1018. Insights: What it's actually like to build a fintech in the Middle East

0:00Retail investment in the UK is the lowest in the G7. According to the Bank of England, there is over£280 billion sitting in UK accounts earning no interest. Something has to change. Financial firms in the UK must look at making investing accessible, contextual and trusted through everyday platforms. That means bringing investment journeys to the point of need, alongside spending, saving and budgeting, and within platforms that already play a meaningful role in customers' lives. We dive into this and more in our latest report, Taking Advantage of the Embedding Investing Opportunity, produced in association with SECL.

0:42Download your copy today at alumnafest.com forward slash embedded hyphen investing.

1:03Hello and welcome to another episode of Fintech Insider Insights. My name is David Breer and today we have got a very special episode for you. Last month, I made my way to Riyadh for the very first Money 2020 Middle East. And like any big fintech conference, there was a lot of noise, there was a lot of celebration, and yes, lots and lots and lots of free swag. And also, I'll be honest with you, a slight mild Arabic coffee addiction that I'm still trying to recover from as well. But beyond all of that, I left with something much more meaningful. A quiet, buzzing excitement about the fintech startup scene in the region.

1:38While I was there, I had the privilege of judging the money surge competition. If you picture this, 15 founders, three minutes each. One shot to convince a panel of judges that their startup was worthy of some serious funding injection. And wow, to say that I was inspired is a bit of an underestimation there. Our four winners were not just innovative, they were resilient, they were smart, and they were ready to thrive in an industry that is crowded and competitive. In fact, I'll be honest with you, I kind of told everybody about it so much in the office that we wanted you to hear from them directly.

2:15So in this very special episode of FinTech Insider, I'm joined by three of the winners. So we've got Orbi, Edeka, and Zest. We're going to dive into what it really takes to succeed in the FinTech startup ecosystem over in the Middle East. And my hope, well, you come away with a little bit of a funny, fuzzy feeling as I did, inspired to hear what's happening in the region. Right, enough about me. Let's meet our startup winners. First up, we've got Abdullah Karim, who is the co-founder and CTO over at Edikar. How are you doing? I'm doing well. Thank you, David. It's a pleasure being here. No worries.

2:50Lovely to have you on. Lovely to see you again under a slightly less stressful situation than last time. We'll come to that a little bit later on. But for anybody who doesn't know your business, tell us a little bit more about what you guys do. Yeah, of course. As you stated, my name is Abdikiyam Khayari, the co-founder and CTO of Dihar. We're basically a Saudi fintech transforming employee savings in the Middle East. In simple terms, we integrate with companies' payroll systems. We allow employees to automatically save a portion of their salaries each month. This money is invested into regulated investment partners.

3:25And employees are able to build wealth over time without even needing to think about it. And so savings actually in the region is extremely low, not because people don't want to save, but because it's very hard. It's manual and it requires financial discipline. And that's where we come in. Very good. And yeah, taking it and giving people a process and a structure around it. That's a fantastic thing to do. We'll come to talk about that in a little bit more detail, but great to have you on the show. And next up, we have Naaman Ali, who is the founder and CEO over at Orbi. How's it going? It's good to see you again, David.

4:00Doing really well, thanks. Very good. I feel like, I think I said to you this at the time, and we were talking about it just before the show, I think you've got probably like, you know, breakout star of best voice in fintech. So like, you know, I think we're going to get layers on you for this one. But lovely to have you on the show and lovely to see you again. Tell us a little bit more about your business. Yeah, so my name is Naaman. I'm one of the co-founders and CEO at Orbi. So Orbi is a credit intelligence layer for modern lending. Effectively, what we do is we augment various processes of the lending journey all the way from data ingestion to enrichment to credit decisioning to autonomous disbursement and collection services for lenders across the region.

4:47typically we would work with neobanks, B2B fintech lenders, and even non-lenders who want to enable embedded lending within their platforms and offer that service to the SMEs that are plugged into that. Very, very cool. Lots of sort of entrepreneurial innovation happening in that space and a lot of startup starting. So a lot of people needing those types of services, right? Yeah, that's right. I mean, I think right time, right place. It's a bit of an understatement, to be honest. So it was a problem that was glaringly obvious a couple of years back. And yeah, I guess we played it right in some sort.

5:31Be good, be lucky, be both, hopefully. But well, great to have you on the show. We'll talk to you a little bit more. So last up, we have Rowan Badu, who is the co-founder of Zest. How's it going? Great. Thank you for having me today. It's good to see you again. Yeah, lovely to see you again, again under slightly less stressful circumstances than last time. But tell us a little bit more about Zest. What do you guys do? Of course. So we're building a digital first platform to power private market transactions. So what does that mean? Think about Stripe and what it did for payments in terms of infrastructure.

6:04What we're trying to do is build the rails to streamline and digitize the way private market deals are being executed. So all the way from a deal lead or, let's say, a fund having a dashboard to invite their network of LPs to come and participate, to investor onboarding, to documentation, all the way up to kind of the full lifecycle of the deal during setup and post. So digitizing, streamlining, and bringing everything together under a single workflow. That's what we're doing. We call ourselves the pipes, the rails, the infrastructure layer to modernize the way transactions are executed. Very cool.

6:38I remember your pitch like it was yesterday. I have to say it was trying to access private markets into the mainstream is no small feat, but actually giving people the level of understanding of those markets is huge, you know, in a massively complex space. But yeah, you've got some really good ideas to how to do that. So well done. All right. Well, that makes up our panel. Lots of great startups and lots of great ideas from the region perspective. But any good startup starts with a good origin story. It's always my favorite part of any superhero movie, quite frankly. But you guys have all founded your businesses.

7:14Man, that stuff's scary, isn't it? Like, tell us a little bit about how you made that happen then. Rowan, maybe starting with you. I mean, what was it? Was it, were you so frustrated that people didn't have access to this market? Or were you just bored doing whatever it was you were doing else and thought, you know what, this startup thing seems like a laugh. Like, what was the origin story? It's funny. I think it's different things. And similar to what Norman was saying, right place, right time, in a sense. So Zohair and I, my co-founder, we've been friends since we were kids, probably the fourth grade.

7:46And we never really overlapped professionally. But there was this one very random encounter where he's like, I need to speak to you. We sat down. I remember we were back home in Jordan. We sat down in my parents' living room. And he was like, I have an idea. And from his perspective, he was talking about liquidity in private markets. He was saying, I mean, we all know this, right? The exit cycles, being very long, being a small angel investor, very hard to access liquidity. On my side, I came from a whole other kind of, let's say, angle. And I remember very clearly saying, listen, for me, the funniest thing I see is sometimes I have a conversation with somebody.

8:23We agree. I love the concept of the startup. And then they're like, OK, I'll send you the details tomorrow. And then the next day I get a WhatsApp with the last page of the safe note with the signature page on it. And I'm like, for me, it's number one, access, getting access to good deals. It just feels like they're siloed within groups. Two is the fact that there's no transparency when it comes to information, when it comes to kind of what you're assigning transaction terms. And the way people execute is still very disaggregated from WhatsApp to emails here, emails there. people not really knowing who's investing in them as well.

8:59So the fact that kind of AML check screenings are never done on a startup level. I think initially those were kind of the first things that came up. So it was kind of two-sided, liquidity governance processes. And then from my side, it was more about, okay, the transparency, access to information, and then streamlining workflows. And at the time I was running a regulated boutique investment bank out of the IFC. And I mean, again, I was doing a lot of the compliance, reg work, cross-border kind of management of, I mean, typical investment banking. And I think it took me a couple of years, but I grew an appreciation for, let's say, good governance and compliance, not in the sense, maybe not in the traditional sense, but I was thinking about, okay, look at our markets.

9:43We're still nascent, at least at the time, four years ago, we were nascent, growing very fast without the right fundamentals, whether it's compliance, whether it's governance, whether it's kind of the way things are happening how will this be sustainable and it just made a lot of sense I remember it was a very quick decision we went to our lawyers at the time and I'm like guys are we crazy or are we too crazy or are we just a little bit crazy shall we go for this and they're like here's the contract let's do this we'll support you guys and so we just basically jumped ship and started the business about three and a half years ago now nice finding that nice level of craziness to kick off a business.

10:24It's an interesting dilemma though, isn't it? I remember starting 11FS back in 2016. I rang my mom up to be like, I think I'm going to quit my job. Like, this is weird. I think I'm going to go quit my job to go do this thing. And who did you talk to? Was it just, well, you were doing it in your parents' lounge, but did you go and talk to them about it as well? At the time, I went through many different things, right? I had a very comfortable job. I was doing well. I loved the kind of bank I was working with, but I've always enjoyed building and kind of restructuring workflows. Like since the early days, I was in banking for about 10 years, but most of my career was in kind of restructuring processes, launching subsidiaries in different countries.

11:05So I knew I really wanted to build again and it just made a lot of sense. So anybody I talked to were like, go for it. Like it was a very natural progression into actually finding something like Zest. Well, we'll talk a little bit more about how it's been since that moment in a second. But Abdel Karim, how about you? What was the, what's your origin story? I think it's a very interesting story. So I don't know if many people can relate, but my startup and my co-founders were actually blood related. So my co-founder is actually my father. and he started his first business many years ago and he actually founded the first employee savings fund in the kingdom many years ago and it was a big success.

11:53They grew an employee savings fund from like around 200 ,000 to around 36 million and they were getting year-to-year growth of up to 10 % and it was a big success. Even at that time, banks were willing to lend this fund to even have more investments for employees. So fast forward many years later, I graduated from college and the kingdom has all of this ecosystem they're building. There's 20 to 30 vision. There's all the regulation for fintech. And I'm a computer engineering graduate. And so he said, okay, why not? We work together and we build this as a fully automated platform. And that was kind of beginning and you can't say no to your father.

12:43Yeah, I was going to say on that one, it might make for some really awkward Sunday lunches, potentially. Does he ever pull weight on like I'm your co-founder, but I'm also your dad's like, so that's kind of a bit of a trump card in the boardroom potentially. No, in business, it stays business, but you always have to keep that level of respect there. Yeah. Very good. very good uh now man how about you what was the what's your origin story of uh getting the business going or uh what was the itch that you wanted to scratch with it yeah so i think when i my entrepreneurial journey started really early growing up um in london um on the weekends i was always inclined to take a problem and try and fix it whether it was um you know uh um solving code problems for my friends, etc.

13:33And basically hustling my way through school. But academically, I graduated in computer science and started life as a deep tech AI engineer at Microsoft and did that for a number of years. And then realized actually there was a world beyond Microsoft and then ended up at the Bank of England for my sins where I was working on the RTGS platform, which stands for Real-Time Growth Settlement System, and then was involved in building the intelligence layer on top of that. Once I got done there at the bank, I thought, oh, this is cool. What actually started off as a freelance gig then evolved into a sort of an AI engineering company, as you would, and started using my network of tech folks to start taking on larger and larger projects.

14:23Did that for a number of years, And the frustrating part of that was building products, palming them off to our customers and then never seeing them to fruition or to their full potential was a little bit frustrating. So I came out to the Middle East exploring another big, big problem to sort of get my teeth into. And I have a habit of biting off more than I can chew. and coming out here and I guess compounded by my own frustration over the years, watching good businesses get turned away from credit simply because, you know, the current legacy model doesn't fit the way in which in terms of identifying the eligibility of them.

15:04And I've spent a long time in AI and financial services. And one of the patterns that became painfully clear was, you know, there's lots of data, but really the intelligence isn't there. So I got on the phone to my co-founder, Guillaume, who I met back at Microsoft, and Nisara, who had met in London on various different projects, and basically said, look, guys, I think I'm onto something. And credit to them, they were on the next plane out to the UAE. And next thing you know, we were brainstorming on a whiteboard, trying to solve this particular problem within the region where, you know, because of the lack of data and because of certain businesses that don't really have formal credit history and to try and identify their eligibility through understanding financial behavior.

15:52And that comes from, you know, how they manage inventory, pay suppliers or handle cash flow. And we felt that that tells a way more compelling story of how healthy your business is and their eligibility as opposed to the the static backwards looking way in which credit history works in and still works in many ways today. Yeah, I've said, I think I said to you guys, actually, to you at the time, it's like nobody drives a car just looking in a rearview mirror, right? Actually, if you're trying to predict the future, you've got to kind of have good data sets to look ahead of the track in that way.

16:30But I mean, it all sounds like you've sold, you know, you've tried to solve a big industry problem. You've seen an issue, you've seen a customer problem. How has it actually been running a business though? And I'm going to tell you like 10 years of running a business, it sucks sometimes. Everybody thinks being an entrepreneur is like, you're suddenly going to get issued with your turtleneck and Steve Jobs pose, but it's hard, isn't it? This stuff is difficult. And actually, there are real peaks or real troughs in that as well. How has it been you know, Rowan, how's it been being an entrepreneur running your own company?

17:06It's funny, before I started this, I thought I was already a person who took on a lot of responsibility and I thought that I didn't really switch off. I thought I was working 24 hours. I mean, that thinking was completely just, yeah, not there. I realized, I think, I really think it's like having a baby in a sense. Like, it's like you really cannot switch off. You really cannot switch off you're always thinking about a million things at the same time and any second you are not thinking proactively about the future there's a massive opportunity cost and I think I mean you start feeling it from the beginning but as the company grows and as you start having employees and real business and real clients it just becomes a lot more just real and there all the time and it's honestly it's been an amazing journey because you're forced to be creative you're forced to kind of manage your emotions through everything you're forced to mature as a leader as an executor as it's kind of different things and we're different personas in different circumstances so so for me although it's been very difficult at times i mean i don't think i've learned as much throughout my entire life as i have the last four years it's just been again good bad all together it's just been yeah you learn a lot and you're forced to level up all the time yeah it's interesting i mean that that you know that kid analogy i think is the right one because you you can almost feel guilty if you're not thinking about it as well right so there's a there's a weird a weird cycle on it as well i mean you you've obviously all all of you kind of worked at bigger organizations as well but actually it takes a certain type of person who can uh work at a startup company and a gigantic organization as well do you know i mean like the 11FS's first offices when we did it was roughly the same size as where we kept shoes when I worked at Gartner you know like so like the uh the ability to to work at both of those levels do you know I mean like who's putting the who's putting the paper in the printer you're putting the paper in the printer in fact you're setting up the printer as well so it's like dealing with all of these different things is a is an interesting balance in it and Naaman how about you what's the what's the feeling like running your own company um so for me particularly coming from a tech background and, you know, it was particularly challenging, I'd say, because being technical comes with its advantages, but also disadvantages.

19:31And so, you know, you know, you tend to explore, you think you can solve the problem by building the most elegant solution on the planet. And then you tend to sort of, you tend to go too far down the path of solution building, and then you've got to hold yourself back and go back to the customer and speak to the customer and understand and stay focused on the actual problem itself that you that so that part was quite challenging for me which was no no we got to stop stop stop getting lost in the code we've got to step back and we've got to focus on what we're what we're trying to solve for the customer and then wearing multiple hats and stepping away from the technical side of things and then selling um the solution and talking to customers that feedback uh to customers all of the things that you have to go through running a startup.

20:21And it's almost like you're sort of, you're trying to predict the next thing that could potentially fail every single day, multiple times in the day, while still trying to maintain the right level of optimism and focus on the vision that you're trying to solve, the problem that you're trying to solve. So it's sort of the right level of being grounded in the reality and facts of things versus having the right balance of optimism. I think that's something that you come to try and find as you navigate the startup. I used to have that quote on my CV. It literally was the, am I a pessimistic optimist or I'm an optimistic pessimist?

21:04And I'm trying to figure out which one basically was like my strap line. But it's true though, right? And actually, the consequences of both of those things are so much more severe, aren't they? Actually, you know, if you're, when you were sort of knee deep in RTGS in the Bank of England, then actually, you know, documenting the risks is important, but actually avoiding the risks are really important when you're, you know, running your own thing. Because actually, it's, you know, it could be fatal if you don't navigate those waters, right? So it's a very different challenge, isn't it? Yeah, absolutely.

21:34I think so, you know, coming back to that point, I think it's if you get too too grounded in into the facts and and, you know, that can sometimes lead you down the path of negativity. And you and you feel you know, it can push you away from from the optimism and the vision. And if you get too focused on being an optimist and focused on the vision, then sometimes you it can pull you away from the reality of things and you tend to have your head in the clouds. And so I think finding that balance and it's easier said than done honestly it's i i still uh i believe i'm still navigating that today and i probably will for many years to come yeah one one thing that you said that resonates a lot my company am i building for me am i in a silo or am i building for the world or for my customer i think that's a trap a lot of people fall into it's very easy to to sit down with your code with your product fall in love with it and and forget to listen to the market to the client and step out of step out of that so it's one thing yeah that's uh that resonates a lot i think with a lot of people probably 100 yeah there's a product market fit is a real thing isn't it i know you sort of see uh textbooks written about it and it sounds all academic but do people we always say this at the end of projects somebody's got to give a damn about what you're doing right and actually you know if it's not changing the way people interact with the world particularly when you're starting in your business it's really difficult to change behavior isn't it?

22:55So, um, Abdul Karim, what about you? What's the, what's the world of entrepreneurship like in reality? I don't want to cut. I feel like we're going to put everybody off starting businesses. We're not trying to put you off. We're just trying to give you the reality of it's quite hard. I think, uh, to add on to Ron, like the, the baby analogies is excellent because it's a very painful experience, but it's also very rewarding, you know, and it's very humbling. I would say the amount of business and like the amount of experience you need to go through is unlike any other, I think, career, being an entrepreneur.

23:32And it's very exciting. And I would say by far, it's one of the best decisions I've done in my life, regardless if I do a big success or fail. But the amount of people you meet, the conversations you go through, through the experiences, the up and downs is accumulation of very beautiful things they go through in life. But it's kind of like sped up in the cross five years instead of waiting your whole career to really experience it. So very humbling. Yeah. It's a definite, like you say, it's a definite accelerate, uh, for learning, you know, cause it's, it's like, it's like total Darwinism. It's like, you know, uh, sort of adapt or die type, uh, structure, isn't it?

24:10And that really focuses you, but I guess now to the point you were talking about with customers though i mean all three of you have had to go out you know what you thought you knew when you start talking to customers uh turns out to be quite dramatically different you know i mean ron i guess when you went to customers and when we're going to give you access to private markets they're like what's a private market like so uh how uh how was your first contact with customers and it's interesting so we actually not pivoted but we We evolved our model very quickly after launch. So when we first went to market, the idea of liquidity and kind of streamlining, let's say, secondary transfers of whether shares, ESOPs, that was kind of the thesis.

24:49And we were so passionate about it. We have to help people in the right way. This is a solution for the companies themselves. We were so passionate. Spoke to stakeholders across the ecosystem. We started out in venture. I mean, now we work with private equity, real estate, other asset classes, but we started out in venture. and I think the first couple of weeks I don't think we wanted to hear the feedback and the feedback at the time it was late 2021 valuations were extremely high it didn't make sense I mean buying at those levels also didn't make any sense there were a lot of things changing in the region but I think a couple of weeks in just a switch suddenly came on we're like okay let's stop and listen we stepped away for I remember a week we went down kind of a new path and said listen so clients are saying we love the, I mean, we understand the problem.

25:39Yes, there are issues, whether it's governance, transparency, the flows. I mean, we see a lot of the elements that you guys are talking about, we see them. But I have my transaction, I have my investors, I know exactly what I want to do. Can you just help me do it in private? And we're like, hmm, I scrapped the MVP at the time. I remember we hacked it, we put like a little button on the side of the page that turned something from public to private. And within a couple of weeks, we completely evolved the model from what we thought would be liquidity solutions platform to private market infrastructure to allow you and empower you as a deal lead or investment manager to actually just execute your own transaction in private with the LPs that you bring along.

26:19And more and more listening to different types of client types, let's say, we realized that that infrastructure gap was way larger than we had ever imagined and slowly, slowly started just peeling up that at that at that feel and slowly slowly adding more and more tools to to solve as much as we can from that um yeah i mean it's it's it's interesting isn't it like you say the almost the scale of some of these issues and i remember you know your pitch the workflow side of things stood out really well because actually having that standardized approach to making these things happen is really really important you know we actually had um patrick hollinson on this podcast uh who referenced that you from stripe and his whole thing was do something really simple solve a problem for a customer and earn the right to do more things right and you know if you can do that then that's a that's a wonderful place to be isn't it.

27:10How about you guys what's what's the was there any sort of turns out the customer doesn't want the thing we thought they did or you know now and maybe on the technology side of things like you say kind of going away from just creating technology because you know it's good but but actually finding that product market fit part. Yeah, it was, I mean, I've, so I come from a background where I have worked on, I've been lucky enough to be in a position where I've worked on some very global, you know, very large global platforms, whether it was through Microsoft or whether it was at the Bank of England or when I was running my own company.

27:47So I had that level of exposure and and sort of removing myself from that and getting, you know, trying to sort of, I don't know, it's de-technical-fy myself, is that a phrase? But I guess it is now. But it was, it literally was. We'll go with it. Let's go with that. We were camping in DIFC and ADGM outside of offices of really big lending companies. And we were basically, we had sort of created a list of people that worked there at various different sort of levels of the organization. And we would literally hound them at lunchtime as they were going out to buy lunch, etc. Just to get two minutes of their time and literally spoke to them about what were the challenges they were having, what kept them up at night.

28:35You know, if they could have a wish list, what would be on that wish list? what you know those sort of questions and we got some really interesting pieces of information and data just by having these very very short brief conversations we we we earned their trust and and then they were willing to open up and and have longer conversations with us and that's literally how we started off and managed to get our first five um early adopters um that were willing to to test out what we what we were building that's very cool we always say the uh build it with people not for them right and that is exactly sounds like what you're doing is uh if you can get five people who will sort of come with you on the journey then you've got you know a bunch of people who will talk to other people about what you're doing as well but you know they're they're going to be your loyalist customers all the way through right yeah absolutely and we were quite surprised how nice people were and i guess it's that sort of human connection you know i think i think it's sort of when you talk about what keeps you up at night or you know what what's your wish list it's quite an emotional thing to try and and when you connect through through those type of questions with people you can you know and and some most of the time we just want to be heard really we all got a bit of a whinge or a moan that we want to get out and and and channeling that in the right in the right way and i guess it worked for us yeah i started a podcast just to get it all off my chest quite frankly but uh here we are now uh it's uh it is funny that one though, like you say, on the customer side of things wanting to be heard.