AirFox aims to unlock capital and financial inclusion to the lower socio-economic classes

Airfox and AirToken vision and recursive product strategy

The last half of a two-part series on Airfox’s company vision and recursive product strategy

This is the second in a two-part series on Airfox’s Company Vision. In the first post, I took a look at my inspiration for the guiding principles for creating our company’s vision. Now I will walk you through the Airfox and AirToken Vision and Recursive Product Strategy for the next three years.

Problem

The poor stay poor because of three reasons:

1. The current banking infrastructure is inefficient and high touch. This results in high costs that hit the poor the hardest.
2. The poor have a higher cost of capital because traditional banking model relies on static, low-quality signals (like income and banking history) that are limited to the formal economy for risk assessment.
3. Lastly, the poor have possessions but lack the ability to produce additional value from those possessions in a formal way. The poor own houses, micro-businesses, crops, yet all of it is unverified, not valued, or unable to transact in an efficient global capital market.

Vision

To enable financial inclusion for the bottom of the pyramid in emerging markets (the four billion underbanked and unbanked) by

1. Providing a higher quality and lower cost financial services through a mobile-only platform
2. Better assess users and risk through dynamic data science models based on smartphone data and social trust groups (per the Grameen model)
3. Raising and moving capital more efficiently (cheaper and faster) through the decentralized peer-to-peer AirToken blockchain tapping into a global pool of lenders

Stage 4: do #1-#3 globally (2021)

Stage 3: do #1-#3 for Brazil (2019–2020)

Stage 2: do #1 and #2 for Brazil (Q4 2018)

Stage 1 — Now: do #1 for Brazil (Q1-Q3 2018)

Product Mission

In the near future, the goals in successive order are:

1. Build a mobile FinTech platform (digital wallet, app, UI/UX, algorithm, partner ecosystem, payments, analytics)
2. Use the mobile platform to successfully (positive ROE) evaluate users in order to provide cheaper capital at profitable rates — (First use Airfox funds and Airtoken reserves as the initial capital for lending until positive ROE before opening to third-party lenders)
3. Use the AirToken blockchain to microfinance capital to users using a decentralized peer-to-peer global lending pool (Open up to 3rd party lenders and token holders)
4. Use the scale of users and money to bring additional financial services to the mobile app (debit cards, savings, ETFs, mutual funds, real-estate)
5. Scale the above to other emerging markets with a replicable model

What’s needed?

To achieve our goals, we need:

1. Widespread smartphone and mobile broadband penetration
2. Basic literacy among people we aim to serve
3. Favorable financial regulation from governments for new entrants
4. Availability and user willingness to give us mobile data for risk scoring algorithm
5. Blockchain technology maturity (transaction speed, transaction cost, transaction volume, UX, solidity ecosystem matures)
6. Cryptocurrency ecosystem maturity (utility adoption not speculative, supporting infrastructure e.g. exchanges, regulation, price stability, stable coin, liquidity)
7. Scalable conversion mechanism between cash to digital fiat
8. Scalable conversion mechanism between crypto and fiat
9. A repeatable product, unit economics and business model across countries
10. Global pool of crypto lenders and AirToken holders
11. Markets where banking and financial services are elitist or expensive for the poor

Objective

To create wealth for the underbanked and unbanked we must:

1) Get rid of factors that decrease wealth

• Time (No standing in line, one-app for everything, mobile-first, fast and quality customer support, easy UI / UX)
• Costs (low-touch, cheaper transactions, and fees, bonus and referral promotion)
• Financial illiteracy (education, positive incentives, social capital)

2) Provide tools to increase wealth

• Increase access to capital (more availability at lower costs)

Lower cost drivers: (personalized and dynamic credit models, low-touch distribution/recollection, lower cost of capital through blockchain)

• Additional and alternative investment options (savings, checkings, pre-paid debit card, funds, crypto)

People don’t have wealth-producing ways to store and invest their assets.

Inflation is and governmental risk is high.

Lack of “formalized’ agent for unbanked population — create digital property rights and mobile identity.

Background information

Outside of me being Brazilian and having first-hand experience running companies in Brazil, we are first starting with Brazil for a variety of reasons:

• 80% mobile penetration mostly Android
• 51% cash-based economy with roughly 40% of the population unbanked
• High credit APRs 100–400% for underbanked customers
• Very favorable local regulation (no licenses required for up to $150M / year of transactions)
• $39B credit market, largest of all emerging markets, in terms of total addressable revenue
• 71% of all lending goes through traditional banks today
• $200B in payments with 22% YoY growth
• Only 30% of all banking is done through mobile (for those who actually have bank accounts)
• Universally established “Boleto” system allows unbanked to deposit cash into a digital account — 40,000+ points of sale and “lottery houses.

Types of Loans in Brazil

Socio-economic classes in Brazil

Thank you for joining me and the AirFox team on this journey.