When Naif AbuSaida, the founder of Saudi Arabia-based FinTech Hakbah, first came up with the idea for a social savings app, his aim was to modernise one of the world’s oldest saving methods and strengthen financial inclusion in the kingdom.
But it took a health crisis to spur him into action, forcing him to take a step back and evaluate his legacy – not only to his family, but also to society.
“In 2017, I got diagnosed with colon cancer, stage three, but I recovered,” the former banker says.
“When you have to cancel all your life, you evaluate everything and two things I was thinking about is what will I leave for my family and what is my legacy? What is the impact I had in the community, or society?”
“So during the chemotherapy, I decided to start a FinTech company.”
Social savings is an informal “money pool”, in which family, friends and colleagues contribute regularly to a collective fund that allows them to take turns to borrow what has been saved by the group.
The funds are typically used for anything from paying rent to bills and school fees or even financing a small business.
Perhaps one of the most famous people to have used a family savings circle to fund their business is Berry Gordy, the founder of Motown Records.
Mr Gordy borrowed $800 from his family's savings group in 1959 – and went on to sell the label in 1988 for $61 million.
The global acceleration of FinTech and digital payment solutions since the start of the Covid-19 pandemic has unlocked new financial opportunities for millions of people who previously did not have access to bank accounts, the World Bank said in its Global Findex 2021 report.
About 22 per cent of the GCC's population is unbanked, compared with 60 per cent in North Africa, according to a report by consultancy Strategy&.
Up to 79 per cent of young adults in the Mena region are unbanked and 72 per cent of the poorest citizens can benefit from financial inclusion, the Arab Monetary Fund said in a report.
Watch: Arab Youth Survey: the key results
Meanwhile, economic headwinds including high global inflation, the cost of living crisis and rising interest rates have made it more difficult for people to save consistently.
Increasing household savings in Saudi Arabia, the Arab world’s biggest economy, is a key priority under the kingdom’s Vision 2030 plan, which aims to diversify the economy away from hydrocarbons.
Saudi Arabia also launched the Financial Sector Development Programme (FSDP) as part of its Vision 2030 plan to help diversify the country’s financial sector and boost household savings.
While investment is recognised as a goal of economic policy as it improves productivity and increases the competitiveness of an economy, savings form the core of capital formation that fuels economic development, consultancy KPMG says in its Analysis of Household Savings in Saudi Arabia report.
“Nations that take conscious initiatives to encourage and nurture formal savings are more likely to witness higher levels of sustainable economic growth, human development and living standards,” KPMG adds.
“Introducing policy initiatives, driven by behavioural characteristics of households, increasing [Saudi Arabia’s] financial literacy to boost savings, enabling easy access to financial products and services by emphasising financial inclusion, and increasing the frequency of data published on household savings are some of the areas that can be focused upon to improve the country’s household savings rate.”
Up to 70 per cent ofpeople in Saudi Arabia do not have an emergency savings fund, while the household savings rate averages about 1.6 per cent, according to Mr AbuSaida.
“They know it is important but they cannot [save]. It will not change unless you make saving easier,” Mr AbuSaida says.
“This is what we did at Hakbah; we did it in a very simple but smart way by digitalising the habit of savings.”
Naif AbuSaida, founder of Saudi Arabia-based savings platform Hakbah, initially bootstrapped his start-up. Photo: Hakbah
Founded in 2018 and launched in 2020, Hakbah has grown into one of the fastest-growing start-ups in the region, Mr AbuSaida says.
It now has more than 120,000 registered users representing a range of nationalities, including Saudis, Burmese, Thai, Afghan and Pakistanis, among others, he adds.
More than 3,300 savings groups, called Jamiya, have been created on the platform, while it has helped 18,000 of its customers to save more than $35 million combined, Mr AbuSaida says.
When users sign up to the platform, they create their own Jamiya and invite trusted family and friends to join the savings group, which includes the amount of money they aim to save.
The app is only available to citizens and residents of Saudi Arabia.
Hakbah is permitted by the Saudi Central Bank to test its services under the Regulatory Sandbox environment, while it graduated from the Dubai International Financial Centre FinTech Hive Accelerator Programme in 2019.
Initially bootstrapped by Mr AbuSaida, Hakbah in April closed a $2 million pre-Series A funding round led by Dubai-based venture capital company Global Ventures and Aditum Investment Management, which is based in the Dubai International Finance Centre.
Since Mr AbuSaida founded the company five years ago, it has raised a total of $3.7 million.
The proceeds will be used to accelerate Hakbah’s presence in Saudi Arabia, improve the user journey and enhance its savings engine algorithm, he says.
Hakbah will play a key role in supporting this goal by widening its savings offering and partnerships for employees, gig-workers, students, housewives, and many others
Naif AbuSaida, founder of Hakbah
“Savings are an important pillar of the Financial Sector Development Programme and increasing them is a key focus for Saudi Vision 2030,” Mr AbuSaida said in April after the company received its first injection of institutional capital.
“Hakbah will play a key role in supporting this goal by widening its savings offering and partnerships for employees, gig-workers, students, housewives, and many others.”
The powerful combination of Hakbah’s exceptional user experience, sophisticated back-end technology and partnerships with leading regional brands will empower millions of users to meet their savings goals, Lachlan Hughes, head of Venture Capital at Aditum Investment Management, said in April.
“We are thrilled to partner with Hakbah in their mission to drive financial inclusion and promote savings in the Gulf region,” Mr Huges said.
“We are impressed with Naif's vision and leadership and look forward to supporting Hakbah as they continue to scale and make a meaningful impact in the region.”
Hakbah’s business model was originally based on a $6 monthly subscription fee, but Mr AbuSaida says this has changed to a one-off charge for users to join the platform.
“We changed it for one reason: psychologically, when people pay every month to save, they feel they are losing money,” he says.
Mr AbuSaida plans to continue focusing on Saudi Arabia and is “not obsessed” with expanding to other countries within the GCC in the near future.
“I graduated from the FinTech Hive Accelerator Programme and the GCC was in the business plan for 2025-2026, but Saudi is still the biggest market,” he says.
“Unless something changes, we have agility … and our savings engine allows us to connect with any financial institution and bank in Saudi or outside, but I'm not obsessed to expand.”
Q&A with Naif AbuSaida, founder and chief executive of Hakbah
What other successful start-up do you wish you had started?
A few come to mind, including Chime, a US banking app, Revolut and Plaid, which allows apps to connect with their customer's bank accounts.
Who is your role model?
I admire several businessmen and pioneers like Chris Britt, the founder and chief executive of Chime, David Velez, who founded Nubank, Zach Perret, co-founder of Plaid, and Anne Boden, the founder of the UK's Starling Bank.
What new skills have you learnt since launching your business?
Since launching Hakbah in 2018, I have learnt a couple of new skills, namely resilience and how to remain super focused.
Where do you want to be in five years?
Solving another challenge for the good of society.
If you could do it all differently, what would you change?
One of our challenges has been finding the right talent for Hakbah. That said, I wish we'd selected the team faster and also moved faster on partnerships.
UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
