How this Los Angeles-based blockchain startup is trying to democratize financial inclusion

Working in international trade for over eight years, Jake seltz has experience building teams, exploring new markets, raising venture capital, business development and execution in the United States. Although he is foreign to the world of finance and blockchain, he had seen that the COVID-19 pandemic and the resulting lockdowns became a powerful accelerator of digital financial services around the world.

Throughout 2020, a significant number of new accounts were created around the world, equipped with mobile, money, fintech and online banking. The growth in internet usage, smartphone penetration, and easy to set up and use financial apps has enabled cashless companies to flourish.

The same year, he joined forces with Kunal Karani to launch Funding blocks – one based in Los Angeles, blockchain-based fintech platform.

“We aim to promote the financial inclusion of the unbanked by enabling rural financial institutions to maximize their efficiency and impact,” said Jake. Your story.

Bearing in mind the need to reduce physical contact in the midst of COVID-19, Finance Blocks offers key features for its clients and RFIs such as a mobile application as well as the creation of a domain name and a dashboard to facilitate contactless banking.

Why finance blocks?

Despite infrastructural and technological developments in the financial sector globally, according to several media outlets, 25% of the world’s population still does not have access to basic financial services such as bank accounts.

According to World Bank data, India is home to nearly 190 million unbanked people who are excluded from traditional financial services.

This population depends on informal financial systems such as pawn shops, cooperative credit societies and rural financial institutions (RFIs) to access credit when needed. According to the All India Debt and Investment Survey, 2019, around 34% of total credit in rural India is provided by non-institutional financiers, mainly professional money lenders and relatives.

Complex procedures and inefficient legacy systems prevent rural consumers from taking advantage of credit opportunities and prevent RFIs from maximizing their potential. There is often a lack of identity documents, credit scores and knowledge of financial solutions.

To tackle these issues in rural economies, Finance Blocks has developed a platform that will serve both RFIs and the unbanked.

“In 2019, I was introduced by mutual ties with Kunal Karani. He explained what the initial ideas and core values ​​of a platform like Finance Blocks would be. In early 2020, I took a month-long trip to India to meet Kunal to gain a first-hand understanding of the Indian economy and to see some of the challenges we might face in entering the market, ”adds Jake.

The duo shared an empathetic vision and approach to create a fintech product that could help improve the socio-economic status of millions of people. This is how the idea behind Finance Blocks was born.

Build the startup

“We started reaching out to government officials who could help define the regulations behind these rural financial institutions and started doing analytical market research on how we could create a product that would not only benefit the rural population,” but also to financial institutions providing these services, says Jake.

For RFIs, Finance Blocks has developed a platform that helps them move from legacy paper-based systems to a secure, easy-to-use and efficient digital system for all their processes.

Through the platform, Jake says RFIs create unique digital identities for all of their clients, calculate their credit scores, manage their financials, loans, DFs, savings accounts and more all on one. platform. They are also able to amplify the reach of their products and services through the integrated marketing features of the dashboard.

The works

Finance Blocks also offers an app for users that helps them stay informed about their financial activities such as withdrawals, deposits, transactions, EMI loans, and interest on FDs. The app provides instant updates on any changes that occur on their accounts with RFIs.

The application also provides information on new financial products and services corresponding to users’ needs. Based on their account age and financial activity, users are given smart credit scores calculated by blockchain-based smart contracts.

“Blockchain technology is an integral part of the solution that Finance Blocks presents. The role of the platform is to enable the immutable recording of all transaction data, ensuring transparency and accountability. This will improve the efficiency of operations by automating banking processes. The use of blockchain also allows RFIs to interact and deal with other members on the Finance Blocks platform in a transparent and secure manner, ”explains Jake.

Finance Blocks works as a Platform as a Service (PaaS) Solution to RFIs through which they can digitize their banking process, which includes user onboarding, loan management, FDs, EMIs, interest disbursements, dividend payments, etc. The company charges a commission

When signing up to Finance Blocks, each RFI gets a dashboard hosted on the bankname.financeblocks.io domain. Once on board, they can add their employees and set the interest rate for banking operations.

Market and future

Cryptocurrency is clearly a hot topic in the startup ecosystem with players like WazirX, Giotuss, Unocoin, Coinbase, CoinDCX and CoinSwitch operating in the space. But while most of them focus on trading and act like exchanges, crypto startups like Mudrex are striving to create a global base for investors. There are a few startups in the space – Signzy, which uses blockchain technology.

In the second quarter of 2021, Finance Blocks received $ 250,000 from an undisclosed private equity group. In the fourth quarter of 2021, the team will begin its pre-Series A fundraising from investment groups, hedge funds and venture capital groups.

“Finance Blocks core development team has high expectations. Starting in the third quarter of 2021, Finance Blocks private equity sales begin, specifically targeting hedge funds, venture capital firms, investment groups and strategic partners. In the fourth quarter of 2021, Finance Blocks will begin planning and developing standards for its protocol with validation by 2023 in the third quarter. In addition, in the first quarter of 2023, Finance Blocks expects 1,275 RFIs to operate within our network, ”said Jake.