RightAngle: Wala
Welcome to ‘RightAngle’ — our series of interviews with mission-driven blockchain projects sharing their angle on their vision, the industry, and more.
For our sixth instalment of the series, our Marketing and Events Manager, Amber McLennan, spoke with Tricia Martinez, the CEO and Founder of Wala, a best-of-breed financial platform built on the blockchain. Wala’s mission is to help emerging market consumers reach financial prosperity by eliminating their barriers to banking.
If you would like to be interviewed by RightAngle, or if you have a recommendation for us to interview, please send your request to media@rightmesh.io.
Amber: What inspired you to start Wala?
Tricia: After graduate school, I started my first company focused on unconditional cash transfers — it was similar to the concept of universal basic income. I worked with a few hundred subsistence farmers in Northern Uganda, providing cash transfers to them and conducting research on what they invested in and the impact it had on their lives and communities.
The problem that I ran into was the cash grants were extremely ineffective in driving long-term impact in these consumers’ lives. After sending them mobile money, they would go to an agent in town, take out the cash, and put it into a cash box in their village or bury it in their huts. These consumers lived in rural areas in poverty and, as a result, had very little access to financial services or systems. Because of this, they lacked the basic financial education, or know how, to use financial systems for long-term savings and investments. This was a learning for me in why consumers at that level of income were not utilizing financial systems — even when given currency.
But, as I engaged more and more with the emerging middle class and consumers in urban areas, it became clear that it wasn’t just those in rural regions who were opting out of using financial institutions — college educated professionals were also choosing to hide money under their mattresses rather than keep it in a bank.
That was when a light bulb went off in my head — if educated people who understand the value of keeping money safe are choosing to not use financial institutions, there is obviously something wrong with the system in place.
We looked at the existing mobile money and banking systems and quickly realized that they were not designed with the local consumers or their communities in mind. It was a system that was forced onto them and had caused a lack of trust, leading to issues with financial inclusion.
That is what inspired the idea for Wala.
Amber: When you say the banking system was forced onto consumers and there is a level of distrust, what spurred distrust?
Tricia: It is a bit of a cycle. Because the banks are not driving enough savings from consumers, they are unable to give out large loans. To bring in revenue, the banks have to charge high fees to operate their businesses… and the fee model disincentives behaviour. The fees can range from 5%–100% per transaction for depositing or withdrawing a payment. For those living on less than five dollars a day, paying fees is simply not doable.
The model just doesn’t work. People aren’t saving enough for the banks to make money on loans, and the consumers don’t want to pay fees, so they keep using cash.
An issue I struggle with is that organizations, like the Gates Foundation, evangelize the theory that banking the unbanked is the solution to decreasing poverty in emerging markets — but that is the completely wrong approach. There is a reason why consumers are not using financial systems, so why do we have to force it on them? Giving someone a traditional bank account doesn’t solve their financial problems if they do not want to use it or if the fees associated with it will cause them more financial burden.
At Wala, we saw this problem as a reason to rebuild the financial system based on the real wants and behaviours of the consumers in our markets.
Amber: That is a very good point:if it isn’t a fit for the community, why force something on them?
At Right Mesh, we are currently focused on building out our platform. As we expand into our target markets, our plan is to work with local developers to enable them to build applications that benefit their communities. The needs of each community differ so greatly by region, it doesn’t make sense for us to create apps without working with them.
Tricia: Exactly! That is where the banks went wrong in Africa…there was never any design thinking around servicing consumers in these markets. It is frustrating as there is so much money being invested by governments and financial inclusion organizations who are trying to push their own agenda. At the end of the day, they need to talk to consumers as they don’t know who they are or what they want.
That is why we decided, at Wala, to take a consumer first approach. We made sure that we were on the ground, talking to people, building a product with them, and having community members involved through the entire development process. We wanted to make sure that we were building what they actually wanted and that it is something they would benefit from and use.
Amber: How did the thought of integrating blockchain into your solution come about?
Tricia: When we started Wala, we tried to work with banks as we felt that the systems and incentives they had were not aligned with the needs of the consumers. We wanted to help them find ways to remove fees from the system and improve efficiency. Our suggestions included decreasing the scale of their physical infrastructure, which was very costly, and to instead invest in mobile financial platforms that could reach consumers easily and at no cost.
This, of course, did not catch on. We were essentially asking banks to flip their business models upside down, and they couldn’t comprehend that.
Our team knew that if we were going to truly support consumers we had to do something radical, which would be to remove fees entirely. People shouldn’t have to pay to save money or to access basic financial services, which we see as a basic human right — that was when we started looking at Bitcoin.
At the time of our initial research,though, Bitcoin was ten times worse than banks! The fees were higher, especially when consumers were transacting in micro amounts, and the processing time was longer.
Despite this, the principles behind Bitcoin resonated with our team. After researching other currencies, it became clear to us that there wasn’t an existing coin that met the needs of our market. It was at this point that we started thinking there could be a way for us to issue a crypto asset designed around the behaviours of local consumers. That is how we created Dala.
For us, Dala is the crypto asset powering everything. It is not just payments, it’s borrowing, it’s saving, it’s earning and it’s transacting. Through data protocols, consumers have access to borderless, low-cost, efficient, and unique financial services.
Amber: With the previously mentioned level of distrust consumers have for existing financial systems, was it difficult to drive initial user adoption of Wala?
Tricia: Gaining trust was the main priority. When you ask people to deposit their money into a system, it is the highest level of trust they can give you.
With the pre-existing distrust, we felt that we needed to create a community who truly believed in changing the financial system and deconstructing the existing barriers. The message needed to come from the people who had a desire for change. That is why we started an ambassador program.
Our evangelists believed in Wala’s mission, and went directly to consumers to create relationships and gain trust.
We also provided rewards in Wala with Dala to incentivize user behaviour. If you signed up, we reward you, if you made a deposit we, reward you, if you do a transaction, we reward you. We took the opposite approach to the banks by rewarding our consumers which really helped create positive dialogue.
The final thing that we did to build trust was through distribution — consumers wanted to know that they could easily move their money out of the system, that they can go anywhere to transact, and that they could gain access to the products that they wanted and needed. We focused on expanding distribution and made sure that it was easy and seamless to move in out of the network.
Amber: How has it been since the platform launched a few months ago?
Tricia: The growth has been beyond our expectations! It has really validated that there is a serious problem and that consumers are looking for alternative solutions. The first few months, we acquired over 100,000 users and processed over 3 million transactions. In the app, users can purchase Dala and with it buy airtime, electricity, satellite tv, pay school fees, water bills, etc.
If people are familiar with M-Pesa, a mobile money service based in Kenya, they laid a lot of the ground work for us. Although their platform is convenient, consumers pay an exorbitant amount of money in fees and were fed up. What worked well for us was that they had created a desire for an online platform. I think it helped us grow so quickly.
When we went live, our value proposition was that we could enable all the same products and services of mobile money, remove fees, remove barriers, open the network and support consumers — it resonated. Consumers don’t want to pay fees. They want something easy to use that is accessible.
Amber: Congratulations on the growth you have had so far!
Are there any challenges that you are currently facing with increased expansion?
Tricia: There are always barriers. After we launched in South Africa, Zimbabwe and Uganda, there was an external pressure to expand to other countries. What people do not realize is that every country in Africa is vastly different. Governments, culture, economy, consumers, all vary greatly and need a specific strategy designed for their diverse needs. That in itself is a barrier as we can’t just launch in the entire continent and assume that we will grow quickly.
Our team is focused on getting it right in the markets that we are in and driving growth and establishing value there.
We do have the ambition of continuing to scale Wala and are hoping that in 2019 we will have a bigger team and more capacity to spend time on understanding new markets and scaling the project.
Amber: As Uganda is one of your markets, do you have any thoughts on the mobile money and social media taxes that have been implemented?
Tricia: Consumers are pissed off! They are furious! And rightly so, as they are absurd policies. No one should be taxed for using social media and making mobile money transactions. The sentiment of the consumers is clear and reflected in the almost 33% drop in revenue of mobile money companies over the last while as consumers try to avoid additional fees. It is one of the difficult things about operating in these markets, that governments change policies constantly.
As our company does not fit into either of the tax categories, we are currently bi-passing them.We are seeing more growth on our end as a result.
Because Dala is a cryptocurrency asset, we don’t fall into a particular bucket right now. As the space is so new, the government has yet to decide on how to regulate it. We have first mover advantage. Although it is free terrain now, in the coming years we expect to see more regulations.
Stay in Touch
To stay up to date with RightMesh, please join our social channels:
- Telegram announcements: https://t.me/rightmeshannouncements
- Telegram chat: https://t.me/RightMesh_Official
- Website: https://rightmesh.io
- FB: https://www.facebook.com/TheRightMesh/
- Twitter: https://twitter.com/Right_Mesh
- Reddit: https://reddit.com/r/rightmesh
