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Cashtree
Cashtree is a digital nano-lender that offers affordable and fast loans using an Android mobile application. The Android mobile app is called Cashtree. It allows clients to apply for loans ranging from $10 to $200 with a reimbursement plan of up to 30 days. Loan approval depends on the borrower's credit score and fraud mitigation calculated automatically by the application taking into account the information provided in the registration data, phone data, general payment behavior, location and movement data in a real-time and the ability to pay to predict their credit worthiness of the borrower . When the loan is approved, the amount requested is disbursed to the Orange money or MTN Momo borrower's account within 5 minutes.
Define three specific objectives that you would like to achieve with your proposal.
The three specific objectives that I would like to achieve with my proposal are:
- Accelerate financial inclusion on a permanent basis while contributing to the creation of wealth, the improvement of living conditions.
- Open credit to people who have been excluded from the formal financial system.
- Make the loan process simple, fast, and no hassle and transparent, so that everyone can easily access credit.
What problems (particularly in value chain competitiveness and global disruption) are your community’s stakeholders facing due to the Covid-19 pandemic?
Imagine having the ability to process a loan in 1 minute with no collateral, no hassle, and no paperwork!
We have successfully developed a digital lending application that not only generates an entire loan within the 2 minute timeframe but that can also facilitate disbursement to a customer in less than 5 minutes.
With the help of artificial intelligence and advanced analytics, we have created an end-to-end loan process that is simple, safe, fast, and transparent!
According to the World Bank and McKinsey respectively, almost 1.7 billion people throughout the world do not have a bank account and there is a $2.1-2.5 trillion unmet need for credit in developing markets. Banks and other traditional institutions are not positioned to meet the capital needs of the underserved due to the lack of financial data on these populations
In Cameroon, Finscope reveals that 10% of the population have access to banking services, 39% have access to other formal non-banking services, 15% use informal non-banking services and 36% are excluded of both services.
One pathway to financial inclusion is through CashTree. And we are positioned to be the first digital platform in this effort in Cameroon. The flexibility of our terms; the ease of use; and the transparency of our practices make CashTree a viable way to:
- Increase banking access while contributing
- The creation of wealth,
- The improvement of living conditions,
- The development of the private business sector,
- Make communities stronger and drive economic growth.
With the spread of the pandemic worldwide, governments, institutions and businesses are migrating to digital technology. We have seen new ways to connect; mainly via video chat such as Zoom technology and telehealth. Grocery stores have moved to online ordering. Schools in many countries have moved 100% online learning. Cashtree follows the same logic by providing 100% digital services which aligns 100% with Digital change-maker challenge . The Cashtree application is user-friendly, simple and can be easily access by anyone with smart phone. Our mission is to promote financial inclusion and improve better living conditions of marginalized and vulnerable people
What minimum viable solution(s) are you proposing to address the challenge(s) in your community?
Cashtree has developed an Android application and its own credit scoring model which integrate, airtime data, loan repayment performance data , phone data, mobile money transaction, location and movement data and deploys machine learning algorithms (Artificial Intelligence) and statistical modelling on the data available on customers’ cell phones, to predict borrower credit worthiness. Cashtree is the first digital rapid loan application in Cameroon that offers short-term loans (15 days to 30 days) for amounts between $ 10 and $ 200 on personalized conditions (interests ranging from 0.5% / day to 1%/ day based on borrower credit score). No hidden costs, no warranty or guarantor requirement, no documentary requirement, fast online processing. See youtube video
1- English
https://www.youtube.com/watch?v=nVJeln4HEho
2- French
https://www.youtube.com/watch?v=I_lQ_y73WuU
Share your story (your narrative)
A few years ago, I found myself going through challenging times after the conclusion of a 10-year marriage. That’s when in 2016, I decided to move home to Cameroon for a chance at a business opportunity and better life. During the start-up phase of my business, I felt insurmountable pressure from competitors and administrative hassles alike. Corruption and the process of obtaining a license forced me back to the USA, where I experienced temporary peace of mind. This peace, however, was short lived. In my absence, my wife had filed a $20,000 lawsuit against me for spouse support. While I was gone, she had obtained a favorable ruling against me. In turn, I was asked to pay her $18,990. After 6 months, I found myself sleeping in my friend’s house, barely surviving on loans from my friends, family, cultural association, and former colleagues. This was a result of my driver’s license and professional work license being suspended in a city without public transportation. At this point, I recognized that I needed money to hire a lawyer. Despite the circumstances, I never lost hope. I maintained faith in knowing that I would eventually bounce back.
During confinement, I started soul-searching for new opportunities to either make money in the USA or revamp my business back home. I felt ashamed to seek financial aid from friends and family, because this was something I have never experienced before. Their comments and feedback didn’t help. That’s when I began brainstorming to come up with a new way to lend money without resorting to friends and family. At the same time, I didn’t have a way to develop this idea without money. Every idea began to feel impossible.
4 months later, my lawyer called to share good news: the court had agreed to release my driver’s license and professional license. At long last, I could go back to doing what I love without relying on others to support me. The end of this dark chapter in my life had finally arrived. 10 days later, I reviewed a letter stating that I needed to contact the RMV and the professional board to renew my work and drivers licenses. 1 month later, both were reestablished. I was able to immediately land two positions, paying $65k and $68k respectively. I decided to take both, as the time requirements were 4 and 3 days per week. Just 6 months later, I paid back the $20,000 I owed and gained financial independence.
Recently, I began working with a developer to create the app, CashTree. As a micro lending platform, cashtree offers an expedited way to receive loans on an affordable basis, directly through Android. Clients can obtain loans that range anywhere from $10 to $100. Approval is based on credit score and fraud mitigation. These are both calculated automatically through weighing registration data, phone data, generate payment behavior, location, and movement, all in real time. As a result, credit worthiness is established for the borrower. After loan approval, the requested amount is distributed to the Orange Money or MTN Momo borrower’s account within 5 minutes.
Despite the hassle-free application process, the repayment period is from 15 to 30 days. Additionally, the interest rate is a substantial .5% to 1% per day. This is in addition to processing fees. New borrowers are also limited to a maximum amount of 5000 FCFA ($10), which is required to be reimbursed within 15 days. During this window, repeat borrowers will have the ability to borrow up to 50000 FCFA ($100), contingent upon their credit score. They will only have 30 days to repay this amount.
Please provide any additional relevant information that you would like to share.
Cashtree's ability to rate customers based on their smartphone data and disburse loans instantly is an innovative approach. This innovative approach will set us apart from other local financial structures, such as microcredit companies and potential competitors. With Cashtree technology, we can be based on data received from customers' smartphones alone, identify the traits associated with good and bad borrowers. Also, the telephone numbers and geographic area of a customer are determining factors of the borrower creditworthiness
6-How people will access our solution
People will:
1. Download the Cashtree app
Use your Android phone to download Cashtree from the Google Play store.
2. Create your account
Fill out a simple form in under 5 min and submit for a quick review.
3. Apply for the loan that meets your needs
Loans are conveniently sent to your mobile money in minutes
4. Receive the loan into your account
Repay with your mobile account. Build your credit to unlock larger loan
7-Technology-Readiness Level
95% Ready. The app will be complete by September 30, 2020
8- Market size
According to Reportlinker publish Nov.19, 2018 PRNewswire, the global digital lending platform market size is expected to grow from USD 5.1 billion in 2018 to USD 12.1 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 18.7% during the forecast period. Major growth factors for the market include the proliferation of smartphones and mobile devices and organizations' continued focus on the digitalization of financial services to enhance the customer experience. Cashtree wants to be part of the growing market. The mobile lending business in Cameroon still at the embryonic state compare to other regions of Africa. The general market size targeted by Cashtree is presented in the following table
|
Country |
Banked |
Others formal bank |
Informal only |
Excluded |
Target market size |
|
Cameroon |
10% |
39% |
15% |
36% |
13 million |
|
Cote d’Ivoire |
15% |
30% |
11% |
44% |
11 million |
|
Senegal |
17% |
20% |
10% |
63% |
14 million |
|
Burkina Faso |
18% |
22% |
21% |
39% |
8 million |
|
RDC |
12% |
24% |
12% |
52% |
20 million |
|
Benin |
8% |
35% |
29% |
28% |
4 million |
|
Togo |
18% |
27% |
15% |
40% |
2 million |
|
Nigeria |
38% |
10% |
10% |
42% |
60 million |
9- Target market in Cameroon
Cashtree targets 51% of the adult population of a rural and urban area, which represents about 13 million adults who have been excluded from the traditional banking system.
These include:
- Low-income employees
- Micro-entrepreneurs,
- Small farmers
- Traders,
- Public transport operators.
10- Mission and Vision
Cashtree's mission and vision are to expand on permanent basis access to credit to 51% adults excluded from financial services by rending the loan process simple, easy, fast, transparent, and with no hassle so that everyone can easily access credit. By doing so, we will close the 51% gap between people excluded from financial services and those who have access to financial services by 2025. We will contribute that way to the creation of wealth, the improvement of living conditions of populations, and the development of the private sector.
11-Competition
Currently in Cameroon, there is no competition for the mobile loan app in Cameroon. The main competitor is a loan shark down the street.Still, we anticipated that as soon as we launch our business, our business model will shake and may then disrupt the traditional Cameroon financial system and will attract potential investors to a market. But we are not afraid of the competition. We will be ready and well equip to face any competitor wherever they came from
12-Competitive advantage
Cashtree has a unique and innovative approach that will distinguish us from other local financial structures such as microfinance companies and potential competitors. Cashtree platform has the following key capabilities that all the lenders in Cameroon does not have:
- It has a Credit Scoring Engine powered by Artificial Intelligence that assesses the creditworthiness of loan applicants based on the data available on their mobile phones.
- In-built fraud mitigation algorithm that cuts out identity theft and data integrity
- The platform provides detailed performance analytics for the businesses that aid Continuous risk management, including impairments and stress testing.
- The platform collects large data sets from the users. These data sets give a 360-degree view of the customer from their spending habits, the number of loans taken from other lenders.
- The platform can score thin-file clients who have never taken a loan before
- Can identify traits associated with good and bad borrowers, and base on the customer phone numbers and the geographic area, we can determine the borrower's creditworthiness.
Besides our unique technology, we provide:
1- Loans products that take into account the specific needs of the market, the ways of thinking, and the ways of doing specifically to Cameroonians. Thus, you will have 15-day, 21-day, and 30-day loans to customers with no collateral and no credit history.
2- Microcredits without branches. Opening an office is an expensive way to provide financial services. In Cameroon, about 44% of the population lives in rural areas. Most of these rural areas are inaccessible. Opening a branch in every village or town is neither feasible nor profitable.
3- Digital marketing compare to traditional marketing done by traditional microfinance
13-The product
When you are in urgent need of cash to deal with a sudden financial situation that has occurred, CashTree instant loans will be your best bet to receive the necessary funds on time. With CashTree instant loans, you will not only be able to access credit instantly but also choose your repayment duration between 15 days, 21 days and 30 days, depending on your eligibility. New customers or borrowers will be limited to a maximum amount of $10, which must be reimbursed within 15 days. Meanwhile, recurrent borrowers can borrow up to $200 but will have up to 30 days to repay. The interest rate applied is between 0.5% daily to 1% daily depending on the profile of the applicant and the credit history, and the processing fee will vary from 25c pour the minimum loan of $10 to the maximum of $10. We also charge late and penalty fees for 1% per day. The processing fee will be deducted upon disbursement.
14-Forecast traction
We understand that the traction is a proof of concept, but at this time, we have no revenue, which is an indicator of the traction. Still, we can assure you that CashTree will disrupt the financial industry and will contribute significantly to financial inclusion Cameroon and other targeted countries. If we have an angel investor, our estimate traction for the first 3 years will be as follow:
First Fiscal Year: $3.38 million
Second Fiscal Year: 5.076 million
Third Fiscal Year: 6.768 million
15- Business model
CashTree will generate revenue by charging interest between 0.5 % and 1 % per day on each loan. A loan made by CashTtree mature in 15 to 30 days. In addition to each loan, we charge the processing fee, which varies from 25c pour the minimum loan of $10 to $10 for the maximum $200. We also charge late and penalty fees for 1% per day.
16-Basic financial forecast
We understand how hard and rigorous the process people go through to obtain loans from banks and other financial institutions. We hope Cashtree will solve people's problems by making the process easy, simple, fast, and reliable to create a substantial base of happy and satisfied clients. How do Cashtree if going to make a million dollars? We must help a million people solve their problems. Solve a problem to create revenue. If we solve a million people's problems, we will be on track to make a million.
Outlined below is a detailed sales forecast for Cashtree, which we believe and hope we will surpass with hard work and perseverance.
We estimate at the beginning about 10000 customers every month with about 334 customers/day in the next 5 months. The average loan for a new customer will be a maximum of $10, which must be reimbursed within 30 days to unlock the door for more loans. Recurring borrowers will be able to borrow up to $100 depending on the credit score but will have up to 30 days to repay.
Daily interest accumulated: $10*0.8%=0.08 *15 days =$1.2
Add processing fee: 0.42
Total: $1.62
For each $10 loan, we will make a profit of $1.62
If we loan $10 to 10000 customers, we will make 10000*1.62=$16200 in 15days
In 30 days, we will make $32400
Our goal is 50000 customers/per month after 4 months
If we make $20 loan, the daily interest will be $20 *0.8%=0.16
0.16*30 days =$4.8
Add processing fees: 0.84
Total: $282000
If we make a minimum of $282000/month in one month, we will be making $3384000 a year
As I state at the beginning, if we want to make a million dollars, we must solve a million people's problems to be on track to be a millionaire. The safer loan we made, the more revenue for Cashtree. We anticipate that we will have 75000 customers /month in the second year and 100000 customers/month for the third year
First Fiscal Year: $3.38 million
Second Fiscal Year: 5.076 million
Third Fiscal Year: 6.768 million
Studies in other African countries state that up to 97% of low-income borrowers pay back their loans under the agreed-upon terms.
The above forecast was done based on what can be gotten in the industry and with the expectation that there will not be any major economic meltdown and natural disasters within the next three years in Cameroon
We also hope there will not be any fierce competitor offering the services we offer to our customers. But if that happens, we will be ready for the competition. It will also be worthwhile to note that the above forecast might be lower, and at the same time, it might be higher.
To meet our goal, we will invest in marketing on social platform like:
- YouTube
Also Cashtree will be advertise on:
- Local TV and Radio
17-How we will measure our progress
1-Geographical expansion
At the end of the second year, Cashtree will expand operations to Senegal, Ivory Coast, Burkina Faso, RDC, Benin, Togo, and Nigeria to make the business more profitable. At that time, the name of the company will change to Cashtree international, and the website will be www.cashtreeinternational.com.
2-Vertical expansion
At the end of the first year, we will launch a new service call Cashtree Flexplan. Cashtree Flexplan is a payment option that lets customers buy a smartphone on credit and pay later with easy installments. How it will work. Customer will get a credit score which will determine which devices he or she will qualify. After that, the customer will order and receive the smartphone preinstalled with the locking app to pay for the device via your chosen payment plan. If you pay all your installments, we will unlock your device. If you missed a payment, we would lock down until payment has been made with applicable fees.
18- Investors
How are we going to finance our start-up?
Cashtree hopes to raise between $200 thousand and $5 million from venture capitalists or angel investors to support our start-up. Our business model has been the main contributor to financial inclusion in the East African region. However, in Central Africa, this business model has never been implemented. CashTree is, therefore, the first digital lending platform in Cameroon and Central Africa. We believe that we will position ourselves for long-term stability and eventually extend our operations to Ivory Coast, Senegal, Nigeria, Benin, Togo, Burkina Faso and RDC. So please join us on our mission to stop the cycle of poverty through creating accessible financial services for all.
19--Other Investor
We invest so far $24000 for application development and $5000 for computers and web design. In addition, I will invest $20000 of our own money to start making a loan by December 1, 2020.
20- Use of Funds
The investors’ funds will be used for:
- Growing business (make loans to customers to generate revenues) 90%
- Advertising and marketing 5%
- Pay for furniture and office supply 2%
- Pay key personnel 3%
21- The Team behind the Innovation
Romain D Voufo, CEO, Co-Founder Bachelor’s in management and master’s degree in accounting and finance from Catholic University of Central Africa . Currently Senior Technologist at Houston Methodist Hospital, USA
Larisse Voufo, Co-Founder Computer Science PhD graduate from Indiana University’s School of Informatics and Computing. Currently a Software Engineer at Google, Inc, USA
Your Final Proposal for challenge
yes
way to go!
Hello Romain, I hope you are well.
I went over your app layout, it's simple and very nicely done. The app is well planned, with every aspect of business. I have a couple of questions and suggestions ;
1) Who's going to finance the loans, if they are coming from your own pocket or do you have investors on board with you.
2) Have you obtained any license from the government or authorities of the country of operation? as there are laws with regards to giving loans.
3) The AI is a great thing to be used here but how are you going to deal with people who don't return on time or borrowers who disappear completely. I think that even a 10$ loan to 50 people who won't return it is a big loss of capital and customer, as people tend to kill the goose that lays the golden eggs.
4) Are you taking your clients criminal or drug usage records under consideration, this is just a concern of mine.
Your storytelling skills are great and the motivation behind your idea is very well explained, looking forward to hear back from you soon.
Status label added: Mentor feedback received
Hello Romain, not sure how developed mobile money is developed in Cameroon. I would sugegst that you also study success cases of similar products like Tala and Branch who have been very successfully globally and see how their experience can influence your idea. All the very best.
Cashtree idea is one of the rarest project to have surface in Africa. With the project, the history-long setback in financial inclusion is nearly eroded. Africans are now assured of prompt and consistent financial assistant to meet their respective exigencies.
Hi Romain
This is a wonderful. However, what traceable documents does one need to have to qualify for the loan? How is your loan portfolio different from a traditional lending institution.?
Great idea and wishing you the best.
This is a brilliant idea.
How are you going to finance this?
will the money be from your personal purse?
Dear Romain,
Fascinating personal story!
1. Only 100$ loans are easy to come by without interest from friends and family. Why would someone take loan with 8% interest? Can you explain.
2. Your financial forecast is ludicrous- just because there is a million people, doesn't mean they are your potential customer! I'd request you to make it realistic.
Good Luck.
This is a good idea. Just wandering why would I use your app and then Money sent on my momo account, yet I can still get a loan from my momo account by just depositing there on my account like 10$.
You could also consider an option of getting the cash directly from the app than adding third party?
Hope this helps you to refine your idea.
Good luck!
Hello, nice idea. I am suggesting as improvement to use digital ID as a way to make sure people are uniquely identified. There is certainly some regulation about loans, do you have the right legal environment? I am also wondering where you get enough information to calculate credit scores?
Hi, inspiring story! How do you stack up against the likes of Tala and Branch? How do you differentiate? And he 0.8% per day, isn't that considered predatory pricing?
Hi Romain, financial inclusion is a very key factor to foster economic growth. This is a brilliant idea. Some areas you can look as key approaches to accelerate financial inclusion;-
1. Foster a diversity of financial institutions.
2. Facilitate the use of innovative technologies and entry of technology-driven, non-traditional institutions.
3. Expand agent-based banking and other cost-effective delivery channels.
4. Invest in supervision and leverage technology to optimize limited resources.
5. Implement risk-based, tiered AML/CFT requirements.
6. Encourage the development of low-cost, innovative financial products.
7. Strengthen financial infrastructure
8. Protect consumers by establishing rules for disclosure, fair treatment, and recourse.
All the best in your project!
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