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Purpl: On a Mission to promote Digital Financial Inclusion

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Purpl is committed to empowering the diaspora connection to their home country by democratizing cross-border money transfer flows and enabling financial access to all by changing the way we receive, transfer, and spend money. At Purpl, we believe in utilizing technology for a greater purpose. Thus, we worked hard on leveraging our solution in order to provide the people of Lebanon with a new way to receive, transfer, and spend money that is tailored to their needs and preferences.

In this post, we will take a look at what it means to “enable financial access to all”, what are the benefits of achieving financial inclusion, and how we, at Purpl, promote financial inclusion.

What is Digital Financial Inclusion?

Financial inclusion is defined as providing as many people as possible with access to and use of formal financial services. It also includes providing affordable financial services to disadvantaged and low-income members of society. Whereas financial exclusion means that customers use informal products and services that are often not tailored to their needs, are more expensive than formal options, and are not subject to applicable financial consumer protection.

The ongoing COVID-19 crisis has highlighted the importance of increasing digital financial inclusion. Digital financial inclusion entails using cost-effective digital means to reach currently financially excluded and underserved populations with a variety of formal financial services tailored to their needs that are responsibly delivered at a cost that is affordable to customers and sustainable for providers. Source: Digital Financial Inclusion (worldbank.org).

Lebanon’s Situation in the ongoing financial and economic crisis 

Lebanon is facing an unprecedented humanitarian and economic crisis. It’s been almost three years since Lebanon, previously labeled as the “Switzerland of the Middle East” began to crumble into poverty.

Adding to that, the Lebanese banking sector, once recognized as the main source of economic growth and job creation, is paralyzed since the beginning of the crisis and Lebanese “zombie” banks have locked savers out of their accounts, imposing capital control measures. The consequences of the crisis are countless, among which is financial exclusion.

How do we attain Digital Financial Inclusion?

The following 7 initiatives lead to digital financial inclusion:

  • A legal framework that fosters a diversity of financial institutions.
  • The use of innovative technologies.
  • The entry of technology-driven non-traditional institutions.
  • The development of low-cost, innovative financial products.
  • Consumers’ protection and fair treatment.
  • Implementing risk-based, tiered AML/CFT requirements.
  • Promoting customer-centric product design that overcomes behavioral barriers and increases utility.

To note that offering digital financial services for financially excluded and underserved populations is a crucial initiative for financial inclusion. As per the World Bank, digital financial services, including those utilizing mobile phones, have now been launched in over 80 countries, with some reaching a significant scale. As a result, millions of previously excluded and underserved poor customers are transitioning from solely cash-based transactions to formal financial services through the use of a mobile phone or other digital technology. For the 2.5 billion adults who rely solely on cash due to a lack of effective access to formal financial services, digital access to financial services could be revolutionary. Source: Digital Financial Inclusion (worldbank.org)

Let’s look at how Purpl tackles these 7 initiatives

  1. A legal framework that fosters a diversity of financial institutions.

At Purpl we strongly believe that a regulatory framework allowing diverse institutions to provide financial services is critical for reaching customers who are underserved by commercial banks. In 2017, the BDL, Lebanon’s central bank, released its financial inclusion strategy, which emphasized the importance of financial inclusion programs and outreach to the unbanked population to provide access to financial and non-financial services. Since then, we have seen progress towards financial inclusion through the licensing of several financial institutions aiming to provide financial services to the unbanked and underserved customers, and through the issuance of circulars regulating the operations and offerings of digital wallet providers (basic circular 69 and its related intermediate circulars).

  1. The use of innovative technologies.

At Purpl, we make it our “raison d’être” to disrupt inefficient solutions to solve big problems. By launching Lebanon’s first remittance and cash out aggregator, we are breaking a monopoly on $7BN in yearly remittances that have made us the world’s 5th most expensive inward remittance country. Our model will allow us to first offer cash out in USD and then store and spend value in both USD and LBP via our soon-to-be-obtained digital wallet license in Lebanon. And all of this available at the tips of your fingers on a mobile phone.

  1. The entry of technology-driven non-traditional institutions.

We believe that financial inclusion is more than just new products and new distribution channels. It is about reimagining new ways to deliver value to the financially underserved people with the help of partners. Purpl’s core operating model is based on creating a unique ecosystem of partnerships between international digital remittance players, legacy banking, cash-out networks, fintech players, and retailers. Partnering with best-in-class players is critical to achieving Purpl’s goal of becoming the first remittance and cash-out aggregator in Lebanon and expanding its services on a regional level as well.

  1. The development of low-cost, innovative financial products.

As Lebanon is facing a monopolistic remittance market due to the lack of alternatives to established international money transfers and the loss of trust in the Lebanese banking system.

Purpl’s business model relies on leveraging technology, existing customer networks, infrastructure, and big data to lower transaction costs and deliver financial products well-suited to the needs of low-income consumers, underserved consumers, and underbanked consumers. While traditional money transfer companies can charge between 9 and 12% for their services (mostly in hidden FX margin fees) and local money agents now impose a 2% cash out fee on beneficiaries, which is significantly higher than the global average of 6.38% according to the World Bank, we strive to provide the lowest rates for money transfers to Lebanon, in line with the United Nations Sustainable Development Goals.

  1. Consumers’ protection by establishing rules for disclosure, fair treatment, and recourse.

It is critical that consumers are protected from potential abuse and that providers treat them fairly. At Purpl, we strive to provide customers with clear information on the terms and conditions of our services via our terms and conditions form, which is available on the Purpl app, in order to help consumers make informed financial decisions and avoid risks. As well, Purpl’s code of conduct emphasizes the protection of customer and personal data and the systems that process them. Each and everyone at Purpl is expected to abide by global privacy laws and respect customers’ wishes to keep their data secure and confidential as well as safeguarding and handling customers and personal data transparently. 

  1. Implement risk-based, tiered AML/CFT requirements.

Purpl enforced its adherence to all applicable laws, rules, and regulations in each jurisdiction where we conduct business. This includes, among other things, implementing a risk-based approach, adhering to anti-money laundering laws, anti-bribery and anti-corruption laws, sanctions laws, and privacy laws. Purpl has a unified, end-to-end digital identity and ID verification solution using AI, biometrics, machine learning, and certified liveness detection to prevent fraudsters. All Purpl’s users are KYC/AML checked on onboarding and monitored on a regular basis. 

  1. Promote customer-centric product design that overcomes behavioral barriers and increases utility.

Purpl is committed to providing all its users with convenient, reliable services for sending and receiving payments and conducting other digital financial services in the future. In order to achieve this objective, we created an ecosystem platform geared toward the consumer pressing needs via an all-encompassing application that allows users to receive, dispose of currency and pay at the click of a button across a virtuous and self-sustaining ecosystem, re-inventing a painful and inefficient cash-out and payment journey experienced on a daily basis by Lebanon’s population.

The Benefits of Digital Financial Inclusion

Financial inclusion is regarded as a tool for elevating people’s living standards, reducing poverty, and achieving overall economic growth. Financial inclusion, according to the World Bank Group, is a powerful catalyst to reduce extreme poverty and boost shared prosperity.

The following are some of the advantages of the digital financial inclusion:

  • Lower costs of digital transactional platforms. 
  • Additional financial services tailored to the needs and financial circumstances of customers are made possible by the payment, transfer, and value storage services provided by the digital platform itself, and the data generated within each transaction.
  • Reduced risks of loss, theft, and other financial crimes faced when dealing with cash-based transactions, as well as the reduced risks using informal providers.

We aim to change the way we receive, transfer and spend money.

Purpl’s Team
person counting money in front of atm

Written by: Rim Ghandour

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