By Philippe Houdard
The concept of micro-financing has existed for centuries, relying on the principle that a tight-knit community can come together to finance the needs of its members. Historically, this trust-based model has enabled micro-entrepreneurs and young companies to access funds without having to take on the costs and manage the complexities of going through banks.
In more recent times, ground-breaking companies have been proving that applying technology to this concept can solve important social problems worldwide.
This past week the Ashoka Fellows who co-founded Puddle, an innovative social banking platform, introduced their concept for the first time in Miami at Pipeline, a collaborative workspace in
Brickell.
Created by a group of social entrepreneurs from Spain and the United States, the platform facilitates the creation of a line of credit by obtaining the financing from a pool of trusted family and friends via Facebook, with the participants setting up the rules of loan repayment.
The lively discussion featured the social entrepreneurs and co-founders of Puddle Jean Claude Rodriguez-Ferrera and Salomon Raydan, who is also President of Funderfir, a foundation for funding
rural communities, and was moderated by Matt Haggman, Miami program director of the John S. and James L. Knight Foundation, which is focused on strengthening Miami’s entrepreneurial ecosystem.
For several years now, panelists Raydan and Rodriguez-Ferrera have collaborated with fellow Puddle Co-Founder Matt Flannery, founder of Kiva, the world’s first online lending platform, to develop the innovative online micro-financing model in order to expand its geographic reach. The concept of communal banking that Raydan first developed has been meeting the credit needs of some of the most impoverished communities in countries in Latin America, Europe and Africa for more than a decade.
Currently, the Puddle social banking platform is in beta testing with 19 active ‘Puddles,’ or funding groups, but the concept has been utilized by groups offline for eight years, according to Rodriguez-Ferrera.
Entrepreneurs and self-employed professionals are one of the main groups that stand to benefit from this innovative banking platform because it provides an easy-to-use system for friends and family to finance their business concepts.
While it would be reasonable to imagine that the default rate could be a concern for an online version of this type of banking platform, Raydan noted during the panel discussion that the social pressure to repay the loan is significant and results in maintaining an extraordinarily low default rate.
As this type of online communal banking platform gains exposure and users, communities in need across the world are bound to be the biggest winners, obtaining funding for projects that can grow companies, drive social change and help people live better.
Philippe Houdard is co-founder of Pipeline, a collaborative workspace at 1101 Brickell Avenue. He is also founder and president of Developing Minds Foundation, a non-profit that builds schools and supports education projects in areas affected by conflict and poverty.