ACTIVE BANKING

THE NEW WAY TO DO GOOD

A VISUAL INTRODUCTION / March 2019

THE STARTING POINT
While global poverty rates have been cut by more than half
since year 2000, one in ten people in developing regions is still
living below the international poverty line. Significant progress
has been made in many countries within Eastern and
Southeastern Asia, but up to 42% of the population in
Sub-Saharan Africa continues to live in poverty. As account
holders, people are more likely to take risks that spur economic
growth by using other financial services to build businesses and
invest in education or health- all key factors to tackle poverty
and hunger effectively.

From this insight, Active Banking is born: The first P2P lending
platform running on blockchain where buyers and sellers can
negotiate risk-free microloans via smart contracts (trust
contracts); and earn reputation tokens that are recognized
across borders. With no need for users to own an ID, bank
account or a credit history, Active Banking paves the way to
true financial disintermediation by mass collaboration, offering
a pragmatic solution to fight social and financial exclusion at a
global scale. 
TRUST CONTRACTS
In Active Banking goals are set a priori, and peers need to agree
on a set of success variables before a trust contract can be
signed. Once issued each contract is irreversible. In this way
dishonest users can’t find any good reason to use the service.
To make a trust contract possible, a Recipient is required to own
a trust deposit: meaning that he must load onto his account a
quantity of stablecoin (e.g DAI) which is equal to the sum he is
asking for, plus the Giver’s final profit on the loan.
Once both parties find consensus on the terms of the trust
contract and sign it, the Recipient’s trust deposit remains
frozen until the end of the contract period. At the same time the
same amount of money -minus the Giver’s interest on the loan-
will be automatically transferred from the Giver’s account to
that of the Recipient’s. This makes it impossible for neither
party to cheat the system.
At the end of the each contract, the Recipient’s success will be
paid back in reputation tokens based on his performance
-which will be accredited on the platform’s blockchain-
allowing recipients across the network to grow credentials and
negotiate better credit conditions from one or multiple givers.
On the other hand, the Giver will always gain a safe return on her
investments; unless she doesn’t deliberately decide to
negotiate more profitable -but risky- conditions.
The open ledger documenting the transactions history -along
with the user-generated content documenting each unique
story- can also support individuals and NGOs to interact
transparently across borders, measuring the impact of their
investments and build more effective strategies to target
common goals.
SCALE
Active Banking allows for as many lending and borrowing
opportunities as there are recipients and givers on the
platform. You can imagine how this can be flexibly scaled from
a local to a global dimension, to envision multiple scenarios
where individuals, communities and NGOs can support each
other out of geographic, cultural and social boundaries. As each
trust contract is born out of a fully transparent and unique P2P
interaction -which rewards honesty by default- the potential for
development and failure of each collaboration resides
exclusively in the hands of its users. In the following pages (see
case 1. and 3.) we can also see how -by active participation-
givers can potentially earn a basic income through the service.
1. DEVELOPED TO DEVELOPING COUNTRIES
Recipients in developing country -individuals as well as groups-
can start the search for any number of givers -worldwide- in
two simple steps: 1. Collecting the money needed to allow a
trust contract freeze (e.g. converting cash or M-Pesa via
Coindirect or Localcoin); 2. Highlighting a clear business plan by
using a template (e.g. Canvanizer)- to provide a realistic model
showing how their venture will impact their lives and those of
their communities.

On the other hand, givers -individuals as well as organizations-

in developed countries, can get inspired by the recipients
initiatives and individual narratives and decide to support their
ventures. In this way givers can make small but steady margins
out of their owns savings, while allowing recipients to actively
grow a reputation based on their factual entrepreneurial skills
and performance. The credentials that each recipient can earn
have the same value across the whole platform and empower
them to negotiate more convenient microloans from single or
multiple givers. This to encourage honest recipients to further
expand their businesses while enforcing their reputation at
local and global level- especially where access to credit and
education is very limited.
2. DEVELOPING TO DEVELOPING COUNTRIES
Recipients and givers can access Active Banking to negotiate
trust contracts which will dramatically improve transparency
where local and national corruption is high and bureaucracy
inefficient. In this way socially and financially excluded
individuals, communities and businesses can find a
decentralized and trusted platform to support, self-organize
and monitor development while building a legacy over time.
3. DEVELOPED TO DEVELOPED COUNTRIES
Recipients upload their bills (e.g utility bills; fines and tickets;
universities fees; etc.) asking givers to anticipate the needed
sum in order to avoid paying penalties on their open debts.
Givers can bid to microfinance their debt and secure a profit of
the loan, collaterally supporting recipients to cope with
unexpected expenses or lack of immediate cash availability. If
demand is high, recipients can negotiate more convenient
interest rates on each loan.
THE OPPORTUNITY
1.7 billion adults remain unbanked today. That means that about
22% of the world population have no access to financial
services. We envision an opportunity between this massive
need for financial inclusion in developing countries and the
growing mistrust towards financial institutions in post-industrial
economies. This is why Active Banking addresses this issue by
providing a frictionless way to give and receive support
autonomously and anonymously, using blockchain as trust layer
to allow a safe interaction. The market potential is huge.

Creating an open and decentralised marketspace, Active

Banking allows users of all age and background to empower
each other across borders. By charging a percentage on the
givers profit on each loan -while keeping receivers free of
charge- Active Banking can quickly grow a reputation in both
developing and developed countries; and use its profit to allow
scaling and innovation to a global dimension- providing hundred
of thousands of excluded individuals with a concrete solution to
tackle poverty and corruption while harnessing human
potential.
THE PLAN
Currently the revenue model plans to take 5% of all transactions
from all givers of the platform, leaving receivers free of charge.
This means if we have an average loan size of $1,000 and
onboard a transaction population of 100,000 onto the platform,
we can generate $5,000,000 in revenue in a relatively short
period of time. The team will start small with three full time
employees.

Operational expenses for the first six months conservatively

equates to $160,000: $70,000 for software development,
$30,000 for administrative work, $30,000 for marketing, and
$30,000 for legal and financial assistance. Due to the potentially
high response to market adoption based on need, we estimate
that the highest cost will come from software development,
legal compliance, and on-boarding of givers to the platform. We
will need to source more funding as Active Banking grows to
support more employees on the ground of each site.