Celo is an open platform that makes financial tools accessible to anyone with a mobile phone. Their recent funding round of $30M led by A16z Crypto and Polychain combined with a round of $6.4M banks on international payments for the unbanked.
Designing for all is one of Celo’s core cultural tenants according to Markus Franke, Head of European Operations. “We believe that to design a truly inclusive financial solution, you must begin by serving those who need it most.” Their core technology has the potential to give agency to those who live in the margins and depend on alternatives to the traditional financial and fiat-based markets.
The Unbanked Population
While the entire population in Germany and other high Human Development Index (HDI) ranking countries from the EU13 depend on traditional financial systems, 37M people in the European Union still lack access to formal financial services. Nearly 40% of Romanians and 37% of Bulgarians, and over 20% of the population from each Visegrad countries (Slovakia, Hungary, and Poland) face fiscal exclusion (1).
Worldwide there are 1.7B people who are unbanked or underbanked – many due to poverty levels but there are also other barriers such as costs, trust, and physical accessibility (2). Franke confirms, “about one in every three adults do not have a bank account, so there are no straightforward means of receiving or storing value across distances. These groups become automatically excluded from the bulk of transactions within a global economy.”
Celo promotes financial inclusion through technology. They want mass access to alternative forms of banking through innovative blockchain tools. These upgrades are specially programmed and designed to alleviate poverty, empower developing economies, and to get folks more financially savvy.
Accessibility and Adoption
A buffet of government payments, coveted paychecks, and the transfer of domestic and cross-border remittances dominate the bulk of bank transactions. The acceleration of smartphones and stable internet access has only added to the ease of mobile financial transactions. This popularity combined with the rise of crypto has offered many benefits compared to standard banking practices and fiat currencies. It has enabled faster payments at lower costs around the clock, plus programmable digital assets for more efficient services.
Still, a major drawback to crypto is its volatility and user-unfriendliness, which make it shaky for trades and exchanges. “For cryptocurrency payment solutions to prosper, they should offer stable-value assets and a frictionless user experience that makes exchanging value as simple as sending a text message,” Franke continues.
To build an inclusive financial system, Celo starts with an infrastructure designed to serve the underserved and embed them within the tools available: mobile networks and phones. By focusing more on the needs within developing economies, the resulting system should be a decentralized and more useful, more resilient, full-featured, and promote accessibility to crypto exchange for everyone.
This means outlining an easy-to-use experience for anyone with a mobile phone network to manage their current account, send money to friends and family, or pay for services. “Sending digital currency should be as easy as sending a text message,” states Franke. On their platform, users aren’t required to enter long hexadecimal cryptographic addresses in order to transfer value. It’s quick, functional, and their platform is also open sourced.
An Ethnographic Crypto
To make sure there is true impact Celo has concentrated its product on frontier markets that are transitioning to a more inclusive financial ecology from a monoculture. “So far, we’ve launched projects in countries where we see the greatest unmet need. These are countries with a high proportion of unbanked and underbanked citizens, high inflation rates, and payment frictions such as costly fees to send and receive money,” explains Franke. Furthermore, Celo prioritizes markets with favorable operating conditions, such as high smartphone adoption, reliable internet, and electrical infrastructure, and a crypto-friendly regulatory environment. As a result, the next project pilots will rollout in the Philippines, where more people have smartphones than bank accounts. More recently they did a pilot in Argentina since their currency crisis is leading to a huge demand for American dollars to preserve value.
Celo has done several ethnographic research stays including Tanzania and Argentina in cooperation with the World Food Programme. “During each stay, each person we met shared their stories — their past, daily routines, hopes, and their dream. While each story was unique, the common thread was a spirit of resilience.” Living in a refugee camp is hard, but despite the challenges, each person was able to find a way to build a life, even though they were surrounded by difficulties. These stories do more than motivate. They change how we work, what we build.” It reveals the day-to-day structure, pointing towards what can be improved.
Transparency and Impact
These quality of life improvements are tracked by standard indicators such as the number of Celo users lifted above the poverty line or the nominal amount of humanitarian aid sent through their platform. “We can break down our mission, ‘economic prosperity for all,’ into key outcomes like the basic needs of participants in the pilot project are met can cross-reference them with our partners like GiveDirectly in West Africa, ” says Franke.
As a naturally decentralized platform, everyone is invited to participate in Celo’s alternative fiscal system. They even established a fellowship to allow people to participate within their ecosystem from any location and for a flexible period of time. Furthermore, the code protocol for Celo will be open-sourced. To further transparency, even more, the company has provided a series of white papers, a research paper on stability simulations, and publishes their findings and updates on their blog. They provide all of the information necessary to unpack the most detailed aspects of their protocol.
Although there seems to be a large jump for those who use the internet for basic use to the crypto market and exchange, we see that technology has to be simplified in order for it to be transparent, adaptable, and adaptable, especially in emerging markets and developing economies. Celo simply adds another factor and option into the equation that arguably adds more trust, saves money, and provides the desired transparency. In summer 2019, the company plans to have a soft launch where parts of their Software Development Kit will be released in order to help actively engage their community to build on Celo.
By focusing on the community in its various formats, Celo has prompted a comprehensive standard for value exchange in the diversified developing world, connecting it to the highway of tech. In the end, what they contribute is a social and infrastructural need for integration into modern paradigms. Inclusion, accessible tech, finances, and ability to respond quickly are all prerequisite interaction to build a stronger and prosperous community platform.