Thinking about gaps in the financial market in the Middle East and North Africa made Ziad Toqan and Jamil Khammu take note of the poor financial literacy rate in the region.
This inspired them to focus on the concept of improving youth financial literacy, a core life skill that’s not widely taught in schools.
“The financial literacy rate in Mena is currently below the global average, and at the same time, smartphone adoption among youth is one of the highest in the world,” says Mr Khammu, a British Arab who grew up in the UK.
“It was a perfect recipe for us to come in and bridge the gap between the two.”
They were also inspired to disrupt the space of pocket money management after spending time with young relatives and noticing that parents were still using the points system for rewards.
“This was the same points system my parents used on my brothers and me growing up in the ’90s!” recalls Mr Toqan, an American Arab who spent most of his childhood in the US and Europe.
The points system involves assigning age-appropriate chores worth certain points, setting a goal, tracking points, and rewarding the child when they reach their goal.
“That was an eye-opener, and we started questioning how something as important as this still hasn’t caught up with technological advancements,” says Mr Toqan, who previously worked in advertising and marketing.
The duo shared the same vision of creating a “virtual helping hand” and “cool older brother” capable of helping young children and teenagers to navigate financial matters, “something we both felt would have benefitted us earlier in our lives”, he says.
In 2021, they launched FinTech start-up Leap, with the aim of developing an app that teaches young people to make smarter money choices by giving them the freedom to consciously manage their own spending and saving.
“Most kids get their first taste of financial responsibility when they go off to college without the oversight and knowledge on how to manage their money. There’s a massive opportunity to change this,” according to Mr Khammu, who spent most of his career in finance.
“Leap’s on a mission to help solve this problem by teaching kids good money habits at an early age.”
Research has shown that children begin to develop money habits at the age of seven. Early financial education can help to foster strong money management skills in adulthood, experts say.
But personal finance education is rarely on the curriculum at schools and universities, with youth often relying on their parents to teach them vital lessons about managing money.
As a result, it leads to poor personal finance skills in the long term.
Fifty-nine per cent of the 2,046 adult Americans polled in a Charles Schwab Financial Literacy survey in 2020 cited the value of saving money as a key lesson to be taught to children.
This was followed by the need to teach basic money management skills (52 per cent), while 51 per cent of respondents said setting financial goals and working towards them were important.
On a scale of one to 100, the respondents rated money management (62.9 per cent) as the most important skill for children to learn. About 63 per cent of US adults also chose financial education as the most important supplementary graduation requirement to maths, English and science, the survey found.
“Teaching children to earn, save and spend can dramatically increase financial literacy rates when they grow up. It was an opportunity to take something that hasn’t been touched in decades, modernise it, and help make a difference for the next generation,” Mr Khammu says.
Leap is a money management app and prepaid card that teaches Mena-based children how to make better money choices. The age range to use Leap is from six years to 18 years.
By signing up for the app, children receive their own Visa prepaid card. They can use Leap to set a savings goal, analyse their spending habits and earn rewards for completing their weekly tasks set by parents.
They can also earn rewards and unlock badges for saving consecutively each week.
The app also features a “Savings on Autopilot” function, which automatically rolls over any unspent money at the end of the week and places it directly into their savings account. This feature will motivate children to spend less during the week and hit their savings goal faster.
The goals and rewards system of the Leap app incentivise responsible saving and spending behaviour from a young age, according to the co-founders.
“By giving kids ownership and independence at an early age, they get a sense of responsibility and awareness they would not otherwise have a chance to experience,” Mr Toqan says.
The app allows parents to create an account for themselves and each of their children, which they can track and control. The parents can instantly deposit pocket money to the child’s account, while also setting a savings target and tasks to complete.
Parents can either load money using their debit card or link their bank account to the app. Leap has teamed up with Abu Dhabi Global Market-backed open banking platform Lean to help facilitate the link.
Every time the child completes a task, money is auto-transferred from the parent’s account to their wallet, rewarding them for their responsible behaviour.
Neither the parents’ nor the children's’ wallets require a minimum amount to be maintained.
“For the parents, we’ve built an experience that allows them to use Leap to start conversing with their children on how to budget, save and grow their money,” Mr Khammu says.
“With these features, we’ve made it simple for children to learn by doing with the parental oversight needed to help guide them along the way. The aim is to advance financial education in an open, entertaining and engaging way for parents and their children.”
Taking cognisance of parents’ concerns about the risks of letting children handle debit cards, Leap has teamed up with regulated and trusted institutions to ensure security and transparency.
The parent gets an alert wherever and whenever the card is used. If the card is lost, parents can instantly freeze it with a tap in the app.
“The prepaid card can be used almost anywhere Visa is accepted [including ATMs]. We have restricted certain merchants and retailers that are deemed as unsafe for our user base,” Mr Toqan says.
Leap charges Dh20 ($5.4) as monthly subscription, which includes a personalised Visa card in the child’s name, unlimited free transfers from parent to child, unlimited free bank transfer top-ups and rewards that children can earn.
The card can be used internationally with no foreign transaction fees. Children can also pull out cash at any Mashreq ATM for free, Mr Khammu points out.
“We will be launching annual and family plans very soon,” he adds.
Leap is based in the DIFC as part of start-up accelerator FinTech Hive. The company currently has seven full-time and part-time employees.
“Right now, Leap caters to the UAE, however, we’re close to launching in additional markets in the Mena region with Saudi Arabia and Egypt as key markets,” Mr Toqan says.
Since launching the app in November 2022, Leap has grown by 45 per cent on a monthly basis, he adds. Word of mouth has been an important driver of growth for the app.
Leap recently closed its pre-seed round. From the get go, Leap has been an extremely lean business, according to Mr Khammu.
“We take the same mindset of cautious spending that we’re teaching kids as an approach to running our business.”
Mr Khammu is grateful that the UAE has invested in the start-up community by putting policies in place that foster and support entrepreneurship.
“Setting up base in the DIFC made it a lot easier for us to build a strong foundation and be able to hit the ground running.”
Q&A with Ziad Toqan and Jamil Khammu, co-founders of Leap
What already successful start-up do you wish you had started and why?
Ziad: There are so many successful start-ups around the world that we admire. For us, it’s learning about their challenges, successes, failures and applying best practices where possible to make Leap a great experience for our users. We always keep an eye out on what’s working well in the industry and try to take and apply any learnings.
What is your next big dream to make happen?
Ziad: Jamil and I are 100 per cent focused on our current dream of giving Mena-based parents the control, transparency and convenience of teaching children financial literacy.
What new skills have you learnt in the process of launching your start-up?
Ziad: As many founders will tell you, learning new skills and starting a business go hand in hand. Since our team is small, we each need to be self-reliant and determined to learn whatever needs to be learnt to get the job done. Whether that be design-focused software like Figma, or video editing programmes like Adobe Premier, each day brings something new to the table.
If you could start all over again, what would you do differently?
Ziad: We wouldn’t change a thing. Like with any start-up, there are lots of highs and lows but that’s all part of the journey and each new obstacle brings new learnings.
Who is your role model, and why?
Ziad: My father has always been my role model. My father is an entrepreneur himself. His work ethic, attention to detail and persistence is something that I didn’t come to fully appreciate until I ventured out to launch Leap.
Jamil: My mother has always been and still is my role model; her resilience and positive outlook on life is inspiring and she continues to be my sounding block and rock.
Where do you see yourself in 10 years?
Jamil: Continuing to serve with Leap! Both Ziad and I realise that financial literacy is a continuous learning curve, especially with innovation and new products being released constantly — we will continue to grow with our user base and one day hope to be a household name or the “go-to” for financial literacy and money management. Hopefully sooner than then, but we’ll settle for 10.
