The FIM purpose is to achieve TOTAL FINANCIAL INCLUSION. There is only one absolute prerequisite. All users must have access to, at least, a low bred feature phone. Once they have this: (i) They will be able to open FI account on the fly, straight from their phone; (ii) They will be able to load their e-Money Purse at thousands of endpoints (agents), and they will be able to save and borrow directly from their phone… Furthermore, dynamic scoring will determine “marketing offers sizes” on the spot and people will have access to Savings and Credit a few days after starting their account. The FIM allows anyone with a feature phone (smart phones included) to initiate a (mobile) Bank Account directly from their device in an unattended transaction. The account resides in the e-Money Management System. An Agent Network features the Bridge-To-Cash Component which allows users to de-materialize cash by (i) Either cashing in at agent station, or (ii) receiving a Transfer from another e-Money Account Bearer. The Bridge-To-Float component seamless integrates the current banking and Payment system into the e-Money Ecosystem allowing banked and un-banked population to execute transactions in tightly-knotted ecosystem.

1. Elaborado por:
José Payano
FINANCIAL INCLUSION
MODEL
The Financial Inclusion Model (FIM)’s purpose is to achieve TOTAL
FINANCIAL INCLUSION. There is only one absolute prerequisite. All users
must have access to, at least, a low bred feature phone. Once they have this: (i)
They will be able to open FI account on the fly, straight from their phone; (ii)
They will be able to charge their e-Money Purse at thousands of endpoints
(agents), and they will be able to save and borrow directly from their phone.
Marzo, 2015
Vicepresidencia Ejecutiva Tarjetas y Canales Electrónicos
INNOVACIÓN & CANALES

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CONTENTS
PRESENTATION........................................................................................................................................2
FINANCIAL INCLUSION MODEL...........................................................................................................3
THE REASON BEHIND.............................................................................................................................5
UNIQUENESS..............................................................................................................................................6
IMPLEMENTATION..................................................................................................................................9
PROJECT ORGANIZATION .................................................................................................................. 11
RESULTS................................................................................................................................................... 12
INVESTMENTS........................................................................................................................................ 13

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PRESENTATION
One of the most important endeavors I’ve worked on recently is a FINANCIAL
INCLUSION MODEL, otherwise known as FIM. This model goes far beyond
current technology to define the components of a seamless approach to
managing the complexities of a new Acquiring Model.
By elaborating a solution from the Economic and Financial System standpoint,
the FIM contends it lays the foundation for common Payments Standard to build
all future Mobile Ecosystems and sets the path to expanding the current financial
payments schemes without losing its purpose.
The FIM will show how today payment instruments, including cards and cash, will
become obsolete in the face of the evolving solution presented in the model.
The FIM features the following components:
(1) An e-Money Management Model.
(2) Payment Systems Architecture.
(3) An Issuing and acquiring model for a Digital World.
(4) Bridge-to-Float to serve Banked population and today’s payments
infrastructure.
(5) A Bridge-to-Cash to allow the unbanked population to transparently operate
in the new financial Ecosystem by de-materializing cash.
(6) A Simplified Accounts Layer.
(7) e-Pool Management system.
(8) DDA Account Interface.

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FINANCIAL INCLUSION MODEL
Read from right to left and top to Bottom:
1. Banked Population: Current Bank account holders are categorized as
“banked”.
2. Funding Sources (Banked Pop): All current Payments Instruments and
cash in hands of Banked Population may become “Sources of Funds” to
the new payments ecosystem. Also any interest yielding instrument,
asset or liability could be interfaced to the e-Money Cloud (See Bridge-To-
Float).
3. Bridge-To-Float: Allows access to current banked population the new
Financial Payments Ecosystem and furthermore foster co-existence
between “Banking Today” and “Banking Tomorrow”.
4. E-Money Cloud: Represents the e-Money (New Currency Surrogate)
Management System with all due properties.

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5. Bridge-To-Cash: An interface to the Cash Ecosystem which aims for
“Cash Dematerialization” and solves the “Convertibility Issue” (See
Uniqueness Tab) required by the new payment ecosystem.
6. Funding Sources (Unbanked Pop): Unbanked population receives
Remittances, Cash Payments, and other forms of liquidity. This funding
sources are loaded thru the e-Money Distribution System (Agent
endpoints) to the e-Money Cloud (Unbanked population eWallets
Accounts)
7. Unbanked Population: On the further left side is the unbanked
population, which once enacted with automatic account opening, can
transparently interact with the banked Population thru the e-Money Cloud.
Even though it is not straightforward to the naked eye, once the
unbanked population opens an e-Money account thru their feature phones
they access a leveled playing field and instantly becomes “Included” in the
“formal” financial System. Bear with me on this; imagine you want to
provide a previously unbanked customer with a low value Credit Line. Well
you just set up a virtual Credit Card on your current banking CMS (Card
Management System) and link this “current banking instrument” to the e-
Money Cloud. Notify the Unbanked customer of the Credit Line Offer, and
they will close and disburse the line right from their phones. This is the
Gist and Beauty of this financial ecosystem; it fosters TOTAL INCLUSION
(Automatic Account Openings at “unbanked” side and immediate
interaction with all available banking instruments). Furthermore, since
this new Payment Ecosystem is construed as an “Economic” solution to
the problem it is REPLICABLE to all markets by just following the common
set of standards prescribed by the FIM Model.
8. Simplified Accounts Layer: Financial Institutions taking the role of e-
Money Issuers should get Regulators on board by obtaining approval to a
“Simplified Account” Opening process which, would allow unbanked and
banked population to open an eWallet directly on their phones without
visiting the branch. This simple requirement albeit a powerful feature that
will assure “inclusion”. Our market research suggests that the BoP
population won’t come to the branch to open an account.
9. E-Pool: The E-Pool is a “Conceptual framework for e-Money
administration. It represents the consolidated balances of the whole
eWallet Portfolio, that is, the total balance of e-Currency issued by the
Issuing Financial Institution. It is a requirement for Issuing FIs to keep
these balances in line with the eWallet System.
10.DDA Account: This last layer denotes a Single DDA Account for holding
the e-Pool balance. This DDA Account represents the total issuance of e-
Money for which the Issuing FI is responsible to the Regulator. By taking
the “Issuing Role”, the Financial Institution becomes a surrogate of the
Central Bank and, as such, it must be accountable for the e-Currency
circulation.

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THE REASON BEHIND
The FIM purpose is to achieve TOTAL FINANCIAL INCLUSION. There is only one
absolute prerequisite. All users must have access to, at least, a low bred feature
phone. Once they have this: (i) They will be able to open FI account on the fly,
straight from their phone; (ii) They will be able to load their e-Money Purse at
thousands of endpoints (agents), and they will be able to save and borrow
directly from their phone… Furthermore, dynamic scoring will determine
“marketing offers sizes” on the spot and people will have access to Savings and
Credit a few days after starting their account.
The FIM allows anyone with a feature phone (smart phones included) to initiate a
(mobile) Bank Account directly from their device in an unattended transaction.
The account resides in the e-Money Management System. An Agent Network
features the Bridge-To-Cash Component which allows users to de-materialize
cash by (i) Either cashing in at agent station, or (ii) receiving a Transfer from
another e-Money Account Bearer. The Bridge-To-Float component seamless
integrates the current banking and Payment system into the e-Money Ecosystem
allowing banked and un-banked population to execute transactions in tightly-
knotted ecosystem.

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UNIQUENESS
The FIM focuses on the Economic Problem and not the fragmented aspects of
Technology Platforms. It is truly based on available technology, Economics
concepts and knowledge like any other innovation would be. But it is radically
different on the approach to contrive a solution to the Financial Inclusion
Challenge.
First off, it looks into the nature of money and Cash as the main systemic
competitor. To undertake any useful initiative the new “payment ecosystem”
must de-materialize cash. To achieve this mammoth task there should be some
entity to take the role of Electronic Money Issuer. Banks are the traditional
trustees of People’s Money so, naturally, the role of the issuer is levied onto the
bank. By Becoming e-Money Issuers FIs relay the Central Bank’s Role on issuing
Nation’s Currency. Such burden must be taken seriously, because for the system
to thrive among Grass Roots the e-Money (eFloat, eCurrency Units…) must take
on the same value of Cash in common people’s minds and this, my dear, is not a
simple task.
The FIM deals with the nature of money and how to make sure the “customers”
will surrender to the market offering “Leave your Money with us because is safer
in our bank and is EXCHANGEABLE JUST LIKE CASH”. So how do we achieve the
same “TRUST” that people have in Cash. Once Cash is de-materialized: HOW DO
WE GET PEOPLE to KEEP THEIR MONEY (e-Money) ACCOUNTS BALANCES? Well
that’s one of the main components in the Model. WE HAVE TO MAKE SURE A
COUNTER INTUITIVE ISSUE IS DEEPLY SOLVED. People have come to trust
CASH because, once they have it, they CAN STASH IT SOMEWHERE (Store of
value property); EXCHANGE IT (i.e. Does not lose value with time) for
ANYTHING or WHATEVER THEIR WHIMSY NEEDS or WANTS DEMAND
(Widespread Acceptance and means of exchange). In short, THEY APPRECIATE
CASH because the ISSUER has assured far-flung national currency adoption and
acknowledgement. Even when the “paper currency” has an inherent
depreciation.
The way FIMs emulate this “Money Theory” conceptual framework is by assuring
CONVERTIBILITY between CASH and e-MONEY. If people perceive that carrying
Cash or e-Money will be the “same”, because e-money is fully and broadly
exchanged everywhere, then (granted: Marketing and Communication is of
utmost importance here) why not leaving the balance at the banks, especially
when you can be offered an “Emergency Credit Line” as double of whatever
amount you are holding into your e-Purse.

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From the aforementioned issue the reader should extract between the lines that
poor people (and some of them are not so poor as they resemble) are low wage
and vulnerable economic group, but they aren’t stupid. They won’t take on any
offer that does not creates any value for them….And this bring us to another
“unique” feature of the FIM’s Model.
The FIM’s model is based upon deeply rooted innovation theory. The purpose of
any Innovation is to create Market Value (i) for the user and (ii) Service
Provider. But banks traditionally are better at “extracting” than “rendering” value
to the market. But these Grass Roots Markets does not bear with the bank on
that. In fact, they DON’T BELIEVE A BANK WILL EVER BENEFIT THEM on the
ground of this mentioned issue. So how the FIM do solves this matter? The FIM’s
VALUE PROPOSITION should be profoundly rooted in Social Innovation. The
Products and Services rendered through this enterprise should address achieving
the next “prosperity-stage” on the aspirations ladder of dreams cloistered in poor
families’ hearts. Through research we have uncovered those secluded desires
and they very manageable and easy to deal with. We discovered these people
are vulnerable and they are in fear of losing their income as, in fact, at any step
they lose it. So, the Products and Services for these segments should be
designed to escalate their prosperity…
The FIM deals more with the “Social Issue” than the Banking aspects involved.
But, by dealing with this “Social Innovation” and “Economic Behavior” corollaries
is, to our modest conviction, what will finally untangle the truest nature of
“Exclusion”, speaking from a Financial System Standpoint.
Ahead lies a lot of difficult ground to parcour, but the FIM got an answer for each
of them. It’s more a human paradigm that makes us rigid thinkers, that the real
harshness of the realities we want to change.
Another Unique solution that the FIMs Brings about is an impeccable co-
existence between the current and new financial ecosystem. By devising
a new Issuing and Acquiring Model, the FIM solved the matter in just one
“conceptual journey”. It’s more a matter of regulation, changing some lines in
law, than it’s difficult to get fully population engaged in the financial system. The
issue of co-existence is solved by the two components I mentioned:
* Bridge-To-Float: This renders each today’s financial instrument as a source
of funds for the new Payments and financial Ecosystem. It also supports mostly
the “New Issuing Ecosystem”. Cards and Cash become obsolete and current
financial instruments become only “Source of Funds”.
* Bridge-To-Cash: An expansive network of endpoints dealing with Cash-
in/Cash-Out transactions. This Agent Network solves the Convertibility issue

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rendering the e-Currency as important as Cash and as we provide “value added
services” to holding “purse balances” people will abandon their cash-attachment
in lieu of the new benefits. Marketing and Value proposition must go hand-in-
Hand with this goal.
Another underlying uniqueness of this undertaking is that by enacting a newly-
bred payment Ecosystem, wherein there was nothing and people were fully
excluded from the benefits of formal banking; the FIM chimes in a full RTGS-like
payment system for the poor. Imagine giving every person in the country a fully
functional RTGS for their daily handling. Let me elaborate a bit on this…
In Economics, a Payment is effected by the transfer of currency. Currency,
meaning, something that is widely accepted as means of exchange an payment.
Again, the nature of cash is that it has highest grade of “Payment Finality”:
Transfers executed through cash immediately obliterates the financial obligation
acquired by payers upon payees. The e-Money Acquiring Ecosystem re-assures
and emulates just that. The Transfer is also executed in a much secured
environment with pre-settling before notification, just the same as it happens on
Central Banks Money wherein the RTGS settles obligations on
counterparties Central Bank’s Accounts before notifying the payment to the
beneficiaries. Well, the FIMs Model redraws this same contrivance in the
enacted e-Money environment; essentially given the former unbanked the power
of a fully functional RTGS to support their daily operations. Again and Again,
marketing and communication is a critical success factor. Once this feature is
fully fathomed by the unbanked population, the future of the surrogate currency
will blossom.

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IMPLEMENTATION
The FIM was devised on 2010 but the Initiative to definitively implement it was
launched in 2014. The hindrance was the bank did not necessarily saw it as the
innovation endeavor it was. It was our main competitor which fostered the
environment to start the FIM off.
Between the under banked market segment research we’ve conducted and the
“banking system” as we know it and the formal FI ascribed processes regulators
presume important, lies a gigantic wedge which if untapped will destroy any
benefits the FIM would try to furnish to the people. The biggest challenge to take
a truly FIM-like solution to the public is the Regulator. At some point, our banks
personnel acts out its Regulators Responsive role blocking anything that
challenges current regulations. That where the FIM’s Model chimes in, untangling
the knots and poising a position to flatten any Regulation Barriers we encounter
in our path. What we have construed is a system that will challenge regulators to
play their most inherent role: To assure inclusion. Several features in the FIM’s
implementation required the regulator and the internal departments as well, to
look at in inclusion with a different spin. We discovered Grass Roots were deeply
in fear of Banks because of their laced and stilt structures. They thought they
weren’t fit because they didn’t have or earned enough money. Furthermore,
levied commissions are a SIN at this lower income commons.
The main issue we have solved is to fully research the market in terms of
matching the Value Proposition to real Grass Roots Needs. What we discover
allowed us to define products and services that behave on the same realm that
Grass Roots live in a quotidian basis. Dominican people, at the lower social
layers, like to play lottery. It goes by the tone of “Buy a cheap dream of getting
better until the lottery plays out”. So low income people are avid Lottery players.
Another question we had is how we should address the issue that most people,
even believing e-Money could be a good thing, will withdraw and deplete their
accounts almost immediately upon receiving payments. It happens today with
low income earners in our Corporate Payroll Product. They go to the on-premises
ATM and deplete their accounts, leaving only the remnants that the ATM network
does not allow to withdraw.
Along these lines of thinking we derived the economic behavior behind these
apparently irrational acts. Why will a low income earner “invest” in a lottery
ticket that he has such a low probability to hit? To begin with, common people
know nothing about probability. They play because they hold “short-term dream”

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that, if come true, will take them out of their misery and if not, at least, enjoyed
the “moment of hope”….
By devising products along the lines of thinking and economic patterns portrayed
by under banked segments we hope to have an absolutely lovely Value
Proposition for those segments.
Today, we’re ready to launch but, first off we want to make sure the market will
be responsive to our Value Proposition. So first, we are going to the same places
where we would like our venture to be a successful uptake.
In the months after submitting we have made some further advances:
1. Defined an e-Money Distribution Ecosystem: As I have thoroughly
mentioned, for e-Money to become a surrogate currency alike Cash it has to
solve the convertibility issue e-Money to Cash and vice versa. Because there
is an inherent inertia in Payments Ecosystems to substitute a Payment
Instrument for another, the e-Money Distribution (sub) Ecosystem is designed
to provide incentives for people or SMEs tasked with converting e-money to
cash (Cash out) or vice versa (Cash-In).
2. Defined a Savings Ticket lottery-like product (testing): We have
conducted a thorough “Value Proposition Market Testing” which has further
validates our proposed design. Surprisingly, customers showed their
willingness to pay for these services, albeit low fees. The FIMs design
advocates levying the least commissions on unbanked population. An
asymmetric fees pricing model is proposed wherein Banked population will be
always charged with twice the commissions. Furthermore, looking forward to
having a very big active customer base, the
3. Defined a 911 credit Line: During the market research it was clear the
lower income segments are always in need of some cash, sometimes to cover
emergencies and other times to just makes ends meet. So we added (to be
designed for second stage launch) an Emergency Loan that could be offered,
contracted and credited right from the feature or smart phone.

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PROJECT ORGANIZATION
The FIMs design is my own. You can take a look at my profile and thoughts at:
https://www.linkedin.com/profile/public-profile-settings?trk=prof-edit-edit-
public_profile
But the a lot of people are working now on the project. I can submit the
structure for attachment. The Project has an steering committee, a Negotiation
Team which is handling relations with the Main Telcos Involved and Business
Model Team which I am myself heading.
Areas involved include Retail and Corporate banking, Risk Management, Anti
Money Laundering, IT, Operations, Fraud Management, Cards Management, and
Strategic planning… Essentially the whole bank.
We are working with MiRed, a local subsidiary of Carvajal Tecnología y Servicios
(Colombia).
The Mobile Wallet Provider is Via MyBank. A Portugal located company. To foster
the “Pilot” we are dealing with SaaS model.

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RESULTS
The Product is launching as of today and it’s in Pilot Phase. Final launch is
scheduled for April 2015. What is important and about this initiative is that it is,
to my modest opinion, a Radical Innovation in Financial services. Because it’s
based on a “Financial Inclusion Model”, it is replicable around the world and the
promise of Financial Inclusion could be finally achieved. It’s not based on
technology, or fragmented conclusions. It’s full-fledged Financial Inclusion
Initiative which, if carried out as construed, should assure the benefit of millions
of people around the world. I’m asking for your support to spread these ideas…
Breeding this in Dominican Republic has not helped this!

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INVESTMENTS
 Overall: Currently we have invested 0 - less than 250K
 Marketing & Communication: Waiting for design
 IT & Operation: 80k