You may remember Banco Maré from our article on The Catalyst Fund, the Brasilian blockchain powered digital financial services platform for low and moderate income consumers living in the favelas. In this article we will dive a bit deeper into the company aiming to bank the unbanked and reduce risk for the at risk.
According to the Brazilian Institute of Geography and Statistic (IBGE), there are 55 million unbanked people in Brazil, of this, 11 million live in favelas: Banco Maré’s target market. The vast majority of the population of these favelas are overlooked by traditional financial institutions due to both their precarious location (banks are reluctant to set up branches in favelas due to severe security risks) and lack of registered credit history. Vitor Kneipp, co-founder of Maré has explained how “Violence is the worst problem you can have in a society, It disrupts trust, which is a vital element of capitalism.” The lack of a bank branch means Brazilians who need to pay their bills are forced to travel “many miles to pay their bills. The journey can involve crossing territories of different criminal factions, which can be dangerous, not to mention costly in both time and money.”
Alexander Albuquerque, the other co-owner of Maré came across a potential solution to the problem. ‘He brought his laptop into favelas, routed it through his mobile, and started paying peoples bills for them. In the first month, this amounted to about £15. Fourteen months later, Maré was processing £160,000 a month for 6,000 customers who are either using our app, or visiting one of our four agencies in the favelas.’
‘The culture within the favelas is one in which people put their faith in the people they know. So to trust that a payment has been made, without seeing the other person or getting a paper receipt does not come easily to them. We are getting around this problem by staffing our agencies with local people, whom the other residents can recognise. The staff encourage customers to migrate from making payments in agencies, to using the app, which allows the agencies to focus their attention on bringing in new customers.’ – Vitor Kneipp
Banco Maré, with its motto “A Simple Bank for a Simple Life”, offers both a physical presence in the favelas through the local commerce and an accessible financial services platform accessed through a mobile app. Through the app, users can pay bills, buy goods and services from local stores, make P2P transfers, and view account statements. The bank has also developed its own cryptocurrency called Palafita, which is purchase-able at local Kiosks.
The global poor continues to be a relatively un-touched market, despite its hugely profitable potential, both financially and socially. Banco Maré continues to grow at an encouraging rate, and has been named amongst the top 15 most disruptive FinTech organisations in Brazil by Caixa, the country’s largest state bank.