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This Brazilian digital bank wants to change the world, one block at a time

Covid laid bare the gaps in people’s access to banking services. Moeda Seeds is looking not just to fill the gaps but to change the banking paradigm.

It may have taken a global pandemic to do it, but millions of unbanked people in Latin America have been propelled into the financial system since the beginning of the Covid-19 crisis. 

Some 17% of the region’s unbanked population had gained access to the system by autumn last year as, within a matter of months, pandemic-related subsidies made financial inclusion a necessity. 

Nevertheless, in Brazil, 34 million adults — almost one in six Brazilians — remain unbanked, according to São Paulo-based research firm Instituto Locomotiva. Those without access to basic financial services like savings accounts, credit and loans are disproportionately women. 

“Many of the wallets and the banking records are in the name of the husband,” Taynaah Reis, chief executive of blockchain-powered neobank Moeda Seeds, told Forkast.News in a video interview. “This becomes a problem when [women] look for credit.”

Fortunately for Reis — who says that even she had limited access to information and credit, despite the benefits of privilege and a private school education — she was able to raise capital for Moeda Seeds through a US$20 million initial coin offering.

Being in blockchain has given Reis the opportunity to see the technology’s promise to democratize access to capital. But the sector has attracted its fair share of criticism, from worries over the speculation rife in crypto to concerns about the carbon footprint of such an energy-intensive industry

Yet Reis says there are also ways for the industry to promote and foster environmental and social sustainability.

“Now, we have the COP26 (United Nations Climate Change Conference), and many discussions on climate change to hold every country accountable and every individual accountable, as well,” she said. “We see opportunities to create different economic models and assets that are sustainable over time.”

Moeda Seeds has itself created one such model, entering into a partnership with Brazilian forestry manager 3Agro on a non-fungible token project. The scheme allows buyers of the tokens not only to support the planting of açaí trees in the Amazon region through their investment, but also to gain exposure to revenue generated by the sale of the berries from the trees that are grown as a result.

With this kind of creative thinking, Reis says, blockchain-based finance can unleash forces for increased prosperity, social inclusion, environmental responsibility and the greater good.

Highlights

  • The problem with Financial exclusion: “I've seen many women struggling and trying to get access to credit through those department stores' cards, trying to have credit to buy a machine that irrigates your coffee, or all the things that you end up paying thousands in interest rates and crazy percentages for a department store because you don't have access to a credit card or financial service from the traditional industry.”
  • Gender and the capital crunch: “When you open a bank account, that is also the first step into identity, to have an ID and then to have the education, proper education, to start a business and to build a business plan and to allocate the money for the long term. Many of them … don't know. I grew up — even being privileged in a school that was a private school — I didn't get access to that, as well. In Brazil, the focus was not on being entrepreneurs, but to have … careers in the government or either like in other industries, but they never focused on entrepreneurship.”
  • Brazil’s regulatory regime: “The market regulator has created a sandbox, and there has been a lot of work done in a progressive way by the government. But it still is at a governmental pace, so it takes longer to adapt and to accept innovation than we would wish, because things happen so quickly, and especially on the crypto side of the market — NFTs, the metaverse and decentralized finance. The government will be slow to catch up. But I do see it as being beneficial to create a framework for guidance for the ones that want to do good and the use of that technology for good being highlighted, and those experiences being broadcasted into other countries that have the same challenges. People before used to see just the speculative side, with the trading and currencies, which the government is afraid of.”
  • Infrastructure before adoption: “Now, more global institutions are looking differently at blockchain and Bitcoin. People are perceiving it in a more positive (light). After (Tesla founder) Elon Musk and also … El Salvador declaring, it's super-positive. But you do need to create the infrastructure, as well. Like, you can announce, ‘Okay, everybody, we’re ready to accept Bitcoin,’ but who will hold the private keys and who will help people to understand the risk of holding or not holding their own private keys? There are many underlying aspects that people are not teaching — how to use it — and this can be a risk, too. You’ve got to be prepared not only with the announcement, but also with the infrastructure necessary for people to use that for good.”

Transcript

Angie Lau: Would we still need physical banks if blockchain takes over? What about crypto's carbon footprint? Is technology progressing equality?

A lot of really good questions here on today's episode of Word on the Block, the series that takes a deeper dive into blockchain and all the emerging technologies that shape our world at the intersection of business, politics and economy. It's what we cover right here on Forkast.News

I'm Editor-in-Chief Angie Lau.

Taynaah Reis grew up in Brazil. She watched her mother take daily trips to the local bank, often spending hours at a time there. Taynaah would make a play-bank at home, waiting for her mom to return. She promised that when she grew up, she would build the bank of all banks and make her mom proud — a bank that did not require all those long trips to a physical bricks-and-mortar.

And now that young self-taught technologist who had a dream to build the bank of all banks is sitting with us right here today as the co-founder and CEO of blockchain financial services provider and neobank Moeda Seeds bank, which offers banking service to underserved entrepreneurs, women, farmers and many more. Taynaah Reis — named one of the 12 young most innovative leaders to watch by Forbes in 2017 — joins us now.

Taynaah, welcome to the show.

You grew up in Brazil and it's a real struggle. For our audience, it'd be great to understand just from your perspective, how Brazil, banking, and how that part of the world really struggled with financial services.

Taynaah Reis: Thank you for having me here. It's a super-pleasure.

Yes, growing up in Brazil has been challenging, especially to see most of the women-owned businesses not getting a range of financial services that are tailor-made for their businesses, their ideas, and for them to thrive and to succeed along the way in their journey — being individuals in informal businesses or larger businesses too — especially in the rural areas as well as the communities, indigenous communities, and other minorities that are super-deeply affected. The average person in Brazil doesn't have access to the majority of financial services that a wealthy person does. I figured that this is not only a Brazil problem — in Latin America, in Africa and Southeast Asia, many countries don't have the same. 

Also, culturally, it is hard for women because Brazil is still a very ‘machist’ country, so many of the wallets and the banking records are in the name of the husband usually, and the land and collateral, and things that they need to have access to a larger credit, or affordable credit, are usually in the name of the man of the house. So this becomes a problem when they look for credit — and they don't get it. I've seen many women struggling and trying to get access to credit through those department stores' cards, trying to have credit to buy a machine that irrigates your coffee, or all the things that you end up paying thousands in interest rates and crazy percentages for a department store because you don't have access to a credit card or financial service from the traditional industry. 

And also the education, the financial literacy that most don't have. When you open a bank account, that is also the first step into identity, to have an ID and then to have the education, proper education, to start a business and to build a business plan and to allocate the money for the long term. Many of them … don't know. I grew up — even being privileged in a school that was a private school — I didn't get access to that, as well. In Brazil, the focus was not on being entrepreneurs, but to have … careers in the government or either like in other industries, but they never focused on entrepreneurship.

So for me, growing up was a struggle too. Even having access to other companies and friends, (it) was hard to raise venture capital for my business. Being young and a woman in Brazil, that’s hard, too. So I found in cryptocurrencies the first way to get access to finance, to be able to finance the business that we have today, thanks to blockchain. We were able to raise in an ICO — an initial coin offer — the funding that was required to build Moeda. So that, for me... it was an opportunity, like raising US$20 million equivalent to a series-A in 2017 was hard, I think, to do. So, in two weeks we were able to raise it, and (we’re) still like, going, ‘Amazing.’

Lau: You list all of the frustrations that you're experiencing, from traditional finance to a largely patriarchal system in Brazil and Latin America that really restricts access to finance for women. And then you place upon that … these social expectations — that you're not necessarily expected to be an entrepreneur, and the system is not set up to support that kind of ambition. And so here you are — you’re creating access to liquidity that funds ideas, a new sort of thinking of a bank. It's kind of what we’re seeing with a lot of projects like Moeda. Uniquely in Latin America, help us understand, just kind of politically, what the frustrations are, as well, for the average, everyday person to be able to access funding, to be able to actually do the everyday necessity of banking.

Reis: Today's a big time of uncertainty. And when Covid hit, it brought another level of uncertainty to the people. Investors that are looking to that kind of impact investment, they don't trust a lot. They want to help, but they don't know why — but they want to verify as well, as the business is going. So for the first time, like, five years ago, when I presented at the U.N. a couple of ideas related to Moeda — ‘Do you want to invest in someone in Brazil, in a cooperative in Brazil and small businesses in Brazil?’ And people would tell me, ‘No, your politics... this, and that is too risky for me, I cannot do it.’ So I told them, 'Oh, if we present this application through the app, you can see step-by-step the business, how much they will be spending, their key performance indicators... Would you invest if you trust the whole thing?’ And they said, ‘Yes, if I can see it in real time — what they are doing — I would invest — and where my money is going.’ 

So we created all those metrics and I started to see early, Bitcoin and the underlying technology of blockchain to build that trust. So, the more information that we share, the more impact metrics that we have, and everything that’s needed for the people to build that trust — that's where I found the most meaningful part of blockchain technology to build that along the way and to be able to measure how many jobs we made, the carbon footprint, and how sustainable it is — the carbon that people are investing into middlemen.

So today, people can invest. You can create an account at Moeda … in three clicks, you'll be able to invest in a woman-owned business. It's as little as US$1.50 — less than a coffee in the airport. 

So now that there is no barrier with technology, we can make it easier and affordable for people that are looking for those kinds of investments to do good and do well. That doesn't need to be a trade-off. You can have the financial returns as well as the impact on social and environmental returns. Through them all, through those years, we have proven this, and you are able to verify through the blockchain. So those things are important for building that bridge of trust in a country like Brazil, where it is too risky for most people.

Lau: Tell us how Moeda actually works. When you structured the bank, how did you want it to work? What’s the philosophy behind it, and what are the step-by-steps when people want to bank it?

Reis: Our philosophy and our mission is to humanize finances and distributed impact. The main idea was to get access to capital and access to affordable capital and education to the ones that most need it in Brazil, particularly. And what we do — we give preference to women. We don't exclude men's preference. We curate projects. Our team can help, from business plans to co-branding, and to think through niche markets and how to put in place services and products. And we can go and guide all through the way through our partners, as well, so people can reach out to us and sign up to one of those programs. We have a ‘gamified’ way to do … microcredit. So even if women don't have any credit history at all, they can invite another five women and those will be the support group for her into the journey. They will receive daily… KPIs — not only financial KPIs, but also if they reinvest in the women and they hire more women, they will benefit together through this journey. So we created economic incentives with tokens along the way, so they can receive the benefit of doing good within the ecosystem. And on the other side, for people that want to do the impact investment, (it’s a) super-affordable way to do it — and easily with all the transparency and trust, they can come and look at those projects on our website, create an account and invest right away either in the cryptocurrency or, if it's in Brazil, through deposits.

We also have a partnership with MasterCard. We are part of the Start Path program, so the people in Brazil receive a prepaid card, and we can track and monitor and verify all the expenses into that, too, to bring all the certainty that’s needed that they are applying the money for the reasons that they are linked within the program. And we do the metrics and calculate all the gender equality aspects, and everything that's owned by the level of the transactions into that too. And on Covid, we launched a payment gateway for marketplaces, so that was the biggest line of credit that we offer, because we anticipate everything that they gain from the marketplace and also all the contracts from supermarkets that pay them. In 90 days, we anticipate for one day, so that was the biggest line of credit that grew and (it) helps them to plan crops and other things. So, from one technology, I see (it’s) all connected in how we can help and support with a single account and an ID, like, how much benefit they can have, both on the marketing side and access to more capital, and guarantees that they can build upon the time, as well. They accredit with us, and have more and more opportunities.

Lau: What did blockchain, tokenization and crypto allow you to do as a bank that perhaps a traditional bank could not do?

Reis: The first thing is — as I mentioned — the funding that came from a non-traditional way. So, to build up, the bank was able to do so through an initial coin offer, the ICO, that we made. But after that, with the currency that we’ve created, and all the steps like cross-chain into different protocols, today we use the Ethereum protocol for the main currency. The Stellar protocol for stablecurrency —  stablecurrency is easier for adoption by people, but we can measure the level of transactions, like each dollar, each euro, each Bitcoin that is going to the project, how many jobs that created and the social and environmental impact of the transaction, so (it) brings another level — an extra level — of sharing information that can help to build trust along the way. People want to help, but they want to verify that help. Even for the environmental, social and governance aspects, people want to know I'm planting trees, I'm saving this and this person is like, ‘Where? Where are the trees? Where are the people and how is the impact?’ 

Lau: Totally — accountability. 

Reis: Absolutely. For accountability. It's the key I see in blockchain. Now, we have the COP26 (United Nations Climate Change Conference), and many discussions on climate change to hold every country accountable and every individual accountable, as well. We can benefit from this technology over time. We see opportunities to create different economic models and assets that are sustainable over time that can embrace what we do with coffee, what we do with plantations and crops, and even Amazonia. We just launched, recently, a non-fungible token. We see those types of assets like evolving to different economic models that can benefit in the long run.

Lau: It's a disruptive idea — there's zero doubt about it. The adoption is incredible, especially in Latin America. And it can also be viewed as a little dangerous if you’re the government. What’s the view of Brazil, and what’s the view of the political class, the government, as it pertains to the speed with which crypto is being embraced — and Bitcoin etc — versus what it's trying to do with its own real — and its own fiat — money?

Reis: The government has been very proactive. The market regulator has created a sandbox, and there has been a lot of work done in a progressive way by the government. But it still is at a governmental pace, so it takes longer to adapt and to accept innovation than we would wish, because things happen so quickly, and especially on the crypto side of the market — NFTs, the metaverse and decentralized finance. The government will be slow to catch up. But I do see it as being beneficial to create a framework for guidance for the ones that want to do good and the use of that technology for good being highlighted, and those experiences being broadcasted into other countries that have the same challenges. People before used to see just the speculative side, with the trading and currencies, which the government is afraid of — and is still afraid of — to protect investors and really make sure that people are not taking too much risk or being scammed… like, so, the government wants to protect that, but it would be also good to create those regulatory frameworks where companies like mine feel comfortable to create and innovate and be disruptive, as we can under those frameworks. So I do say … they should be faster.

Lau: You know what? That’s definitely the tension that exists right now. It's this dance, this very delicate dance between regulators and innovators such as yourself. I think both will agree that one needs the other, at the end of the day, for growth in the industry, for mass adoption in the industry.

But one thing about mass adoption that I wanted to ask you about was definitely one of the biggest pieces of Bitcoin news this year — El Salvador's recognition of Bitcoin as legal tender. Since then, we've seen a lot of Latin American nations and politicians even voicing support and even hinting at the possibility of following suit and adopting Bitcoin as a currency. What is the public perception of Bitcoin and crypto in Latin America? If you could kind of share with us this perspective, and what is it growing up — even for yourself — and just also the instability of the system in Latin America that kind of lends to this interest in potentially using Bitcoin as a national currency?

Reis: Now, more global institutions are looking differently at blockchain and Bitcoin. People are perceiving it in a more positive (light). After (Tesla founder) Elon Musk and also, as you mentioned, El Salvador declaring, it's super-positive. But you do need to create the infrastructure, as well. Like, you can announce, ‘Okay, everybody, we’re ready to accept Bitcoin,’ but who will hold the private keys and who will help people to understand the risk of holding or not holding their own private keys? There are many underlying aspects that people are not teaching — how to use it — and this can be a risk, too. You’ve got to be prepared not only with the announcement, but also with the infrastructure necessary for people to use that for good. So that’s why I see the technologies we’ve been building to kind of be this bridge, like, for institutions and other fintechs that want to accept and enter this world, and want to do the custody… have all the safe and secure methods... they can come to us today and, like, we can support (that) because we have been on this journey to navigate in both industries.

But you need to prepare people with education, because it still is an environment and a market that has hundreds of thousands of coins. There are projects there that do good, and other projects that you need to study and see the risk of them, too. So I see a super-positive — that people look at cryptocurrencies now with a different eye because they see not just the speculative part, but now they see the the technology as being beneficial for accountability to track and measure products, logistics and other things that people would not have access to before … But I do see the government supporting, and supporting the people with education and infrastructure, to join this movement today. Everybody will benefit from that.

Lau: And Taynaah, you just told us that you needed to move to a secondary location, so I'm going to let you do that, but I know you're still listening, and I want to ask you this question about ESG. There’s just a lot of real interest about crypto and the carbon footprint that it also has on the environment and the like, and those concerns. How are you mitigating those concerns?

What are those ESG concerns? What are those carbon footprint concerns that you're trying to be thoughtful about and how you potentially could help mitigate?

Reis: Especially now, with the COP26 and people being aware about the climate change consequences that will affect all of us — not only people from the government that are now deciding, but all of us — it's into the small decisions, the daily decisions that we can do the change, be they investment decisions or consumption … So if we can look at products today that have less impact on our environment and benefit more people to support our environment, those are the products that we should be buying and investments that we should be making to companies that benefit Amazonia and create benefits like protecting other areas in the world. And, yes, we can — through blockchain — share that information. I think every (piece of) information is good for the public … being public or being given by companies in a strategic way. We have Dow Jones sustainability, we have many stock markets that are now looking to implement metrics and index stations and algorithms to support those companies and to be highlighted. But there is a lot to do to include ESG assets into common people's portfolios. And that's what we have been trying to do — being democratic in a way that people can invest and access that kind of sustainable green asset. The carbon credit is not regulated in many countries, and it's nonexistent in many countries, as well. Creating a global framework in a global marketplace for carbon credits would be amazing, but not only to compensate carbon, but also to invest in people to protect areas. We need to look into those things, as well — like, you can plant trees on a billionaire's farm, but also it will be good to help small agriculture farm-holders to protect their farms and not only plant monoculture, but also bringing in tropical and like other types of cultivation for crops that are more sustainable over time. So there is a lot to do. But technology can support and help on a daily basis.

Lau: Absolutely, because there's a flexibility in the speed with which you can enter these partnerships. One of the partnerships that you mentioned is with Brazilian forestry manager 3Agro to create NFTs out of tokenizing the production of freeze-dried açaí, for example — to help preserve the Amazon rainforest. These are the actual things that you could offer up customers and create a community around it, and I think that's really one of the really important aspects of of blockchain and crypto — it's that there really is a community feeling around it, and because of smart contracts and because of the smart-contract nature of the the functionality of some of these protocols, it means that I can trust that when I say that I'm investing or that I want to participate in it. It's actually being done.

Reis: Absolutely. We were pioneers in that. It was the first NFT for the Amazon rainforest region. So by purchasing one NFT, the investor can get access not just to plant 1,200 açaí trees in that region — equivalent to one hectare — but also participate in the revenue of the sales of the açaí under production at the end of every six months. So that’s one of the economic models that we can see how sustainable they can be through the future, not only to compensate carbon credits, but also to support entrepreneurs in the region to continue in their businesses in a sustainable way. They plant not only açaí, but a range of other things into a syntropic (farming model), say, which is super-sustainable for the crop, brings more nutrients, and people can get to see how other practices can be sustainable. We can share that, and investors will benefit not only from the financial returns of the project, but also contribute in a sustainable way to the Amazon. So, those types of assets are passionate to build technology and to see that, to support people and individuals and businesses, especially in the areas that need it the most.

Lau: I kind of want to bring it back full-circle, because it all started with the frustration you felt as a little girl growing up in a system that disenfranchised a lot of people — disenfranchised a lot of women, and kind of railroaded a lot of people into a traditional structure. You recently spoke at Hong Kong Fintech Week, along with myself and so many great leaders in blockchain. How has this become a global phenomenon that allows you to take this idea that was really seeded in Brazil and bring it to an international audience? What's your vision there, and how do you view Asia?

Reis: There’s a lot of courage and persistence. In our expansion plan, now we feel ready because we’ve developed so many beautiful technologies to be that bridge between the traditional way... and to people to get access, and the adoption to be quick with a well-designed app, but also the other way to access the crypto world, and to bring crypto to those challenges and issues in the real world, too. So… connecting and creating that bridge between the metaverse and the real world. I do see today that we have the proper infrastructure to do so, and we want to bring it to other countries... Latin America and Asia... Like, most of our investors today are from Asia, and I'm super-thankful for that, because one day I asked a question to one of our investors —Why did you invest in Moeda? This thing will be, like, on the other side of the world.’ And he said to me, ‘What you wrote in the white paper — if this works, my fourth generation can benefit from that, and that's why I invested in you.’ And I found it so beautiful, because he could see — in the long term — the vision of helping not just one generation but, he told me, the fourth generation. So it was a very special moment... I do see in the long term how things that we are creating in a collaborative way and, like, being able now to share our experience and our technology with other countries. This, for me, is where my heart is today —  in building technology to serve people — and that is aligned with my personal mission, as well. So, I do see it as a bigger, embodied opportunity for many people that can benefit from what we do today. And I’m very excited to now expand what we’ve done.

Lau: It's amazing to see how far you’ve come since those many years ago in 2017 — the ICOs. A lot of people during that phase didn't have projects that survived, and yours did. And what you've created is now starting to reach an international audience. But I think it just boils down to that dream that you had, which is, ‘We can do better.’ And when we think about that, it's all about access. It's, ‘Can we give people better access?’ And I think you've definitely started us on that journey with what we're seeing in Brazil, so good for you. What's next for you?

Reis: Next, right now, is to expand. I can't wait to see our technology benefiting other people and bringing more projects from all over the world to our portfolio, and to share the learnings and experiences with people from all over the world. I do see — in Africa, in Southeast Asia and India and Latin America — (it) will do so well, like, to contribute to other companies, fintechs, payment providers. I do want to see the gender calculator being everywhere in other marketplaces so people can get to know the products they are buying and how it's benefiting women and how this is being sustainable. I want to see people on a daily basis not thinking about impact investment in the future — they will just do it naturally because it's part of their day-to-day portfolio of average banking products. I want to see my children and my grandchildren showing me, ‘Mom, this is my NFT. See my drawing, see the music. See, I'm helping Amazonia with a … beautiful NFT gallery.’ That's what I would see in the future — connecting to many worlds and many people, and connecting them to do good together. Like, many of the challenges that can be gamified and benefit the real world in the sense of collective work towards many of the objectives that we see not only in climate change but ending poverty, hunger, and many of the things that are possible with technology and with people being the humans that are behind the technology, and supporting that to cooperate for the greater good.

Lau: To say that it’s rare to hear this kind of language coming from the CEO of a bank is probably a little understated, but this is what this technology brings — which is a different choice and different perspectives, and also important philosophies that a lot of people resonate with. And if that's your consumers who are sharing liquidity with you based on that, it's a whole redefinition of this space.

Taynaah Reis of Moeda bank, thank you so much for sharing the story, your vision, what's happening in Brazil, Latin America, how that also translates to Southeast Asia and large swaths of Asia that we're also seeing with so many people unbanked, and really giving us a glimpse of of the future of banking. It was a pleasure speaking with you.

Reis: Thank you so much for the opportunity.

Lau: Taynaah, thank you so much. And everyone, thank you so much for joining us on this latest episode of Word on the Block. I'm Editor-in-Chief Angie Lau. Until the next time. 

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