Pascale Elie saw her hometown fall apart from her house in Port-au-Prince. The massive earthquake that struck Haiti in 2010 left the capital city in ruins. Elie, an economist who was then working for an insurance company, watched as the financial system collapsed in the wake of the disaster. Over a third of physical branches — long concentrated in the capital city — fell apart overnight. Even though only 10% of residents were account holders, hours-long lines formed around the few remaining banks. The country’s fragile power grid failed and left millions of Haitians in the dark. Foreign aid struggled to plug the gap, as distributing cash through traditional means proved difficult and time-consuming — on average, locals waited 12 days to access emergency aid in the midst of Haiti’s worst humanitarian crisis of the 21st century.

Elie eventually quit her job and threw herself into building a solution. She founded a fintech called HaitiPay which in turn launched Lajan Cash, a trailblazing mobile wallet and payments system that allows anyone with a cellphone to get paid, transfer money, purchase from mom-and-pop stores, or receive remittances from abroad. By dialing a short number, clients can send requests for transfers and payments from their phones, without having to rely on an internet connection. Since its early days, HaitiPay has guaranteed that all transactions were traceable and available between different financial institutions — a level of interoperability that remains an exception to the rule in the country. The service was one of the first in Haiti: an innovative company looking to disrupt a slow-moving and inefficient industry whose shortcomings were painfully obvious. “I said to myself, ‘That’s what I’m going to do for the rest of my life,’” Elie told Rest of World

On the surface, her life-long mission was starting to look a lot like a Silicon Valley–scripted underdog fairy tale. Early on, when she envisaged the company, she jumped through all the ludicrous legal hoops required to create a startup in a heavily regulated market. Then, when she looked to attract customers, her company stood against contenders that had dominated the area for generations but stood as yet unaware of fintech’s potential. If things had panned out as the standard Silicon Valley–endorsed fairy tale claims, disruptive innovation and perseverance should have been enough for Elie to beat the traditional players of the local financial scene. 

But, a decade on, it isn’t pioneers like HaitiPay that dominate the fintech scene. Digital wallets and payments are now firmly established in the country’s mostly informal economy. Contrary to the underdog myth that pervades startup culture, the fintech market has been taken over by the establishment — oligarchic banks and telecommunications companies — thanks to archaic regulation and precarious access to funding.

In the aftermath of the quake, the Bill & Melinda Gates Foundation rushed to Haiti with millions in emergency aid, three days after the catastrophe. Less than six months later, it had partnered with the U.S. Agency for International Development to offer a $10 million grant to mobile money solutions that could streamline fund distribution. An initial $4 million would be split between two companies that proposed the best solutions; the remainder would be given to the winners, if and when they hit at least 100,000 transactions in the country. Contestants had to deliver solutions that weren’t only innovative but could distribute funds to a large user base as fast as possible. 

The aid announcement highlighted the same idealized case study that Elie had identified months prior: M-Pesa — a Kenyan peer-to-peer payment and money transfer system with over 9 million customers — was deemed to be the most promising model on which to base Haiti’s nascent fintech sector. At the time, this African startup’s success stood in stark contrast to the hundreds of mobile banking initiatives that had been unable to grow their customer base beyond a handful of users. Soon M-Pesa had put East Africa in the spotlight as the region that, by 2011, concentrated 80% of all mobile money operations worldwide. What became known as the “M-Pesa model” seemed to be Haiti’s ticket out of financial ruin; cellphones appeared to be the perfect substitute to the country’s ailing physical infrastructure. Even better, nearly every Haitian knew how to use one, and most households had at least one device — which could cost as little as $20 by 2010, down from $300 in the early aughts. 

The Gates Foundation and USAID set a high bar for access to the award: at least 100,000 transactions in the first six months. Unsurprisingly, the two final winners were companies with big preexisting customer bases, Jamaica-based Digicel and its main competitor, U.S.-founded Voilà. In conjunction, the two giants covered over 3 million cellphone subscribers on the island and would later merge to create Haiti’s most powerful fintech, MonCash.

MonCash’s overwhelming arrival onto the scene revealed something about its model that global fintech-watchers across the board had failed to realize. Mobile money operations in emerging economies in East Africa or Haiti didn’t succeed only because their approach was particularly innovative. Their success rather depended on very unique local contexts and their ability to scale up. “M-Pesa was based on something that Kenyans were used to: sending airtime to each other as a form of currency, instead of using transfer services like Western Union,” Erin Taylor, an economic anthropologist who researched the early days of mobile money in Haiti, told Rest of World. But the M-Pesa model would only truly experience success when it received backing from important transnational corporations. Subsequent studies have found that its business model depended on widespread adoption to become “commercially viable,” which turned out to be easier for a telecommunications company with nearly 80% of market share. The secret to Africa’s most successful fintech lay, not in its disruptive innovation, but rather in its alliance with Safaricom — a local subsidiary associated with telecommunications giant Vodafone. 

With massive telecommunications behind them, both M-Pesa and MonCash were able to rely on established telecommunications networks to process transactions at virtually no cost for end users. Selling a mobile-based service to millions of customers was no problem to the tried-and-tested companies. With an established consumer base, players like MonCash could make their services as widespread as possible. Those already using Digicel’s services as an operator could easily join its digital wallet and carry out transactions with acquaintances — likely Digicel users as well. Deploying its considerable resources, Digicel positioned agents in Port-au-Prince and other Haitian cities and explained electronic money to customers, by distributing pamphlets and comics about it in local Kreyol, soon meeting the transaction target set by the Gates Foundation and USAID. 

The model’s mass adoption made the giant players bigger but left little room for underdogs, like HaitiPay. To Elie’s great dismay, it turned out that it wasn’t the “M-Pesa model” that promised success in the Haitian fintech scene: being first to market wasn’t enough, you had to be big. MonCash grew on the back of the Safaricom model, supported by the country’s main telecommunications giant. “People would ask if we were like Digicel,” Elie said to Rest of World. “But we were there before, you know?” The Digicel-MonCash fintech solution would go on to grow 15 times faster than Elie’s HaitiPay over the 2010s, reaching over 1.5 million Haitians to her 100,000. 

To make matters worse, Elie wasn’t merely competing against big telecommunications companies. According to Haitian law, she wasn’t even allowed to take these giants on single-handedly. Any service that relied on electronic money had to operate under an establishment banking partner, so HaitiPay was forced to delay its launch, as it negotiated with its own competitors. She waited nearly two years to receive her stamp of approval from a partner, only to launch in an industry that had been taken over by telecommunications companies months prior. Making the best of a bad situation, Elie found a way to use her legally mandated partner to her advantage: when reaching out to potential customers, she would highlight the bank’s trusted and well-established brand, instead of presenting HaitiPay as a mere newbie.

Unfazed, she set up operations in a small office in Port-au-Prince, designing a tool that worked smoothly amid Haiti’s power outages and expensive internet. Though her system avoided dependence upon internet connectivity, HaitiPay still relied on a proper phone signal — provided, of course, by her telecommunications competitors, Digicel and NatCom. Companies reliant on mobile services, like hers, had to negotiate with the local duopoly to guarantee its operations ran smoothly. “You have to either marry one or the other,” Clifford Reginald Nau, who manages the tech incubator Alpha Haiti, told Rest of World. Elie married both, in order to guarantee that clients from both telecommunications companies could still choose her services. 

Once Elie had painstakingly grown her clientele, HaitiPay would go on to benefit from the eventual crashing of the fintech wave in the Caribbean. The industry had become impossible to ignore, creating new giants valued at $10 billion and disrupting services from microlending to digital banking. The trend gradually gained momentum across the region, and investors began to take notice. In 2014, Elie was offered a $500,000 grant from USAID to expand operations across Haiti. By mid-2018, HaitiPay could rely on at least two local accelerators, Banj — which supported Elie and her startup — and Alpha Haiti. Yet despite the feeling that HaitiPay had turned things around, its quest for funding remained unfulfilled. Talks with investors in Haiti proved fruitless, so Elie is now rearing her startup for its latest and most ambitious pivot yet.

“It is only funding that holds us back against giants.”

Far from her Caribbean island — in the place where much of the fintech vocabulary and its far-reaching underdog mythos originated — Elie is preparing for a new round of talks with investors in the United States. She has already registered her company in Wyoming and hopes to benefit from the world’s biggest fintech market as well as its hyperactive venture capital industry. But Elie now knows better than to put all her hopes into one basket and is looking beyond traditional startup financiers. She believes that the 1.2 million-strong Haitian diaspora, living in states like Florida and New York, might be the missing ingredient in her own Haitian recipe for fintech success. It is indeed an untapped market: one yet unscoured by her giant competitors in Haiti but that has generated a $3 billion remittances industry, nearly a third of her home country’s GDP. Telecoms haven’t tailored their products to accept money from abroad, and local banks process as little as 15% of transactions. The rest comes from traditional brokers. So Elie is doubly banking on the Hatian diaspora, hoping to both crowd fund investment for her startup and draw them in as a central pillar of HaitiPay’s expansion into the remittances market. 

By going beyond her island, Elie is distancing herself from some of the local dominants but getting closer to others. She will be competing with established foreign brands like Western Union, which have dominated Caribbean remittances for generations. In a way, she is bracing herself to tick off every item of the fintech recipe once again: the paperwork, the funding, the disruptive model to meet customers’ needs, the urge to muster a loyal clientele. Yet she remains optimistic that this recipe of her own making will work out, living up to the fintech fairy tale, as soon as she lands a first round of investment in American soil. “It is only funding that holds us back against giants.”