The New Kid on the Neobank Block 

0:02Mohamed Al Sabea: Excited to have Bark in studio with Brett today. Now, a quick clarification for the American listeners. We are not talking about root beer, although honestly, the root beer's growth curve could also be something to learn from. Bark means lightning in Arabic, and for once, the brand name might be underselling it. One million users in three weeks, more than 15 million users today, and around$118 billion processed since launch. for context, it took most of the neobanks we've had on the show the better part of a decade to tell a story like that. And Bark has done it in two years. And then last month, they did something even rarer.

0:41Mohamed Al Sabea: They announced how much money they had raised, and that is$329.5 million Series A at a$1.85 billion valuation. That's not a Series A, really, in my book. That's like a, are you kidding me? That is a lot of money. In fact, it's the largest Series A in MENA history. But here's the thing about Lightning. It is bright. It is fast. The hard part is bottling it. With 15 million users, the question is how many of them become customers? And what happens when a payments company starts lending money, which is what Bark just got preliminary approval to do? So, Brett, why don't you kick us off? I will play the resident skeptic on, can they bottle the Lightning?

1:23Mohamed Al Sabea: But excited to have Mohamed in studio with you.

1:26Brett King: Mohamed El-Sabir, welcome back to Breaking Banks.

1:31Jason Henrichs: Thank you. Thank you for having me. It's a pleasure to see you again, Brett. It's a pleasure to meet you, Jason. Barak's journey has been a journey of hyper growth, and we are excited here to share more about it. So you're the Chief Strategy Officer.

1:51Brett King: I guess the first question, most obvious question is, on paper this looks pretty incredible. Was there a strategy to it? 100%. 100%. Let's start maybe by just give a little bit of history of how Barack came to be, particularly with the background of Ahmed, who previously led the first unicorn in Saudi, which was STCP. and they've been, obviously they've been on the show as well, but how did you get from that to this?

2:29Jason Henrichs: 100%. The team has the strongest credential in the market. They built the first fintech in Saudi. They pushed it, grew it, got a digital bank license, and this is when Ahmed and most of us on the team decided to go and start Barkh. What is very great about being a first is that you essentially dig the road. And digging the road means that you really work very closely with the regulatory authorities. You work very closely with the partners and stakeholders. So we have been very privileged to be part of the first. And as such, we have that right to win because we have built a trust with the regulator.

3:18Jason Henrichs: we understand a lot about what it means for customers to not be happy or happy and honestly the first three and a half months Ahmed said no work no building to sit down write for me what you did well write for me what you did wrong so the experience of all of the team headed by Ahmed has been instrumental for the success of Barqa today.

3:48Brett King: Now you've got about 50 % of Saudi's outbound remittance right now, and about 50 % of the Saudi population is, no, adult population?

4:00Jason Henrichs: More. More. More. So in terms of bankable population in Saudi, we have north of 70 % today of the entire bankable population in Saudi. And in terms of outward remittances, we do about 50 % for the main corridors of expat remittances. This is not a coincidence. We have designed this playbook where we started by going for the toughest. Yeah, remittances are tough business. to make payments payments.

4:38Mohamed Al Sabea: It's tough, Brett, but I'm curious on this, Muhammad, like pull this out as the strategist. Where was the part where there was a problem that could actually be solved? Because while it is a tough business, it's largely been solved in many regards, but you clearly have found a job to be done in that toughness that could be solved that only you could do. And that's what my curiosity sparked is you only see real growth like this when you say we've found a problem that is yet unsolved in this relatively mature but tough business, as Brett said. What was that insight?

5:14Jason Henrichs: The insight was fragmentation, friction, and user experience. These are the three things that we knew for a fact are going to be a big differentiator for any user. So users today or before Barq had to do remittance in a platform, cards in a platform, peer-to-peer in a platform. in this day and age it doesn't really work so fragmentation was the first thing we solved for second thing was experience users wanted a seamless frictionless experience this was a big hook for users they really don't want to do we look at effort per click we don't want users to do a lot of work because technology helps us make transactions very seamless and very secure.

6:05Jason Henrichs: Lastly, is the knowledge of the markets. We really know the markets. We have the right to win because we know all the customers. We cater something that satisfies the customer's needs in the kingdom and beyond.

6:19Brett King: Jason, you and I both built neobanks, right? You with Perk Street.

6:25Mohamed Al Sabea: I mean, by comparison to this, I don't know that I've done anything more than a

6:28Brett King: But that's my question is like, you know, like we thought we were doing pretty well with moving, having a quarter of a million customers in the first year we went out of beta. Right. And, you know, that was even before Monzo and Revolut and Nubank existed. But I couldn't have imagined in, you know, maybe it's a timing thing. I couldn't have imagined building a million customers in a year. You guys did it in three months. Three weeks. Three weeks, sorry. Three weeks. So, I mean, is it just pure brute force spending on marketing? Or what was it that got you that amount of traction and that amount of trust in the Saudi market so quickly?

7:18Jason Henrichs: It's never spray and pray at Bark. There is no spray and pray strategy at Bark. we really really think about how our brand communicates with customers and building trust in financial services is key what we really leveraged on and worked very well for us is the transparent element of financial transactions people have always had that concern that you know the fine print we need to look at the fine print and we look for us it was very straightforward there is nothing hidden and for a change people appreciated that what also was very exciting for users is that there's a new hero that is actually solving problems in the product they

8:07Brett King: are using every day uh so and was that the messaging the message we're here to solve your

8:13Jason Henrichs: problems or the subtly subtly because once a user uses your product whether it's a remittance or a card, he's like, well, vis-a-vis your competitor, this is much better.

8:27Brett King: So then the word of mouth kicks in, but you've got to get to a sort of certain critical mass to get the word of mouth, right?

8:34Jason Henrichs: Yeah. And that was my next point is we designed this in a way. Our playbook was to get to a not just spray and spray mass acquisition. It was about hitting network effect. really a very good statistic to bring up is out of the 500 000 plus users who registered 95 plus percent of them the first transaction was a peer-to-peer what that means to us is that i don't like to say the word forced but the ecosystem and the network says if you want to get paid or if you want to receive your money download the application it worked it worked for

9:15Brett King: alipay you know it worked for uh wechat pay that those guys grew right alipay we paid it was

9:22Mohamed Al Sabea: monumental for you know stripes payouts business you know like this idea of make it easy to send but if you actually want to get it out you know you actually get through a lot of the compliance hoops. Now, I'm curious, Muhammad, like normally this transparency doesn't lead to spread. It leads to people who leave, right? Like I really only care about transparency after I've been bitten by it. Was there something that changed in the market that really said, you know, was it some other player? Was it a shift in kind of a global world where that really resonated that created the spreadability?

10:03Jason Henrichs: I think timing was everything as well. Timing was key for us because we came in a time where users were churning from other platforms. Platforms started to add fees unnecessarily. And for us, we have not changed our pricing or product strategy since day one. It's been the same and it's not promotional. We believe that today at mass, payments work. And in order for you to reach the mass, you really need to be transparent and be very, very straightforward. And the last thing users like is, hey, this is an offer. It's great. Three months in, hey, you got to pay for it. And we would never do that.

10:48Jason Henrichs: So we put some DNA kind of guiding principles that we follow. And one of them is transparency for us.

10:56Brett King: You've got 16 million cardholders right now?

10:59Jason Henrichs: We've got just below 15 million.

11:02Brett King: Okay, 15 million. And you've got a 50 % monthly active user rate. 100%. Which is very impressive. It's a rare benchmark for the fintech industry right now. But I want to talk to you about how consumers see Barak as a product in the market. because, you know, this conversation is ongoing online. Jason and I have been involved in this conversation on multiple occasions, which is, is Barak, is Revolut, is Nubank, are they banks or are they wallets, you know, enhanced wallets, apps in the ecosystem? How do customers see the app and the institution of Barak in the Saudi market?

11:54Jason Henrichs: See, I always refer to ourselves as a platform. We are a platform anchored around financial services, regulated, and that's what gives you trust. And 50 million users in, we built a real estate. and as you rightly said we have almost 50 % monthly active users I mean you could look at some of the benchmarks and we are very very high up there the reason is the design of the app the way people interact with one another in the app as well as the payments nature it's part of your everyday life you You cannot think of, you know, payments as a one-off, like a loan or an investment. So being part of everyday life, understanding your customer, really understanding customers.

12:52Jason Henrichs: And this is why payments are important, because you get a lot of data. Cash flow for one. So that ecosystem in the kingdom of Saudi Arabia has been built in a very robust way that allows for a lot of businesses to build in a very secure manner, not only in payments, but also in lending, which we will get into later.

13:14Brett King: We're definitely going to get into later. Now, also, you're moving into SME now?

13:19Jason Henrichs: We launched our SME banking, better margins. Beautiful thing that's happening today is 15 million plus users, 85 % of them are SME owners. In a way or another. You really don't need to convince them. They're already bought in on you as bar. We could have launched with SMEs, much better margins and went there. But we wanted to crack the tough part of payments, which is retail payments. Once we add SMEs, it's all about incremental growth. But monetization is also what's key after Uri's kind of mass in Saudi. Interesting.

14:04Mohamed Al Sabea: You had talked about the margin improvement. given the no hidden fees, the bundle of things you do around no annual fees and international fees, lounge access at 25 airports, travel insurance, like you come at this very much as a premium product for the users, yet you're also very profitable. How are you making that magic work?

14:29Jason Henrichs: Well, that's a secret sauce. Basements works very well at mass. And once you have a volume and value and share, you're able to negotiate extremely preferential rates and agreements with your partners that allows you to manage the costs related to rewarding customers, as well as the fees with transactions. So this has not been a journey that has been achieved from day one where we got an agreement, it was happy hunky-dory. It was an ongoing journey of us. When we signed, for example, the round, investment agreements for the round last year, around November, December, we had 7 million users. The growth from 7 to 8 required minimal or no marketing.

15:28Jason Henrichs: You have to think about a philosophy of the network effect that really is a founder's credit. And Brett, you know how Ahmed Al-Annezi is extremely in. And we see the results today. We see the results today. So it's more about really becoming a find the problems in the payment.

15:57Brett King: Because you've created that network effect. Now you've got these partners, especially in the retail space, that want to come and court you. But Jason, you were going to ask a question.

16:09Mohamed Al Sabea: Well, I'm curious, expanding on that, as we get to the network effect, so you came out strong and probably the experience with STC, like you knew what you needed to build. What are you bringing to the SMEs, you know, expanding on top of this in your premium product set?

16:27Jason Henrichs: a full digital experience where they can manage everything in a single place. Today, a full digital onboarding, you have, you know, the world has changed. You cannot run around with a laptop to manage your SME or your business and then have your phone to manage. It doesn't work like that anymore. In this day and age, users expect a frictionless experience. So today, if I was an SME owner, in my app, I could go and approve the payroll of my employees in the same single app. See, that ability extended to a mobile app that allows you to run a business. And exactly, that's the platform expert. It is what makes a difference.

17:17Jason Henrichs: And plus, we are really, really focused on solving problems in the Kingdom of Saudi Arabia. So if there's a problem in the way SMEs are being onboarded, they manage the financial affairs, we go and find these problems and we solve them first, and then see how this can be monetized and have an impact on P &R.

17:39Brett King: But I want to come back to something, because you just said something, and I want to understand how this process took place because we're talking about the Series A, but you said that was actually signed last year and then you just announced it at Money 2020 in Riyadh. Correct. But it's like eight months later, nine months later. What was the delay?

18:04Jason Henrichs: The only delay was to announce a fully approved by the regulator. Okay, so it's the regulatory approval. Yeah. The sticker price is November, December last year. The company has grown more than twofold since. We used to do, say,$750 to$800 million in international remittances and cards individually each,$8.8. And now we do more than$2 billion each. So the... And you're profitable. We run our last profitable quarter last quarter, and it's great.

18:43Brett King: That in itself, I think, is probably the fastest. I don't know how long it took Alipay to get profitable, but if you take Revolut and Nubank and Monzo and those guys, they took many years. Starling took many years. You guys have done it in year two. Year two.

19:05Jason Henrichs: See, you mentioned starring and others. I'd like to highlight a point here. If you go to the UK and you try to open a bank account in one of the conventional banks, you need to go. It's like an interview. It's, you know, documents printed out. It really doesn't work. So when somebody comes in and does a fully digital onboarding experience, there's big disparity between conventional and us and digital. However, in Saudi, all the conventional banks follow a very digital approach towards onboarding and providing services. So for us to compete against those banks versus competing with a conventional bank that doesn't even have a digital onboarding, it's much tougher.

19:56Jason Henrichs: And this is what gives us a lot of pride because it is a bloodbath. it is not going to be easy, but we have strong belief and conviction in the product, the team, and the technology, which is 98.9 % in-house.

20:14Brett King: Well, let's talk about that. That in itself is pretty impressive for the Saudi market because a lot of this is outsourced. How did you build the tech team capable of deploying the stack that you've deployed and still doing the agile adaptation on lending that's coming in the SME stuff, things like that? How big is the tech team? Where are they situated? How are you executing on the tech side?

20:47Jason Henrichs: Today, technology is two-thirds of the company. mainly based in Saudi. Our CEO, Ahmed, and founder is very adamant to say when you want to hire somebody, it's like, can we get technology to do it or no? It's a DNA and a tone of the top where technology is first in everything we do and you have to have a tech savvy mindset. And to get there, we need to have a strong tech team own our engineering powerhouse, build our own technology, run our code. This is also what allowed us to be very agile and in other angles allowed us to manage a lot of the risks in the market, fraud and whatnot, that the regulator really had big concerns about.

21:39Jason Henrichs: So we showed how technology can allow you and enable you to manage risks instead of having 500 people sitting and reviewing, you know, like transfers. you just need a tech tool that gives you the right outcome so the timing of when we came out everything was cloud uh you know in the cloud not cloud in the cloud you know you've got multiple um entities that came before us but by design they came in and they had i don't want to say mainframe but they had essentially cabinets um yep so the timing has helped us big time, big, big time. But it's also not a coincidence.

22:25Mohamed Al Sabea: Are there any strategic decisions you made that you look back on now and say you would have rethought those? Either the market wasn't ready for it and you need to revisit those or the customer wasn't ready for it. you would, you know, with the benefit of hindsight, say, optimally, we would have chosen something else?

22:49Jason Henrichs: Not really. There's a very clearly defined playbook that we are following, where start with payments and retail, crack that. And once you crack that, everything is much easier, simply put. the only thing that i would say is we need we had the mentality of oh let's try to make it very perfect let's try to make sure that all the but doesn't work like that the more you ship a well designed product to the market and iteratively continuously keep improving it is the right way rather than let's perfect it forever.

23:33Brett King: So you got it as perfect as you could to launch, but then in the iterations, you've been a little bit more flexible.

23:40Jason Henrichs: 100%. And we use voice of the customer. We use a lot of the tools that really help us get free feedback. And we own our technology. We own our tech stack. It's just a text to the engineer and an email. And these bugs are fixed. All right.

23:58Brett King: So let's talk about use of funds. Yeah. And, you know, you've raised the biggest round in GCC MENA history for a Series A. Probably, I mean, I'd have to do some research on this, but it must be, if not the biggest round, certainly one of the biggest rounds in fintech for a Series A. You know, in Jason's, you know, parlance before, you know, this is not normally a Series A, this sort of size of a round. And, you know, you don't see unicorns come out of the gate in Series A very often. No. But you've also got such a huge part of the Saudi population already on board. There's only so much growth you can wring out of the Saudi market.

24:41Brett King: And I know you're deepening into credit and I know you've got the SME. But where do you go from here? Is it expanding the geography? What's the play?

24:53Jason Henrichs: So two things. Just on Saudi, it is very important to know that the monetization is just about to start. Payments is a very tough business, very low margins. And as we introduce lending and other products, our margins or our pool are going to skyrocket. Now, is this enough now that I have almost 80%, 70 % of the bankable population in Saudi? It's impressive. It is impressive, but there's a clear path of what we're going to launch next and how we monetize on it. But how do we grow further? Owning the technology is a big part of how you can be very nimble and expand. Two days ago, we signed an agreement in FinTech Forward Bahrain.

25:46Jason Henrichs: We're acquiring Beyond Money Group. It has licenses in the Gulf region. and we've already been in Pakistan we're expecting to launch that being an interoperable player a spiderweb as I like to call it is something that has not been done in our region before and we believe we have the right to win

26:14Mohamed Al Sabea: I mean I've got to call out because speaking Roger Martin where to play, how to win and the right to win is my love language. So, you know, I do appreciate that. One of the challenges in this expansion always is, I like how you described it as the spider web, but it also is something new for that customer that they hadn't necessarily hired you to do. What gives you the right to win when it comes to the lending side as you expand based on the beachhead that you've made?

26:46Jason Henrichs: Okay, so two things. Right to win, payments has a part to play here. When you look at, for example, cross-border payments coming out of Saudi, going to Pakistan, today I've got over a million users who are of Pakistani origins in Saudi. Each one has three to four beneficiaries for cross-border remittance at minimum. By a penny or a dollar, they're going to switch to my platform first. First, the right to win is holding the send power. When you hold the send power in remittance, you're really able to skew the recipient to what the sender wants to do. Second is in lending, I'm really looking to do intelligent lending.

27:34Jason Henrichs: I could have started lending from day zero. For example, if you run basically my scoring today, it would be that Mohammed does not, his rating is adversely impacted by the fact that he is a flight risk because he is traveling around multiple countries. And as he travels in multiple countries, see that that level of data is not used in the region. So you're doing behavioral credit scoring. Behavioral, social. Data science is better. So if you've got eight data scientists right now. I've got eight data scientists and growing, all savvy, by the way. We have a way to look at lending as not a complementary product to buying something that is luxurious.

28:25Jason Henrichs: It's you complement that product with a necessity. When somebody needs to send money home to their family every month, that is a necessity. that is not buying rims for the dot challenger yeah so for us when you bundle and this is from studies when you bundle lending with necessary like bloodline kind of project whether it's trade or remittances back home the likelihood of anybody having a default approach towards the song is minimal to none interesting yeah well um so i know we're running out of time

29:06Brett King: but um i let me just ask you this question in finality and then jason can wrap is take us to 2030 because you know i'm a futurist so i've got to talk about the future

29:19Jason Henrichs: what is what does it look like for barack barack is going to be the pan regional hero where you can send cross-border remittance using your phone number between Saudi, Pakistan, Bahrain. The best trades ever, no fees. And at the same time, it's going to be a profitable company that's ready to be IPO'd a year and a half before that. Amazing.

29:48Mohamed Al Sabea: Well, I mean, as we close, I'd like to say the hard part, the lightning in the bottle typically is getting to that profitability, which you guys have done at record speed as we've talked about. And I think for the bankers listening, the takeaway isn't that, Barb, didn't win because incumbents lacked products. It won because you actually showed up where people really were. And I loved your starting with the send. It's a little bit of the follow the money, right? Follow the need beginning with where the money needs to go. And I think as we think globally, this isn't a Saudi lesson. every one of your customers, you know, since cross-border is so important, goes into a segment that touches globally.

30:31Mohamed Al Sabea: And so while lightning doesn't strike twice, I think good businesses do. And I'm excited to see what happens as you begin to look outside of your own borders and expand with those customers that you're sending the money to. 100%.

30:44Brett King: Where can people find out more about Barak?

30:47Jason Henrichs: Everywhere. Barak is coming at you, wherever you are. The idea is now owning our technology, we're very aggressively looking at expansion. We don't really see that as a problem. We understand the region, we understand regulations. And our most recent acquisitions is a good testament to how we are able to navigate regulatory challenges as well as other challenges and expand very quick and at the most optimum cost.

31:24Brett King: So search for B-A-R-Q-N-X and LinkedIn and people can follow you as well, right?

31:31Jason Henrichs: Absolutely. And stay tuned. Lending is just starting and we're going to see us in a lot of countries. Awesome. Awesome.

31:40Brett King: That's it for another week of the world's number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Elizabeth Severins, audio engineer Kevin Hirsham. If you like this episode, don't forget to tweet it out or post it on your favorite social media or leave us a five-star review on iTunes, Google Podcasts, Facebook, or wherever it is that you listen to our show. Those actions help other people find our podcast, and in return, that helps us build an audience that can be supported by sponsorship so we can continue to provide you with our award-winning content every week.

32:17Brett King: Thanks again for joining us. We'll see you on Breaking Banks next week.