Tag: remittance

What it’s like launching a Fintech startup in the UAE

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Ian Dillon

It took us 4 years – but we launched our Fintech startup NOW Money in May this year, and the reception so far has made it all worth it.

We started NOW Money in the summer of 2015. Back then we didn’t yet know how little we knew about what we were trying to do and how to do it, but we did know exactly the problem we wanted to solve.

Bank accounts are often accessible only to those that earn over AED5,000 per month. In the GCC, there are 25 million low-income workers that earn less than this. This means no bank accounts, no online payments, no ability to send money home using cheap online providers that almost everyone from Europe is used to. Our goal was to provide the best account in the GCC, with these excluded workers our customers.

My co-founder, Katharine, and I had seen the success of the new mobile only ‘challenger banks’ that had started in the UK – the likes of Monzo, Startling and Revolut. Customers loved them and had a passion for them that had never been seen for banks and financial services companies before. We wanted to do the same thing first in the UAE and then across the GCC.

These days, ‘startup’ and ‘Fintech’ are the new big buzzwords. Billions are invested into Fintech startups annually; many people have entrepreneurial ambitions to start or work at a startup and a number of corporates have strategies to partner with or support entrepreneurs and startups. However in 2015 mindsets were completely different. Almost no one understood why we’d left well paid jobs and the corporate ladder. We were laughed out of meetings, often told that what we were trying to do was impossible. We couldn’t get legal support, couldn’t get a bank account ourselves and were lightyears away from being able to raise funding. We made life hard for ourselves by being focused on remaining independent, creating our own technology and providing the best customer service possible from day 1, and the delays were demoralising and at times we wondered if we’d ever get to launch.

However with persistence we broke down each of the barriers – and 4 years and a lot more grey hairs later we launched in May this year. We had to overcome so many challenges in those 4 years to launch, the most time consuming being banking (try getting an account, let alone a banking partnership as a Fintech startup in the UAE) and regulatory issues.

These barriers took so long to break down that we had got used to running the company in a cycle of break down a barrier, move to the next problem, raise funding to keep the lights on, repeat. So when we had finally received the last of the approvals required earlier this year and launched, it all felt quite surreal.

For the first time, and after years of planning, we had customers. This meant the problems we had to solve quickly changed from dealing with bankers, regulators and investors, to issues such as customers losing their cards, remittances being delayed, customers not having the right documentation to open an account, etc. We realised that even with the most comprehensive planning, you cannot prepare for and have no idea what will happen until you launch! We’ve learned to be very nimble and adaptable, aided by our incredible in-house team of tech developers that are all with us in Dubai and everyone in the company (and this means everyone!) is on the ground with customers at least once a fortnight. We believe it is this connection with our customers and ability to innovate quickly to optimise ourselves around their needs which sets us apart from the competition.

The satisfaction and validation of our mission that we’ve seen since launching has been immense. Numbers of customers continue to grow strongly – we’ll accept over 2,000 new customers in September alone – but the most pleasing thing has been the reception from customers. 

With an account like NOW Money, it would be easy for our customers to use the MasterCard we provide to take their salary out at an ATM and continue to spend this cash in the same way in which they did before, and at first they did. In our first month in May just 12% of our customers used the account for anything other than cash withdrawal. However since then the engagement has exploded as customers discover the range of services available to them in the app – services which save them significant amounts of time and money, which ultimately ends up in the hands of their families back home. And as word of mouth spreads amongst our customers, the change in behaviour has happened rapidly. Last month almost 60% of our customers made an in-app transaction or significant card spend in-store, and this ratio is continuing to trend strongly upwards. More importantly, the direct feedback we collect daily has been overwhelmingly positive, with customers used to being ignored often surprised that a company would go to such lengths to provide a great solution for them.

Also pleasing is to see the appreciation of their employers. Employers in the UAE often get a bad rap for the way they treat staff – but those we’ve worked with really do care and on a couple of occasions I have even been called directly to thank us for providing a service their employees like so much and that provides them with financial independence they’ve not experienced before. This has led to employers referring us to other corporates in their networks – the very best form of sales lead.

We’ve just closed a funding round, led by the UK’s leading Fintech Venture Capital investor. We are working hard on adding additional exchange and other partners to our network to give our customers more choices, preparing for upcoming launches to Saudi and Bahrain, and working on an offering for SMEs in the UAE. But one goal that will remain our number one priority – the same mission that got Katharine and I through the tough times for 4 years – is providing the best account in the GCC for our customers. We don’t believe that income, nationality or any other factor should stop anyone from having the best experience and loving their account, and so far the response we’ve seen from our customers is proving that it isn’t.

We’re changing the way financial services operates in the UAE, and operate in a very transparent and openly collaborative manner. If you’d like to learn more or reach out with any opportunities, please reach out to me on LinkedIn, Twitter or comment on this post.

A self starter

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Meet Daniel. To the uninformed eye he appears to be an ordinary barista but looks can be deceiving.

He doesn’t just make coffee. He’s essentially a ‘one- man team.’ He has been trusted to run the entire branch with only an intern who has recently joined him. Duties include handling inventory, permits, licenses and anything else that the municipality requires; all on his own. Despite his humble demeanor, his talent is self-evident. He tells me how small the margin for error is. For example, selling a single item past its expiry date can result in the branch being closed. For a conglomerate to apportion this level of responsibility to a single employee is unheard of and the accountability never ceases. “I go home, take off my uniform and get back to work,” he jokes; but this is no exaggeration. For five days a week he works from early in the morning to well into the night, handling the everyday running of the shop. Following this he begins filling out the days paperwork which doesn’t end until 10pm. After waking up at 4 AM he repeats this process.

As he reveals this I can’t help but wonder how he is so relaxed. Not only does he have to navigate his stressful work life, his weekends are spent studying at university; and he enjoys it! He perceives the added workload as a recognition of his considerable value whilst his educational pursuits provide a personal challenge. I ask him what motivates him to be so industrious and his reply was short; “my parents.” Both his mother and father are retired in his native Philippines, where his siblings also reside. Every month he remits as much money as possible to support them. However, he feels no pressure to provide. He stresses that these monthly displays of generosity are completely voluntary. He uses these payments as a means of showing his “respect and love” to them. “Yesterday I made another payment, so I think they love me a little more right now!”

Daniel moved to Dubai after working in Saudi Arabia for 3 years. There he learned how to speak Arabic, how to run a coffee shop and how much Middle Eastern countries differ. He believes that the UAE is always “one step ahead” of their rivals and describes Dubai as “a work of art – it’s as if someone created this place with a paintbrush.” He gestures towards the skyline and marvels at the pace of development.

Clearly, his knack for shouldering responsibility is at the core of who he is. He accepts the burden of his work, education and providing for his family. His life choices are no different. He saw no reason why Dubai would be free of prejudice. Consequently, he refuses to begrudge any limited prospects he may face. It was his decision to come here. It is also his decision to leave.

He has passed his university exams, processed his paperwork and is imminently moving to Canada. There he will become the official manager of another coffee shop. His salary will increase and so will his generosity toward his family; but this is just the beginning.

Daniel’s grand ambition is to start his own company, perhaps a food service. There he can hire his siblings, support his parents and take complete ownership of his work ethic. He would finally be able to be his own boss. This vision of his becomes clearer and with each passing day and draws closer with each sleepless night. I have no doubt that soon it will be his reality.

 

 

 

 

 

8 misconceptions about the UAE and its residents

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I often get asked about my thoughts about the United Arab Emirates (UAE). Before I moved here, I probably would have described a land of sand, oil, mosques, wealth, and magic carpets amongst other things.

In all honesty, looking back, that wouldn’t have been a terrible guess, but now that I’ve lived here for a while, I think maybe it was a bit one dimensional!

One can’t be blamed for basing assumptions on what most people would consider to be the native Arabic speaking Emiratis; how they live and what jobs they do. But the Emiratis only make up 13 per cent of the population. The rest? 17 per cent Western expats and 70 per cent low-income migrant workers from countries such as Pakistan, India, the Philippines, Bangladesh, Nepal and Sri Lanka.

Are you shocked that not everyone drives a sports car? Well, it’s true. And there are a few common misconceptions about the UAE and the underprivileged 70 per cent of its population that I can help clear up for you.

  1. The streets are paved with gold
    More golden sand, than actual gold. The UAE is celebrating its 46th National Day in December 2017, so understandably, it’s very much still under construction. Yes, there is a lot of wealth, and the Burj Al Arab is partially plated with gold leaf, but there’s also 70 per cent of the population who earn under AED 5,000 a month (around $1,360) and cannot afford luxuries.

 

  1. You can live here comfortably on $1,360 a month
    Most of the low-income migrant workers in the UAE are here to send money back to their families, because they can earn more here than in their home countries. Typically, they send around 60-70 per cent of their wages home, meaning that they will only get a remaining 20-30 per cent to live on. So, monthly income suddenly drops from $1,360 to about $400. And given that Dubai is one of the most expensive cities in the world, this isn’t much to survive on, let alone afford a comfortable lifestyle.

 

  1. Most people in the UAE have a bank account
    This is a common misconception and far from the truth. Most banks in the UAE have a minimum salary requirement of AED 5,000, meaning that the low-income migrant workers can’t have a bank account and get paid via a prepaid card with limited functionality. They use this card to withdraw their salary in cash, excluding them from many in-store card purchases or online benefits such as cheap remittance options.

 

  1. It is more developed than emerging economies
    Considering that world’s tallest building and the only seven-star hotel in the world are in the UAE, you might expect the most high-tech payments systems too. Pakistan and India are leading the way here though, having launched instant mobile payments years ago. Easypaisa, a money transfer service accessed through a mobile phone, was launched in Pakistan in 2009 and PayTM is India’s version, which was launched in 2010 and has amassed over 230 million users. NOW Money is the first accounts and remittance service for low-income people in the UAE, but most of them have used similar services in their home countries.

 

  1. Migrant workers can’t afford smartphones
    The first question I get asked when speaking to people about NOW Money: “but can they afford smartphones?”Yes, 98 per cent of low-income migrant workers own a smartphone. It’s their only way of communicating with their families back home, and probably their most prized possession. A perfectly good smartphone is now available at Carrefour for AED 120.

 

  1. They can’t read English – can they even use a smartphone?
    The standard of literacy in emerging economies ranges between 50 and 60 per cent compared to 99 per cent in many Western countries (UNESCO 2015). Therefore, you could argue that migrant workers won’t be able to read their native language, let alone another one? Wrong! When carrying out market research at the end of 2016 I discovered the majority of users wanted the NOW Money app to be in English, as they’re using it every day.  As go-getters who have moved abroad, UAE migrants hold an education advantage on their relatives at home.

 

  1. Their families don’t have access to the internet
    Some won’t, some will. But, in reference to point four, mobile payments are sophisticated in some of the workers’ native countries, so the chances are beneficiaries will be able to receive money using a mobile device. NOW Money delivers remittance to mobile wallets, bank accounts and local pick-up, so there isn’t actually a need for their families to have access to the internet.

 

  1. It’s all about Dubai
    Dubai’s population only makes up 2.8 million of the 9.27 million people in the UAE. That means there’s still 6.48 million people living outside the metropolitan hub.  Although Dubai and Abu Dhabi are the best-known Emirate states, there’s actually five more: Sharjah, Ajman, Fujairah, Ras Al Khaima, and Umm Al Quwain, all of which have low-income migrants working in their hotels, shops, taxis, and building new structures.

 

So, as you can see, NOW Money’s target audience are vast in quantity and in need of safer, cheaper and more efficient access to payments and money transfer services. The emergence of FinTech and RegTech in recent years has opened up a gateway to enable cost-efficient solutions to be created for this population, who are currently excluded from the current financial system.

To find out more about how NOW Money can help your employees on less than AED 5,000 please get in touch at info@nowmoney.me or tweet us @NOWMoneyME

UAE-Based Fintech Start-Up Secures $700K Investment to Advance Financial Services Access for Underserved Migrant Workers

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NOW Money has secured an investment of $700,000 from two U.S.-based venture capital investors – Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Newid Capital.

Both Accion Venture Lab and Newid Capital make investments that target the financially underserved.  Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Newid Capital focuses on such investments outside of North America and Western Europe.

NOW Money uses mobile banking technology to provide accounts, financial inclusion and a range of low-cost remittance options to low-income migrant workers in the Gulf region. It aims to provide access to affordable financial services for everyone.

The investment comes a year after NOW Money’s initial seed funding, which allowed the company to expand the team and develop the technology and brand. With the latest investment, also a part of its seed round, the team plans to launch the service across the United Arab Emirates and expand into the other Gulf Cooperation Council (GCC) countries.

Co-founder of NOW Money, Ian Dillon said, “Having what’s understood to be the first early stage investment from U.S. venture capital into the Middle East is testament to the opportunities available here and how far the GCC has come in making itself a destination for investment. We hope this will be the first of many U.S. venture capital investments in the region, and will help to grow the ecosystem further.”

“We’re excited to be making such a big social impact in the region. Accion is one of the leading global institutions promoting financial inclusion, and Newid Capital was co-founded by Nigel Morris, who previously co-founded Capital One Financial Services. We’re excited to be working with them to bring financial inclusion to the 26 million unbanked in the GCC,” he added.

“Each year, migrant workers contribute more than $400 billion to their home economies, and the United Arab Emiratesis among the top remittance-sending countries in the world,” said Michael Schlein, CEO and President of Accion. “NOW Money’s innovative approach and digital platform provide a faster and safer option for these workers to support their families and communities.”

“Our partnership with NOW Money marks a number of firsts for Accion Venture Lab – our first investment in the Middle East region, our first investment into a wholly-digital neobank, and our first opportunity to focus on reaching low-income migrant workers,” added Amee Parbhoo, Director of Investments at Accion Venture Lab. “As we reach this new group of financially underserved individuals, we’ll look to apply our learnings to Venture Lab’s work around the world.”

In the last 12 months, NOW Money has won six awards, including Chivas’ “The Venture” for the Gulf region. The co-founders Katharine Budd and Ian Dillon speak regularly at fintech events, such as Payfort and Wamda’s State of Fintech report, and are featured regularly in publications such as Entrepreneur Middle East and on the Dubai Eye radio station.

About NOW Money

NOW uses mobile banking technology to provide accounts, financial inclusion and a range of low-cost remittance options to low-income migrant workers in the Gulf Cooperation Council (GCC) countries, improving their lives and saving them and their families significant money, in a profitable and sustainable manner.

About Accion Venture Lab

Accion Venture Lab is the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching in 2012, Venture Lab has deployed over US$10 millionacross more than 25 start-ups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global non-profit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by –  the financial sector. For more than 50 years, Accion has helped tens of millions of people through its work with more than 90 partners in 40 countries. For further information, visit https://www.accion.org/venturelab.

About Newid Capital

Newid Capital is a direct-investment fund focused on financial services and financial technology companies in developing markets. Through its investments, Newid Capital aims to expand financial services to currently underserved markets and individuals. Newid actively seeks early- and mid-stage start-ups that are looking for investment and operational assistance. Newid is able to leverage personal experience in building, and exiting, financial services companies from the viewpoint of both the entrepreneur and the investor.

Why We Invested in NOW Money

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By Amee Parbhoo, Director of Investments for Accion Venture Lab

Despite the fact that they are wealthy and modern, cities like Dubai in the Gulf Cooperation Council (GCC) actually face a big financial inclusion challenge. There are 8 million foreign-born migrant workers in the United Arab Emirates (UAE) alone, making up some 88% of that country’s total population. These workers come primarily from India, Pakistan, Bangladesh, and the Philippines, and are mostly in low-paying jobs such as construction or domestic labor. Across the Gulf region, migrants have faced tough working conditions and have been historically ignored by financial institutions. They lack access to basic financial services, including bank accounts and fast, convenient remittance channels for sending money to their families back home.

This is where NOW Money, Accion Venture Lab’s newest portfolio company, comes in. NOW Money was founded in 2015 by Katharine Budd and Ian Dillon, who were inspired by the digital-only “challenger banks” that had begun to emerge across the US and Europe. While the UAE has over 50 banks in operation, none of them are able to reach the country’s massive and underserved low-income migrant population effectively. NOW Money provides a suite of products to its customers: current accounts for depositing and withdrawing wages; debit cards for use at ATMs and for merchant transactions; and a marketplace of online remittance platforms for cheaper and more convenient money transfer services. By reducing the cost of customer acquisition and reaching a relatively untapped market, NOW is able to offer these services (and eventually others) and cost-effectively serve customers that would otherwise be considered unprofitable by traditional banks.

NOW partners and integrates with large employers to pay workers’ salaries directly into NOW Money accounts. The value proposition is strong for both end customers and employers. For customers, NOW offers a suite of products otherwise unavailable in the market. In particular, during our due diligence we saw customers incredibly excited about the digital interface for access to remittances. In the UAE today, some 95% of remittances are cash-based transactions. The workers we spoke with remit 60% or more of their wages to family members in their home countries, and typically have to take time off work, wait in long lines at remittance houses, and pay high fees in order to make these regular transactions.

Accion Venture Lab and NOW Money staffers talk to migrant worker customers about their experiences using the service.

For employers, NOW provides a less expensive solution for payroll. In addition, the employers we spoke with were motivated to give their employees the benefits NOW offers for both moral and economic reasons. Some employers see a spike in absenteeism the day after pay is disbursed, as employees go to remittance houses. Lastly, many employers, especially in more skilled and technical professions, value NOW as a way to increase employee retention.

Venture Lab is excited to be supporting the NOW Money team as they grow and scale. We invested in the company — our first in the GCC and one of the first early-stage VC deals in the region — for a number of reasons:

  • Clear social impact: The migrant population in the GCC is historically underserved by basic financial services. The wages these workers earn are low ($200–300 per month, depending on occupation). Due to banking standards in the UAE, it is very difficult and costly for a customer to open an account if they earn less than $1,300 per month, thereby excluding a vast majority of the migrant worker population.
  • Large market with unmet need: The UAE is the third largest market in the world for remittances, trailing only the US and Saudi Arabia. Across the GCC (UAE, Saudi Arabia, Bahrain, Kuwait, Qatar, and Oman), the total addressable market is some 25 million low-income migrant workers believed to be remitting about $50 billion annually. The remittance corridors used are some of the most active in the world, and NOW fills a crucial gap by providing customers ease of access and lower costs.
  • Innovative “neobank” model: Accion Venture Lab looks to support fintech companies that have innovative approaches to increasing access to and quality of financial services for underserved markets. We have been actively watching the digital-only neobank/challenger bank models around the world and are excited about NOW Money, our very first neobank investment. We’re thrilled to be part of NOW as it expands and aims to become the financial service platform of choice for migrant workers. As NOW truly owns the customer relationship, it will be able to provide incremental value to customers’ financial lives with each further partnership, beyond simply account access and low-cost remittance tools.
  • Opportunity to learn from new customers, market, and product: NOW Money would be a first for Venture Lab in a number of ways. Venture Lab has never invested in the Gulf region, and NOW Money could serve as a way to learn about this fast-growing region and its market dynamics. In addition, Venture Lab has investments reaching many kinds of underserved customers, but we have limited experience serving migrant workers, which is a huge market with demonstrated, specific, and relevant financial needs. NOW Money would help us better understand this vast and growing population of underserved customers.

As is the case for all of our seed investments, NOW Money is early in its journey, but as investors in the company and proponents of financial inclusion for underserved populations, we are excited about their progress so far and the company’s plans going forward.

Rob Stevens contributed to this article. 

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Decoding: APIs

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Hi, I’m Niraj, Lead Developer for NOW Money. My life over the past few months has involved many late nights and weekend sprints to get the NOW Money app ready for launch. We’re building a platform which has to be easy to use, fast, secure and importantly it has to connect to our FX partners, so that our users can remit their wages back home from the UAE.

I know you’re wondering how we connect and interact with these FX partners… Well, it’s actually quite easy. We do it using a little acronym called an API, otherwise known as an Application Programming Interface.

You may have heard the term before and brushed it off as something that only geeks understand. Fair enough. It’s a widely-used term in computer science fields, but not so much a household term. But as technology increasingly infiltrates the world, it will become mainstream soon enough, so get ahead of the game!

Despite popular belief, APIs are really quite easy to understand, and I’m going to explain to you just how they work and why they’re so essential to NOW Money (and to anyone working in technology).

In brief, an API is a set of processes, functions and tools for building software applications, or “apps” for short. Examples of apps are a word processor, spreadsheet, web browser, game etc.

An API also defines how software components should interact with each other.

There are two types of API; open or closed. An open API means that anyone can access, view and use it to integrate into their own software. Examples of companies with open APIs are Twitter and Facebook – it’s easy to integrate with these companies.

A closed or private API is the exact opposite of an open one. They are closed to the public, and usually only facilitate internal functions.

Simply put, you can think of an API as an agreement between two people, saying:

“If you ask me to do this action, I will respond by doing this action or providing this information”.

At NOW Money we’re using an open API which allows us to easily interact with our remittance partners. We’re also currently integrating with APIs that will enable our users to remit money through our partners, and transfer money from cards to pay bills and top up mobiles.

Here’s a diagram to explain:

 

We are also using closed APIs too, allowing our mobile app to connect with our servers (more on servers in another post). These APIs are internal to NOW Money, and facilitate the functionality we provide to our users.

There’s no real limit nowadays as to what we at NOW Money, or anyone, can integrate with. There are thousands of open APIs out there, from PayPal or Stripe for payment processing and accepting credit and debit cards, to Facebook, Google or Twitter for social features. So really, the world is our oyster!