DeFi meets real world impact: how blockchain is expanding financial access with Zach Marks

nice to see everybody bright and early I feel like folks have struggled in the with some coffee let's take a good morning stretch all right cool ladder settled in my name is Zach marks I'm a co-founder of Gia which is a project working to unlock Financial access in emerging markets and before I get into exactly what we're doing I thought I'd share the story of our name Gia has a sort of a Global Connection and Chinese Jazz home or family which we think is the central Financial unit we're expanding upon in Hindi Gia means heart and we're working to provide banking with a heart and in Swahili ngia means the road or path and we're building the rotor path to financial Independence and our first Market is Kenya so it's helpful to have a Swahili name all right so let's begin with a story of one of our first users and what we're working to build for him so meet Francis injuguna Francis sells spices and fruits and vegetables in a market in Nairobi just a picture I took with him last week and just to make his challenge really clear he sells spices and fruits and veggies to local customers and also to some local restaurants and because he doesn't have access to financing he buys he has to top up his inventory basically every two days and even when I was there visiting with him a local restaurant came up to say hey can I buy my order of regular of sesame seeds he needed 2 kgs and Francis had just run out so I asked well why do you buy it every two days why not buy in larger quantities maybe every week and then you'd have more uh in your stock and simply doesn't have access to financing so he has to buy five to ten kgs of sesame seeds at a time and then he pays about twice the price per kg of Sesame versus if he could just buy a larger uh a larger shipment seems pretty basic right so that's the kind of problem we're trying to solve and of course why can't Francis just go to the bank why can't he just say hey I'm running this business I'd like to take a line of credit so I can buy some more spices and what banks typically say is well there's not enough data to underwrite a guy like Francis I have no idea how many sesame seeds or spices or fruits he sells and he's probably just too small to make it worth our while maybe he needs two or three hundred dollars of financing but it'll cost us more more than that just to go find Francis collect some collateral and process the loan because of this basic challenge there's an estimated five trillion dollar credit Gap around the world probably a stat we're familiar with hearing at a bunch of talks like this so that's the general challenge that my team at Gia and I have spent the last decade working on um and I think we think of the attempts to solve this credit Gap in maybe three waves the first wave microfinance 1.0 basically relied on community Finance groups so traditionally in Emerging Markets uh when people don't have access to Banks or formal Financial Services they save and borrow in small Community Savings and borrowing groups and what traditional microfinance institutions came in to do was basically work with these Community groups and provide some additional Capital now the great thing is that there's a lot of Community Trust you have these small groups everyone sort of knows each other and so to solve that banking underwriting problem even if there's no data on Francis I put him in a group with 10 of his friends if Francis defaults all of his friends cover for him so the microfinance institution is all good this model is great for getting started but it doesn't really scale for every new group you want to sign up or every new Francis spice seller you need to hire a new loan officer or a sales agent to go sign people up and once the groups get to a certain size you start to lose that trust because people say I'm not gonna put my collateral up for this guy I don't even know him more people just can leave money because they don't have that that trust Factor pulling them in um so we have the challenge of not being able to scale also the model of basic microfinance not very flexible or personalized so the second wave of microfinance that which is where the Gia team actually all met was working in fintech lending where we'd have apps which would use mobile phone data to underwrite in the absence of credit scores of course these can scale across the globe pretty fast but you totally lose that Community ownership piece and when we were working at our last company what we heard from borrowers in Kenya sometimes is they'd say hey in my Saco which is a local savings and Credit cooperative when I after I repay my loan I put my money in and I get shares so can I have shares of your company I've been taking your loans for for a while now and the first time we heard that our company was valued at something like 50 million dollars and now it's valued at a billion dollars and it's a lot of value creation but it's really all gone mostly to the Silicon Valley investors of that company not to the borrowers who've done the hard work of actually justifying that value creation and even if that company had wanted to distribute ownership around the globe to borrowers it'd be very logistically inoperationally complex to do enter the really wonderful world of web 3 where we can represent ownership with a token on chain and distribute ownership quite efficiently and so basically what we're working on at Gia is to provide our borrowers ownership the greatest bit of microfinance 1.0 with the scale of fintech lending microfinance 2.0 so if you think about a traditional bank or fintech model it's a pretty transactional relationship the borrower is really a customer they take a loan they repay it the bank often makes a lot of the The Profit that the the borrower has generated and they move on it's not like the borrower has a stake in the entity with Gia though we're building a real relationship with these borrowers so borrowers receive financing they repay this Fair affordable amount then they earn Jia token rewards as they repay and that lets them actually build wealth and prosperity in the long run so just to make this real for how Francis uh interacts with Gia we really meet him where he is we don't come in and say Hey you need some crypto product or this special blockchain we just come in and provide some financing he borrows that financing to finance his inventory and he receives tokens and because tokens is sort of an abstract concept to make it very real for him uh Geo tokens unlock better interest rates they unlock higher loan amounts and more flexible repayment terms and as he's borrowing and repaying he's actually building an on-chain history so today that might not mean much but in the long run as more and more money and capital flows happen on chain and as more and more on-chain credit scoring protocols get developed Francis will actually be able to access more Global Capital not just from Gia but from other protocols as well one of the basic fundamentals of how we build products is we try to take what's already working offline and just bring it online and so what already happens in these Community Finance circles is that borrowers invite their friends and they often put up collateral for them to for them to borrow now when they do that today it's not like they're rewarded with with much when someone repays they just get their collateral unlocked but with Gia we let borrowers invite people in their community and stake their tokens on on the success of that borrower and when that referred borrower repays then they earn some returns as well all of this is doing is basically just a more equitable distribution of value instead of it all going back to the lender uh the Geotech the Gia token is not just a security token also has some utility and we've heard from businesses all the time that people don't just need Capital they actually need services to help them grow their businesses and so that's what uh Gia is as building as well as a global service provider community and if you look at this in the end basically uh Francis has gone from on today his with his fintech lender he's just a borrower at the end of a one-way transaction to with Gia he's actually an owner and a builder of this community and that's pretty powerful so how does this really work in practice basically liquidity providers from around the world can deposit their stable coins in liquidity pools we have a wonderful partner here in Huma protocol where we're launching a liquidity pool with very soon um Gia then takes those stable coins and works with local trusted Partners so it's very difficult to gain Trust of small businesses if you're just sort of a foreign entity saying hey you want a loan so we work with Partners usually wholesalers or Inventory management providers who aggregate local small businesses we use those Partners data to underwrite and then we deliver either working capital in the form of fiat currency or often inventory uh that's purch that's purchased on credit as the borrowers repay they earn tokens as I mentioned and they're also providing yields for these LPS actually connecting blockchain Capital with these real world use cases I'll just talk about one of these Partners since it's a very real example that we're doing now so ilara health is a network of about 2 000 medical clinics in Kenya most of these clinics ask for financing you know they buy their medicines on a Monday but their patients might not come in until Friday and pay them even later on but Elara doesn't want to take on this financing risk they just want to be in the business of providing medical devices and medicines so we step in we partner with Alara we use their data to to underwrite and then provide financing for this uh for the medicines what's kind of cool about the Geo token is it doesn't just unlock Better Credit rewards ilara the partner Network can actually use it to deliver customized Loyalty Rewards as well for example repainting and beautifying the local clinic or running local medical trainings and Community showcases another exciting thing which we're really excited to be working with with Huma on is tokenizing real world assets to unlock liquidity so we think of Francis as I mentioned in the beginning he has this restaurant that comes in and buys sesame seeds from them every week he often issues an invoice to this restaurant because maybe the restaurant doesn't pay for 30 days or 60 days this is a common challenge in just working capital so we can actually tokenize that invoice Bring It On chain and use that to unlock liquidity for Francis and finance his broader business growth so in short our roadmap right now we're launching inventory and invoice financing today we're live in Kenya and in the Philippines uh two markets that our team has worked quite a bit in over the past several years from there we'll actually be growing into asset financing and in the long run providing savings Investments and other Financial products for businesses so that is what Gia is doing to unlock Financial access and emerging markets and I'm happy to take any questions that anyone has really appreciate you all showing up nice and early for me foreign any questions yes in the back yeah I think I think I think the question without microphone was how is our project viewed by the government and I'm really glad you asked that so we work with The Regulators in Kenya and the Philippines with the central banks um to be a regulated entity which you have to do in order to provide loans in these countries um we actually have a pretty close relationship in Kenya with the central bank and with the capital markets Authority um actually my buddy Jacob here who runs a Dao of African Founders helped organize a meeting with these Kenyan regulators and vitalik when he was just in Kenya to talk about how we can use blockchain to unlock more far indirect investment into Kenya yes team sorry what does your on the ground team have to look like in order to actually verify all these borrowers and yeah decide whether to give them a loan great question so unfortunately this isn't as seamless as a pure Tech play where anyone with an app can just sign up and it's all it's all seamless does require a lot of manual work we have to uh we need local business development folks to work with these Partners uh we need a local credit team to underwrite that the invoices are accurate and then we have our local engineering team led by Ivan here which is actually leading the build of all of this how are you working to partner with current uh microbanks or the larger stuff like project opportunity or different things like that are you sorry I actually didn't hear it how are you are you working to partner with uh current micro Banks or people working on this project like project opportunity or different folks that already work in Kenya in different places for now we're mostly partnering with networks that have aggregated small businesses and have a need for financing as opposed to working directly with other financing institutions but a really exciting thing about this is once we've developed this capacity of unlock of aggregating capital on chain and deploying it for any real world Emerging Markets use case we certainly could partner with other microfinance institutions which might have access to borrowers that we wouldn't get through these networks so that's actually um a pretty exciting thing that came out of that meeting that I was mentioning with the Central Bank in Kenya is the first lady of Kenya actually has a microfinance institution and she's worked with about 15 000 women-led savings groups called Chamas and we're actually talking with them about how we can provide liquidity for what they're doing I think it's very important that we don't come in and say hey we know exactly how to finance and we know the partners we want to partner with there's lots of great organizations that have already done work on the ground identified the right Community leaders to work with and so we're definitely working with them yes biggest challenge to widespread adoption so certainly there is a challenge of communicating what a token is and what crypto is and so for now we've kind of abstracted that away we provide Gia points we don't talk about a token um and people want loans and Shillings not in stable coins I think what's really important though is over the years as we're building trust by providing affordable and accessible financing as they're repaying we'll be able to um to gradually educate customers about different blockchain use cases I mean an obvious use case we talk about all the time is in Kenya there's massive inflation and devaluation of the Kenyan Shilling a lot of borrowers talk about hey can we keep our money in a US dollar denominated account by building the crypto back end that houses a Geo token we can also let them for example save in a US dollar stable coin cool I think this might be the last one because I see the clock ticking down awesome uh so how did you select Kenya and Philippines why did we select Ken in the Philippines great questions these happen to be also the very practical question it happens to be two markets where my co-founders and team and I have worked so we we know the markets extensively We Know The Regulators which is really important before just showing up we can have existing partner networks but you know team aside just from a macro economic perspective these are great markets to be in there's a huge unmet need for credit and both of them I think in Kenya alone the unmet need for working capital is valued at something like 300 billion dollars they're relatively large markets for their regions there's also a lot of crypto adoption and interest uh Kenya has always sort of been a leader in financial Innovation you know they have way broader mobile Financial Service adoption than any country in the world and the Philippines I think in part because of play to earn has just seen soaring crypto adoption so in a lot of ways they're sort of right markets for us to enter um and I know I gotta go so I want to say thank you so much for joining um please follow us on Twitter at Gia underscore defy so you can read about the launch of our liquidity pool very soon thank you