Financial inclusion, i.e. access
to useful and affordable financial products and services that meet the needs of
individuals and businesses, facilitates achieving seven of the 17 Sustainable
Development Goals set by the United Nations, according to the World Bank. The
G20 has also committed to expanding financial inclusion. However, around 70% of
the population in Latin America still does not have a bank account or is barely
incorporated into the banking system.
In the United States, while
studying for a master's degree in energy systems at Northeastern University in
Boston, young Bolivian engineer Diego Rojas, 33, got his first credit card and
started investing. That experience was transformative, allowing him to discover
how investment and credit help to improve the quality of life. Thus was born
his goal of bringing financial inclusion to his region, a dream that has
materialized with PasanaQ. This start-up digitizes informal community-based
peer-to-peer savings and credit systems, a practice known as PasanaQ in
Bolivia. In addition, its platform provides education and connects its users
with banks' financial services, such as insurance and microcredits. Thanks to
this breakthrough, the young man has become one of MIT Technology Review's
Innovators Under 35 Latin America 2023 in Spanish.
PasanaQ is an example of a ROSCA
(rotating savings and credit association), whose participants, groups of
trusted individuals, periodically make a contribution to a common fund. At the
end of each round, the total amount saved is given to one of the members. Users
are mainly low-income people, with little formal education and mostly women,
Rojas explains. The creator of PasanaQ explains, "These transactions are
currently hidden from the formal financial system and do not connect people
with better formal opportunities. Their users do not trust the banking system
to access savings and credit."
Rojas' development works with banks
and microfinance institutions to enable them to attract new customers and build
customer loyalty with new services, as well as using informal credit and
savings systems as a form of payment in stores. "In this way, it manages to
digitalize community banking and individual credit management," explains the
innovator. Its partners include Bolivia's largest bank, BancoSol, and the
region's largest microfinance institution, Mibanco Peru.
The PasanaQ app has reached more
than 7,000 customers in less than a year. The goal of PasanaQ's creator is to
expand his system throughout Latin America, the most profitable region for the
banking system, and to reach Latinos in the United States to help the migrant
population send money to their loved ones in their countries of origin. With
its application and the alliance with financial institutions, Rojas seeks to
facilitate credit to the most disadvantaged people in the continent as a means to
a better life.
