Monday, 02 August 2021

Mojaloop’s Hunter: “Our mission and vision on financial inclusion are aligned”

By Foo Boon Ping

Paula Hunter, executive director of Mojaloop Foundation explained how it will work with its new sponsor member, MAS, to explore technology advancement in digital currency settlement infrastructure and applications to increase financial inclusion.

The Mojaloop Foundation and the Monetary Authority of Singapore (MAS) are working together to provide affordable financial services to the underserved through digital currency-based settlement systems and foundational digital structure. MAS is joining the foundation as a sponsor member and is the first central bank to do so.

The foundation, which was formed under the Bill & Melinda Gates Foundation, has created an open-source software that would increase interoperability and reduce costs associated with deploying a payments platform.

According to Paula Hunter, executive director of Mojaloop, the software first developed in 2017 has since been evolving. The foundation’s “centre of gravity” is to enhance the software base so that central banks and other financial service providers can deploy real-time digital payment platforms with no licensing costs,” Hunter said.

“MAS and Mojaloop Foundation will explore technology advancement in digital currency settlement infrastructure and its applications. The aim is to work with the open-source software community to create the blueprint for an open and inclusive digital financial infrastructure,” a spokesperson from MAS disclosed to The Asian Banker.

In collaborating with the Mojaloop Foundation, MAS will build on its experience with Project Ubin’s Central Bank Digital Currency (CBDC) development efforts and foundational digital infrastructures. By connecting the underserved with financial services firms and government entities in the emerging digital economy, access to financial services will be improved. At the same time, new opportunities for the fintech ecosystems in Singapore and Asia-Pacific will be created.

“In this spirit of open source, what we're trying to do is generate a public good that anyone can avail themselves of,” explained Hunter.

 

Here are the key points that were discussed during the interview:

The following is the edited transcript of the interview:

Foo Boon Ping (FBP): Good morning, everyone. For our followers and audience in the US and other parts of the of the world, good evening. Welcome to another episode of Wealth and Society live. Today we're very happy to be speaking with Paula Hunter, the executive director of Mojaloop Foundation, which mission is to bring financial inclusion to the world by bringing interoperability and digital payment infrastructure together. What brings Paula to the program this evening is the announcement of the collaboration between Mojaloop Foundation and the MAS, which brings some experience in policy development, as well as some of the work that they've done in foundational digital infrastructure to the table. Good evening, Paula, it's a pleasure to have you on the program.

Paula Hunter (PH): I’m happy to be here. Thank you.

FBP: We were saying the Mojaloop Foundation is not unfamiliar to Wealth and Society. We had the chair of the foundation, Kosta Peric, on our program late last year and he was talking about some of the things that he did in his role as deputy director of the Financial Services for the Poor program, and he talked about Mojaloop as well. Today, we want to delve deeper into what you do. We understand it’s your mission to bring financial inclusion through the payment infrastructure, specifically the Mojaloop software. Tell us a bit more about what you do at Mojaloop in terms of bringing that interoperability to the community that you serve in different parts of the world. We understand you're particularly active in Africa, in parts of Asia, India, Bangladesh, etc. The main asset that you bring is the Mojaloop software. How else are you involved in creating the infrastructure for digital payments? Are you also funding, providing philanthropic grants or contributing financial assistance, or it’s just technical assets and assistance?

PH: Let me just give a little background on the Mojaloop Foundation. As you noted, we were spun out of the FSG group of the Bill and Melinda Gates Foundation. They had a vision for addressing financial inclusion. Part of that vision included creating a software platform that would increase interoperability and reduce the costs associated with deploying a payments platform. Several years ago, they created this modular open-source platform. It's been evolving over the last few years. In May of 2020, we launched the Mojaloop Foundation as an independent open-source software foundation, whose primary focus and mission is on financial inclusion.

Our centre of gravity, as far as our work, is on enhancing the software base so that central banks and other financial service providers can deploy real-time digital payment platforms that take advantage of no licensing costs, but also very low cost to deploy and implement the solution. So to your question about grants and funding and such, our investment is in the development of the platform, the development and nurturing of a community of individuals that are helping us define the requirements and the roadmap for our development efforts, so that we can invest in making sure that the Mojaloop platform is sound and stable for folks to deploy. Then the market can take advantage of that and deploy it with central banks, other institutions and such. But we stopped at the development and education with regard to the platform. In this spirit of open source, what we're trying to do is generate a public good that anyone can avail themselves of, that there are no licensing costs associated with it. There is a robust community that's maintaining enhancing the code base. So that's really where our funds are going in.

We accept funding from various philanthropy organisations, philanthropic organisations, like the Gates Foundation, The Rockefeller Foundation. We also get funding from member companies like Google, Coil, ModusBox, Ripple and others that have alignment from a technology and a mission standpoint. But at that point, the software is available to the market to use as they see fit and we welcome central banks to use and deploy the technology. But we actually do not fund the deployments of the modular platform.

FBP: How might you get involved in the deployment itself, in terms of integrating it into the platform of the host community that you serve? Is it just the software? Are you free to use it? And that's basically it? Do you get involved in bringing the community together and setting up the platform itself in the host country?

PH: It's essential that we are very active with the community. The community is not only software developers, there are systems integrators, software vendors, service providers, all who are interested in deploying or implementing or supporting modular-based deployments. So what we want to make sure is that community is communicating with one another about requirements, feature enhancements, other things that they want to add to the platform and that they collaborate on supporting one another.

We also invest in training. So we've rolled out a very robust training program that is free of charge. Again, our mission being a public good, everything we do is free of charge. So we want to make sure that there is a very robust ecosystem that's trained and willing, and able to deploy Mojaloop. We also meet four times a year. Up until recently, we used to meet face to face but as you can imagine, that has not been a possibility. But we still meet four times a year, that’s open to all and it's to focus on what we have accomplished in the last three or four months with regard to the platform. What are the priorities we need to focus on in the next three to four months? What's the input from the marketplace, from the central banks? So we iterate every three to four months on the development roadmap, because we want to be very agile, we want to have rapid improvement to the software base.

A growing community

PH: It's important to have that inclusion across the ecosystem because everyone brings a different perspective. If a systems integrator, a central bank, a digital financial service provider, a mobile network operator, they all have their own perspective and constituents that they have to serve. We welcome them all. And I'm happy to report that we have, I would say at the last count, at least 45 countries that are contributing to our projects; six continents. Every time we have these meetings that community engagement grows.

FBP: In terms of the actual deployment of Mojaloop in some of these platforms inside these countries, we read for example, the Bank of Tanzania is in the process of implementing Mojaloop. In that part of Africa, there is Project Mowali.A joint venture between network operator Orange and MTN. And from the days of when you were still part of the Financial Services Program, programs in India with PhonePe and in Bangladesh and other regions.

PH: Well yes. As you mentioned, those two deployments, Tanzania and Mowali are well underway. I can't speak to their public releases, that's up to them. Although Mowali has gone live and is active, Tanzania is still in process. Our community is actively engaged with a number of other central banks and countries where Mojaloop will be part of their payment strategy. But I can't speak on behalf of those integrators.

Providing access to the underserved

PH: Our objective is really to reach those countries that can take advantage of a new platform, a new reference design and may not have real-time payments today. So this allows them to jumpstart their work and move more quickly in getting a new platform installed. But as you can imagine, implementing, testing, and scaling up a payments platform is not something you do quickly. You have to do it carefully and with great care to ensure that you know things are tested, that you pilot things, that you roll it out in phases. That if it's a central bank, you make sure that your financial service partners are trained and well prepared to onboard their customers. It's a long process but we're optimistic.

As you mentioned, we have the two that you already noted, Tanzania and Mowali. But we have several others in the queue that should be coming more public soon. And because we're so keenly interested in interoperability, the more that come online, the more it reinforces the benefits of this interoperable platform. Instead of someone having to choose one service provider or be locked into a service provider, being able to plug into a financial network is really important in providing people access and also lower transaction costs.

FBP: Under what condition is it most ideal? What are the prerequisites for some of these areas or countries where implementing Mojaloop will be more suitable? Do they need to have a real time retail payment system already in place?

PH: No. In fact, I would say that the most critical element is a strategic vision for digital payments and financial inclusion for their country. The entities that we're talking to and engaging with, you consistently have a vision, a strategy, and it may not be where you would resolve this in the next 12 months, it might be where to resolve it and solve it in the next five years. But in many cases, they may not currently have a real-time payment platform, they aspire to get to that. In other cases, they might have a real-time payment platform that is inadequate. But what I see consistently among the different entities that we talk to across various countries, in Asia and Africa, in particular, is a strategic vision to lift people out of this unbanked world and get them involved. And even in some cases, they might be underbanked, but they’re getting more actively engaged in state-of-the-art financial platform, rather than languishing behind systems that are not in place.

FBP: With the announcement of the collaboration with MAS, it’s the first central bank that is a sponsor member of the foundation. Tell us in terms of what is the role of a sponsor member? Or what are its duties and responsibilities and obligations as well? Do they provide funding? Or it’s just technology or advice as in policy development in the case of MAS?

Providing strategic counsel

PH: Yes. A sponsor member of the Mojaloop Foundation is a very strategic position. And with that commitment comes the responsibility to contribute to our mission and growth and the evolution of our platform. So what the Monetary Authority of Singapore has done is it has already committed resources: Sopnendu Mohanty as an advisor to our board, Alan Lim, as a delegate in our technical governing board. Their insights and perspectives, from a regulator perspective is very important. But also, they're known as innovators. Singapore is not a country that has a large proportion of underserved citizens but they recognise their position in the world to advance financial inclusion in developing countries. So that strategic vision is in line with our mission. And as we get to know one another, we've been talking for some months now. Obviously, we’ve already placed them into our sponsor levels to provide that strategic counsel. The next stage is to flesh out what projects we want to collaborate on. We are currently discussing, particularly in the area where they're their very strong, in central bank digital currencies. We're very interested in their perspective on that and how we can leverage Mojaloop to deliver more capabilities in that area. So we're not yet ready to announce a specific project. But certainly, those are the areas where we think we have the best synergy.

FBP: I was going to ask about any project that is in the pipeline with MAS and the area of work that they are involved in. For example, they've done some research or paper around foundational infrastructure with the central banks of Kenya and Ghana in Africa, and also in Asia, with Brunei, and Cambodia. Do they sit in the board of directors as well? How are they influencing the work of the foundation?

PH: They are absolutely influencing the work and the direction of the Mojaloop Foundation. It is sometimes a little challenging for a government entity to take on a voting position of board of directors, so they're a board advisor. And we will regularly consult with Sopnendu on strategic direction for the Mojaloop Foundation. More specifically, Alan Lim is on our technical governing board, which really oversees our long-range product roadmap. It's a strategic position to help guide us on what we need to be thinking about in 6 months, 12 months, 18 months out. So it's not about the day-to-day activities of the development community. It's more what path do we want to take with our roadmap, with the architecture and how we want to enhance and advance the Mojaloop open-source project. Their expertise and perspectives are really helpful.

Maybe three months from now, I might come back to you and talk about a more specific project. But right now, it's strategic discussions. Alan joined our technical governing board meeting this morning where we talked about architectural issues, our project product roadmap, and he's already an active contributor there. We are also collaborating on some upcoming hackathons that MAS is going to be hosting this summer. So our team is already involved in that. I'm sure there'll be other specifics as we advance the relationship.

FBP: In terms of the technology itself, how complementary is what MAS is working on compared to what is already existing or inherent in Mojaloop? So Project Ubin for example? It is built on the quorum protocol with the Mojaloop is an interledger. But interoperability is the name of the game, right?

PH: Absolutely. That's key. So as I said, we've been talking to MAS for several months now. Alan and his team has had the opportunity to have several discussions with our technical governing board, our community. And we do feel that there's alignment on the technologies, the ways to enhance interoperability, but also to extend the Mojaloop platform to address some of the interests that MAS has.

FBP: The interledger protocol itself, it is a kind of interoperable with blockchain. And when we had our interview with Kosta earlier on, the Mojaloop Foundation was still tentative in terms of looking at central bank digital currency. Tell us in terms of where do you think central bank digital currency is heading? And what kind of potential do you see its application for financial inclusion, interoperability, especially in the retail application of the digital currency? Ubin is more focused on the wholesale application between financial institutions and is kind of limited application for last mile, no deployment to the end user, so to speak.

PH: Right. And like Project Ubin, right now our primary focus is wholesale. Our discussions about central bank digital currency (CBDC) are wholesale. Let's face it, the plumbing needs to be in place before you can take the drink of water. What we need to do is make sure that on the backend, within a country, across border multicurrency, that we flesh out the details for settlement and an interchange between the different currencies. At a wholesale level, I think retail comes later but we really need to make sure that the underpinnings are sound, well tested, proven and ready to launch before we go retail.

FBP: In terms of financial inclusion, serving the unbanked and serving the poor, one, we assume that the retail application is more direct, more relevant. Tell us in terms of your moving towards wholesale, you're also moving towards cross border. And what kind of figure do you need for cross-border payments for the poor?

Interoperability will reduce costs

PH: Particularly in the time of COVID-19 where you have families that are distributed across borders, you have migrant workers, you have expatriates, there's a real need right now to address the cross-border exchanges. Historically, it's been very expensive to transfer money across border. And if you are a worker that wants to send money home, even if the border is only 20 miles or 20 kilometres from your home country, the minute you crossover, the transaction costs become even more burdensome. So the more we can reduce those transaction costs and make it more seamless and interoperable, then it brings more parties into the loop and that can change currencies. We don't want to be a monolith, we don't want one currency, we don't want one payment platform. We want interoperability and we think that interoperability will reduce costs for everyone.

FBP: In terms of the challenges of bringing financial services for the poor. One of the issues that challenges us in terms of infrastructure and policies, central bank policies, is who provides the service? A lot of the time, the provision of payments is not seen as a utility. It is seen as a service, that commercial organisation that provide profits. To have the central bank’s involvement in your mission, how much would that address policies, infrastructure issues, in your perspective? Will it create an environment where you have the unbanked?

PH: It’s critical to have the central bank engage, particularly in countries where central bank policy has such an impact on the regulatory affairs of the various financial institutions. So having them in place, what you don't want to do is have a commercial entity trying to roll out something that is appealing to those that are unbanked and run afoul of regulatory matters. So we want to make sure that all parties are at the table talking about the platform, the rules, the rails for how we deploy a modular-based platform. The other thing is, there is room for commercial players in this. We fully expect that. Mowali is an excellent example. It's a joint venture between Orange and MTN to bring new financial services out to their customers.

What we hope is by delivering an open-source platform with no licensing fees, with community maintenance enhancement, it reduces the overall cost of deployment, maintaining that platform, and therefore, that can be delivered at a lower cost and therefore lower transaction costs to the end consumer. So part of the reason we chose this open-source strategy is even if you are a commercial player, you can leverage the platform and not have to pass hard costs off to the customers.

FBP: What's the attitude towards interoperability? You cite as example Mowali in markets where it's still emerging in more established markets where you have more dominant players, the incumbent players, the commercial banks that serve a majority of the bank customers but not so much the unbanked. What's the attitude towards interoperability? Obviously, it serves the needs for smaller emerging players, but from the incumbent players, are you also getting the same kind of response and what role does the regulator have to play in terms of bringing the two together?

PH: I've been in the open source and standard space for more years than I'd like to admit. And interoperability, at times can be threatening to people that want to take a more proprietary approach to something. But look at Wi-Fi, look at Bluetooth. At one point, I can remember when there were arguments about Bluetooth and Wi-Fi among the major manufacturers that did not want to play nicely with one another. But at some point, there's a tipping point where they recognise my laptop and my phone are not differentiated by this base infrastructure that I offer as part of the package. So why am I investing in a proprietary solution when we can come together as a community, address these non-differentiating items and differentiate where we add value? We're early in that with Mojaloop because obviously, there are proprietary players out there selling hubs and switches. But at some point, as the market evolves, there's a recognition that there are certain fundamental offerings and solutions that are universal. They don't differentiate you, they're a checkbox, you have to have them. It's a level playing field. So interoperability, in my mind, is about agreeing on what everyone needs and what's the common denominator across competitors, and then let them differentiate it above that line.

FBP: Among the members or the part of the ecosystem partners that you work with, some are pretty dominant. You mentioned Google and MasterCard, for example. It is about interoperability and it's about open source as well but not to be truly operating on a level playing field. The foundation doesn’t give them additional competitive advantages over those that are not in the foundation.

PH: Well, we do not want to infer competitive advantages as being part of the foundation. When someone joins a foundation, what they're basically saying is: I support the mission, I want this mission to prevail, I want the project to be healthy and vibrant and I'm willing to invest to ensure that it does. Now, in some cases, there are other parties that are active in our community that have not stepped up yet to be members, we hope to bring them on board and ask them to pay their fair share. But our fundamental premise is, everything that we do is open. Our roadmap is open, our work stream activities are open, the meetings that we have four times a year are open and free to the public.

We welcome all bodies to participate with us in whatever form is best for them. Some companies have chosen to make monetary or developer investments in the Mojaloop project for either mission alignment or even for strategic commercial interest. We're happy to take their contributions but we're very transparent with how we make decisions about the product roadmap, how we make sure that we adhere to the mission. That's why we're formed as a nonprofit foundation with bylaws and a board of directors, and the technical governing board to make sure that no one party has extraordinary influence over our decisions.

FBP: Part of the what was in the announcement with MAS is that they also provide new opportunities for the fintech ecosystem in Singapore and Asia Pacific. How do you see that developing, creating the opportunities for fintech in that region?

Leveraging on MAS’ connections

PH: It's a vibrant marketplace for fintechs. And we think that there's opportunity for them to engage not only their development work, but in deployment of Mojaloop within and beyond Singapore. It's preliminary to get specific but we want to leverage the fact that MAS is noted as an innovator. They attract very prestigious talent and corporations that are interested in advancing financial inclusion. Over the next few months, we'll be able to formulate a specific project plan that takes advantage of that. But certainly, having that centre of gravity is useful and expanding our footprint. Up until recently, I think our centre of gravity has been Africa. And while I'm not saying that we're shifting away from that, that's not the case. But there are many markets within Asia that have equal need for Mojaloop and modular platform. So we want to take advantage of MAS’ interest and relationships and expertise to leverage that.

FBP: You're already working with MAS in terms of doing some of the hackathons on their platform? Are these region-specific or they are global in nature?

PH: Yes. My team's already involved and we’re going to be very active in the hackathon that's coming up this summer. These are absolutely global.

FBP: Are you looking at global challenges and how some of these fintechs can help to solve them? And are you also using other parts of their tools like sandboxes?

PH: Yes, absolutely. The planning is well underway and my team has been meeting with MAS regularly. One of the things that we've experienced in the last 16 months is that we have gone truly global. Up until COVID-19 struck, we were on the ground in Africa quite regularly. We have, sadly, not been able to meet our colleagues and community members in Africa. But what we have found is that our quarterly meetings now have much more robust representation. It was sometimes prohibitive for people to travel to Africa to join our face-to-face meetings. By doing virtual events, it's really broadened the participation globally. And so the challenge next year is how do we integrate virtual and face-to-face meetings because many of us really want to meet face to face again. But we also want to take advantage of what we've learned from reaching out to a broader community during these virtual days.

FBP: As part of the interoperability agenda, when digital identity and payment identity standards are very important as well, how are you progressing? In that sense, the number of identity standards out there and one of your members, Ripple, is also heading a global payment identity-kind of project? How is that progressing? Are they leaning towards a specific standard?

PH: Right now, identity is not a core focus of the modular platform. But what we need to do is to make sure that we are open and have the APIs in place that address the needs of the marketplace and the identity market. Particularly in the last 12 months, it's exploded with new projects and new initiatives and rollouts. So we're monitoring them and trying to make sure that we can accommodate them. But it's not a core focus at this time.

FBP: In terms of being digital, especially in terms of providing direct government benefit, there are also instances where the last mile delivery have become susceptible to fraud. The avenues of corruption practices. These are very specific, very technical issues. How are you looking at those?

PH: Government payments, benefit payments is something that has really changed and become a very hot issue in the last 16 months. And while we don't actually deal with the retail transactions, if you will, from modular work, as I said, we're the plumbing. What we want to make sure is that people can plug into identity frameworks that are compatible with the backend of the payment solution. We've been talking to other providers and parties that are focused on digital payments. And in a couple of the cases where we're talking to central banks that want to implement GDP payments, we want to make sure that our platform is compatible whatever they want to plug in. But that's a whole ‘nother set of challenges, interoperability challenges that there are other organisations that are taking the lead on. We want to be compatible but we aren't taking the lead on idea this time.

FBP: So your role is in terms of the planning, the infrastructure, the rails, not so much the policy. In terms of how you measure impact, we understand from Kosta from the previous conversation how many people you get connected to out of that 1.7 billion by using digital payments and also that there is a gender equality part. Does that also carry into Mojaloop in terms of inclusion of financial services for a woman?

PH: Yes, absolutely. Women can have such an impact on an economy if they become empowered and engaged in the financial community. We do believe that by addressing the financial inclusion, in particular, women will benefit from that. It's one of those challenges that you have to be patient with. Because if you look at the trajectory of implementing a modular platform, having a central bank roll it out, integrate it with their financial service providers in a country, roll it out to their citizens, it's a long tail before you see metrics. So of course, I want to see how many people are now impacted by Mojaloop. But it's going be a little while. I have to be patient. Our priority right now is getting more and more deployments live, particularly with central banks. And those will flow into impact. But yes, it requires patience.

FBP: It's still very early days. As an independent foundation, you mentioned just in the second quarter of last year. Have you celebrated your anniversary yet?

PH: We did, virtually. But I have to say I'm very much missing my community. I was fortunate enough to attend five face-to-face meetings before we launched. Unfortunately, we had to go virtual, but we have some really great players. I've also hired staff in the last year that I have not met. I would like to meet them face to face. We joke that I don't know how tall they are, but they fill big shoes and they're doing a great job. So I just look forward to getting on a plane and seeing my community around the world. Just reinvigorating our work face to face when it's possible. We face challenges everywhere.

FBP: How big is the organisation, the foundation in terms of staff, in terms of your headquarters in Wakefield, Massachusetts? Do you have offices around the globe? You're very active in Africa, obviously.

PH: We have a small staff in Wakefield, which is our headquarters. That's really where the bills are paid and the websites maintained and things like that. So the stuff that you would expect in the back-office operation, and our marketing PR team. I have a community manager in Kenya. I have a product strategy director in the UK. And I'll be likely adding more key people. But what's really important with an open-source foundation is the community and that's what amplifies our work. We don't want to burden our operating structure with a lot of staff.

We need volunteer community members developing the code, maintaining the code, enhancing the code. And so those hundreds of people that touch our code base in the community are really the count that matters for us because they are going to make the most measurable impact. Not to diminish the work of my staff, by any means, but everyone on my team is very much engaged with the community on a daily basis. They bring domain expertise, they bring geographic and demographic expertise, payments expertise, central bank. So to borrow a phrase, it takes a village to make this happen. 

FBP: This is just the start of our conversation. I'm sure as you have more of your projects firmed up and ready to announce then we will have our next conversation. So for now, thank you so much Paula for speaking to us and giving us an update on what the foundation is doing.

PH: It's my pleasure. Thanks for having me. 



Keywords: Project Ubin, CBDC, Project Mowali, Phonepe, Fintech
Institution: Mojaloop Foundation, MAS, Bill & Melinda Gates Foundation, The Rockefeller Foundation, Google, Coil, ModusBox, Ripple, Bank Of Tanzania, Orange, MTN
Country: United States, Singapore, India, Bangladesh, Kenya, Ghana, UK
Region: Asia Pacific, Africa
Guest: Paula Hunter, Foo Boon Ping, Kosta Peric, Sopnendu Mohanty, Alan Lim
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