards.

We currently have a pipeline of 435 000 Ugandans waiting for launch and we have partnered with service providers to add more value in this market.

Over the next five years, we will expand to six regions globally. These regions span over 45 countries, focusing primarily on emerging markets. We will start in East Africa, move to Southern and Western Africa, and begin expanding to Asian and Latin American markets.

It is important for us to focus on markets with strong remittance flows as they will have significant demand for the Dala utility token.

VB: What have been the biggest challenges your startup has faced and how have you overcome them?

TM: The biggest challenge in releasing a financial product is that you often have to be a financial institution or work with a financial institution. On the whole, they can move slow, be hamstrung by red tape, and are often too conservative to even try something that they feel confident will work. Unfortunately, as gate keepers, financial institutions can end up being the biggest blockers of innovation for consumers.

We have overcome this challenge through sheer perseverance and by finding the right type of partners. Not all financial institutions are created equal and it took us some time to truly understand what a great partner looks like. We’re excited to announce our first major partner very soon.

VB: Lastly, after the token sale, what are Wala’s future plans?

TM: Obviously we have a lot of work to do to get Wala and Dala off the ground in our initial market. Our expansion is going to focus on two elements that increase the utility: creating more opportunities for use of Dala in a market and growing to new markets.

More products that facilitate transactions, more retail and financial institution partnerships, and more merchant adoption. We want to expand throughout Africa and continue pushing to other key emerging markets where Wala and Dala can fill this major need.

Featured image: Wala CEO and founder Tricia Martinez (Supplied)