Blockchain first upended traditional finance in developed economies. Now it is beginning to reach out, beyond the “first-world” to have an impact globally.
Where is that having an impact first? Basic banking services. Close to 70% of the U.S. population cannot get credit and just under half cannot get a loan on decent terms. When someone cannot even get access to a bank account however, other “normal” transactions of every-day life become next to impossible. Things like paying bills online, participating in e-commerce, unable to rent cars or hotel rooms not to mention building a credit rating are all out of reach. Forget loans, even of the micro kind.
Enter Uulala. The elevator pitch is that this company, founded by first and second generation Latino to the U.S., aims to facilitate the money transfer between people in the United States and relatives “back home” – starting with those south of the Rio Grande. In doing so, recipients not only gain access to much cheaper money transfer, but a range of banking services in which other ways would be unreachable.
Here is how it works: People in the U.S and Puerto Rico can send money to their relatives in Latin America – as little as $2 per month. They can also use the platform to pay bills for recipients. Recipients in other countries can also use their wallet to establish a mobile banking and payment presence. This includes having access to pay-as-you-go MasterCard purchasing networks, and even online B2B banking services.
Hi Oscar. Thanks for joining us today. Can you tell us more about yourself and Uulala?
I’m a first-generation Latino, born and raised in Los Angeles. At an early age, I was very disciplined and driven, training for the try-outs with the Olympic diving team. I had an unfortunate injury, but my competitive spirit only grew where I and transitioned from athletics to business. At age 18, I was fortunate enough to be mentored by a formidable businessman who was the founder of the fastest growing company listed in Inc 500 for 1993, 1994 and 1995.
With my team, I launched Uulala in 2016. We are mission-driven organization focused on facilitating and accelerating the financial inclusion of the under-banked and unbanked population starting with the US Hispanic market and Mexico.
It is clear you are a company on a singular mission – to provide banking services for the unbanked. But apart from a Latino heritage, what specifically motivates the team every day?
As a minority-owned company, the majority of Uulala’s staff and many of our shareholders, are first or second generation Latinos. We come from humble beginnings so we understand the value of money and a hard day’s work.
Many of the unbanked are poor – 56% earn less than $15,000 annually.” Banks shouldn’t ‘kick-them-while-they’re down.” Cashing a check at an institution typically costs around $6US. Securing an apartment usually requires a costly money order. Overdrafts, cash loans and remittances charge sky-high fees and interest. We should be making banking easier for the people who are most at risk, not taking advantage of them. The promise we make to our users. Uulala will always be safe, transparent, and accessible.
How did you come up with the idea and what was the thought process behind it?
As a young boy, I remember standing in the cash-checking line with my mom when she got paid. After paying all the bills, there was never extra money for any frivolous purchases and hardly enough for bread and milk. It made me angry that from my mom’s small check, more was taken from her to provide for her family.
Today, we know that many banks have taken advantage of minorities and in the process over-charged them banking fees. We also know they are least likely to get the loans they need to expand their business.
Hispanics alone in the US, represent a $2 trillion economy and collectively 17% of the total US population. It continues to be an underserved market and we want to change that.
What is the biggest problem within the industry or do you think there is a gap in the market for Uulala to fill?
On the service side in the remittance space, only 7% of all transactions are done digitally. Today, brick and mortar based cash businesses account for 47% of all remittances according to Remittance Price Worldwide’s report. With US Hispanics and Latin Americans being super mobile consumers, this number is likely to reduce significantly with the proliferation of smartphones that make online transfers more convenient. This driving shift presents a business as well as a technological challenge for existing companies which require a robust technology platform that can support both traditional and newer modes of servicing customers. This market gap is where the hybrid model of Uulala will meet the consumer demand for instant mobile remittance combined with the flexibility of thousands of loading stations through our Power User program within the regional transfer corridor all at affordable price points.
With regard to helping the unbanked, we are doing lousy job-creating opportunities to help the unbanked build credit. Uulala will help change that through our microcredit offers and ledger system.
What do you think is the biggest problem Uulala will solve and why is the problem important to solve? Beyond “banking services for the unbanked” – or even “Spanish-speaking underbanked.”
In phase 1 of our business, we will decentralize ATMs and bank branches by allowing our users to become a peer to peer loading stations. In any medium-sized city, the number of individuals who can load money for others far outnumbers the number of ATMs and bank branches.
I also believe we’re in a position to build a database that shows the spending habits and financial capabilities for the Latino market from the US to Mexico. Although some attempts have been made, the data is at a high level and does not adequately capture the day to day financial transactions needed to understand spending habits and critical decision-making statistics for the fastest growing segment of the US population.
What are the KYC issues you face and how are you planning on addressing them, particularly on the “underbanked” side of things?
The main issue when dealing with an underbanked population is collecting the appropriate information and documentation (valid ID, address, email address…). Most, if not all, will be able to provide enough information to get them started with a very small account, giving them the ability to transact with a limited amount of money. In the case of not being able to collect much information, users can be limited to 10’s of dollars, i.e. enough to top of a pre-paid phone account, or a couple of hundred dollars, i.e. enough to pay a couple of bills or remit a small amount of money to a family member. As users get more comfortable and wish to transact more money through the system, we can simply and elegantly step them through a process to collect more information. As they get more comfortable with the platform, and we collect more information, more doors open up to them in terms of services, allowable monetary amounts, etc. In summary, with limited information (e.g. a valid government ID) we start them out with a very small account, and as they express interest in using the platform for other services, we educate them and step them through a simple process of providing additional information (e.g. social security number/tax I.D., biometric data) that brings them even further into the formal economy.
In the whitepaper, you talk about the “value” of international money transfer between families as opposed to government aid. This is an interesting angle to explore, particularly because you can cut out all the red tape. Do you expect this kind platform to be the vanguard of a new age of “international foreign development aid” – albeit peer-to-peer? What do you think the impact of this could be on super big problems? Like global warming for example?
The US to Mexico remittance corridor represents over $25 Billion annually which carries a higher value than oil exports from Mexico. This market with its significant financial footprint continues to be under-served.
With the proliferation of smartphones, there is no good reason why we can’t better service customer demand affordable remittances services through technology. Our strategy of building a robust technological platform with a focus on remittances, bill pay and micro-credit offers for the user, is a vanguard and disruptive approach as it’s comprehensive in scope. Giving our users all those features, combined with the flexibility of thousands of loading stations through our peer-to-peer network, gives our user the ability to move their money quickly and efficiently while building their credit history.
I believe there will be many residual effects of the success of our platform. Users will save money and this will allow them to invest in other things like their well-being, education and businesses; users will travel less to conduct financial transactions which will reduce greenhouse gas emissions; blockchain technology will safeguard the users’ assets thereby reducing digital theft and hacks. The other big opportunity is that our platform will give us a large database to mine and provide us with in-depth analytics on the Latino consumer.
Regulation-wise, what are the toughest challenges you will have to overcome? KYC is an obvious one. But anything else?
In terms of regulations, the area that seems to take the most time and resources is securing Money Service Business (MSB) licenses through the United States; Each state requires a separate application process, each has distinct rules, and each requires a separate monetary payment and/or reserve to be put in place. And then finally, once all applications and monetary deposits have been made, the timetables for review and issuance are out of your control. This is perhaps why there has been a push for a nationwide FinTech charter/license that would allow financial technology companies, who don’t represent themselves as being a bank, to obtain a meaningful regulatory vehicle that would allow them to go to market using a more streamlined, yet still compliant, program.
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Uulala – The Financial Platform Empowering The Cash Consumer To Become Creditworthy
The disintermediation of banks and other traditional financial services via blockchain has huge possibilities in providing FinTech services to the un and underbanked, particularly in still-developing economies.. Even in one of the richest economies on the planet – the U.S. – 46% of the population cannot obtain a loan on
