During SIBOS 2015 in Singapore there was a co-creation session about the refugee crisis (as part of a series on financial inclusion) during which an audacious goal was mooted – to create a Refugee Bank.
A Refugee Bank could be an on ramp to a productive life in new societies for refugees. It can also be a petri dish for innovation related to digital consumer banking. This will be a place to try out innovation around Digital Identity, mobile wallets, Blockchain etc. The Underbanked is a huge market and a lucrative business opportunity as well as an opportunity to help people. Innovation usually first gets traction among those excluded from mainstream services and Refugees are as excluded as you can get.
Will a Refugee Bank be up and running by the time SIBOS comes to Geneva in September 2016?
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There are so many issues related to the mission of creating a refugee bank and these issues are complex because they sit at the intersection of technology and business and regulation. So we plan a series of research notes covering one topic at a time.
Uport
This first note covers digital identity, which is the most tricky foundational issue for refugees. Most identity artifacts used for KYC are government issued (passport, drivers license) or assume a fixed residence (utility bill).
When I met @ethereumjoseph and his colleagues @consensys a few weeks ago in New York, he mentioned the work they were doing around digital identity called Uport.
Uport is also a wallet.
That is a practical combination for refugees. A digital wallet for those in the West is a nice to have luxury but we can do without it. For a refugee a digital wallet might be the only way they can receive cash from remote people – and that might be the only way to feed your family that day. A wallet must be connected to a digital identity, so that money is sent to the right person.
Digital Identity is the foundation of decentralization.
If you can prove who you are, you can store and exchange assets via the blockchain. Every person can be their own bank/custodian. That is as crazy a vision as Bill Gates talking about a PC in every home in 1976. There is a reason why Microsoft worked so hard to get Passport established – the upside is massive.
There is also a reason why any company that gets close to this prize – whether it is Facebook or Google or Apple or Microsoft – eventually gets consumer pushback. Microsoft finally gave up on Passport. Facebook and Google are the closest to realizing the level of commercial control that Microsoft wanted from Passport. Apple, threatened by Facebook and Google’s control over the Centralized Internet, decided it was worth upsetting the US Government by taking a stand on privacy.
Privacy has become the third rail of the Centralized Internet; this is the Internet where we are the product.
In the coming Decentralized Internet, our Identity becomes the first asset we store on the Blockhain, the foundational asset that allows us to store other assets (and because of that control, to be in charge of our relationship with banks and other commercial suppliers).
As Ethereum’s Vitalik Buterin points out:
“10 years from now it may be harder to change identity providers than it is to change countries”
People can become refugees without even leaving their country. This was brought vividly home to me when waiting in line at a Post Office in NYC and witnessing the desperation of a homeless person being refused a PO Box because she had no physical address. Without that PO Box she would be refused the job she had applied for. She would be an unperson without any official identity. She would be stateless. She would be a refugee despite (probably) having been born in America.
Apart from Uport, I have found two other Blockchain based ID solutions:
These are the three key requirements of a Blockchain based ID:
- Trustless and decentralized. Your Identity is not under the control of any institution (either Government or commercial).
- Immutable. Nobody can change a record; they can only append a new record. For example, all previous passports will be on the Blockchain.
- Granular Control. For example, you can have my driver’s license but not my passport or medical records and you can only have it for this one transaction.
That is why we focus on refugees as being the sharp end of Digital ID, where new concepts may get initial traction.
Who Issues ID?
A government issued ID is something we take for granted in the West. For the billions among the global Unbanked, digital identity is the on ramp to society and this cannot be solved by technology alone; Government needs to be actively involved. In India they are tackling this through the Unique Identification Authority of India.
For the Unbanked in India, they have a Government which can issue an ID if they can figure our the daunting logistics of doing this at scale.
What if you are a refugee? You have no Government to look after your interests. You have no official ID and no entity to turn to who can create on for you.
That is the sort of issue we aim to shine a light on in this series on creating a Refugee Bank.
Please use comments to add more knowledge and insight to this issue. We would love to hear from anybody with experience in this area (either the technology or working with refugees).
Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought-leader.
A Finnish Fintech that is helping refugees get prepaid cards is MONI (www.moni.com). The Finnish Immigration Service has chosen the startup for one of its pilot programs to provide refugees with both MONI Prepaid MasterCards and mobile-first, customisable payment accounts. Do these prepaid cards act as IDs?
Sweden and Estonia, have proven that they can give birth to companies that have large impact. Will Finland be next?
Greece is more likely to be incubating, as we speak.
An interesting solution in the UK for accounting opening is Monese (https://www.monese.com/). Does require a Passport which can be an issue from a refugee standpoint; however, it is a simple account opening / verification process.
An initiative like this would be a huge step forward for refugees. The irony of being a refugee in one’s own country is also mildly disturbing but shockingly plausible, as you witnessed first hand. To me this highlights how these sorts of initiatives also greatly benefit the underbanked, or those who find it difficult to migrate their identity between financial institutions.
A classic example is a small business, who has set-up as a partnership or trust (extremely common). Thanks to AML-CTF laws, identification of beneficial owners can become a complex and almost nightmarish paper based exercise, and a massive barrier to new fintech banking entrants looking to identify new clients. The most recent Financial Systems Inquiry here in Australia recommended the government ‘develop a national strategy for a federated-style model of trusted digital identities’. Lots of opportunity in this sector for private enterprise to work with public to develop something on the blockchain platform. Will be watching this space with interest.
http://fsi.gov.au/publications/final-report/chapter-3/digital-identity/
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The M Pesa, a mobile banking service tied to your mobile phone service provider in Kenya has been very effective. Here’s how it works: “Customers buy credit on their mobile phone accounts to pay bills or buy products. To transfer money to a person, merchant, or government agency, all they need is the creditor’s related phone number. The debits are deducted directly from the mobile phone account, with no need to fuss over a bank account. Customers give debtors their mobile number to use in settling up; when a debt payment comes in, their mobile phone account is credited.” Source: https://www.bloomberg.com/news/articles/2013-03-06/what-africa-can-teach-us-about-the-future-of-banking
This can be applied to refugees who need to put food on the table and even receive money for work they have done.
Nothing stops a government from issuing a blockchain ID.
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