Karim Farra and Ziad Aboujeb, co-founders of neo-broker amana, created the retail investment platform with the aim of democratising and reshaping the Middle East and North Africa’s financial investment landscape.
“We are catering to a market that has long been and continues to be underserved. Penetration remains low relative to global standards, suggesting plenty of growth ahead,” says Mr Farra, who has been active in the investing and FinTech space for the past 25 years.
“Moreover, a large savings pool from individuals now looks ripe for migration to investments.”
Fewer than 10 million people from the GCC, Egypt and Jordan – with a combined population totalling 172.3 million in 2021 – invest directly in Mena stocks, according to amana.
The base of retail investors in the region remains very small, compared with 55 per cent of households in the US who have direct exposure to the financial markets, the platform’s data suggests.
“We believe that the region presents an enormous market opportunity to offer more retail financial services to millions of new investment clients,” says Mr Aboujeb, a serial tech entrepreneur who previously launched companies in FinTech and e-commerce.
“In the past 10 years, we saw positive secular tailwinds triggering the awakening of a new class of investors. Ease of access to investing and trading is here to stay.”
Retail investors are increasingly seeking access to markets with the help of technology, leading to a surge in popularity for zero-commission trading apps such as Robinhood and eToro.
Demand for trading apps soared during the Covid-19 pandemic as monetary easing by the US Federal Reserve and other central banks around the world gave novice day traders more money to invest during lockdowns, according to a report by Finra Investor Education Foundation, based in the US, and the National Opinion Research Centre at the University of Chicago.
“Market dips that made stocks cheaper to buy and the ability to invest with small amounts were among the top reasons younger and inexperienced investors reported entering the stock market,” said the study Investing 2020: New Accounts and the People Who Opened Them.
Amana is owned by 180 Capital, a FinTech holding company that also owns Centroid Solutions, 514 Capital Partners and 180 Digital Assets.
The company was launched in 2010 in Lebanon. In 2016, amana relocated its headquarters to the UAE, while it evolved from a classic online broker to a neo-broker last year.
Amana Financial Services is regulated by the Dubai Financial Services Authority, while the amana app is now pending final approval by the regulator.
Amana is regulated by the Financial Conduct Authority in the UK, the Cyprus Securities and Exchange Commission in Cyprus, the Capital Markets Authority in Lebanon, the Financial Services Commission in Mauritius and the Labuan Financial Services Authority in Malaysia.
“Amana was launched on the back of the learnings of a previous FinTech company we started and invested in that reached a valuation of $270 million, but ultimately did not succeed for different reasons,” says Mr Farra, who met his co-founder on a trip to Saudi Arabia in 2006.
“This was a watershed moment, that fortunately occurred early in our career in 2010. We took the lessons taught from that adverse experience, along with other professional and life experiences, and moved forward.”
Predominant users on the platform are novice traders who previously shied away from trading and investing, including Gen-Z and millennials, according to Mr Aboujeb.
The median age of app users is 31 years old, and amana caters to both retail and institutional customers, he says.
Amana, which operates predominantly in the Mena markets, offers digital investment alternatives, disrupting a market dominated by large incumbent banks or trading platforms with more limited capabilities, Mr Aboujeb explains.
Many of the legacy banks and brokers are not equipped to operate effectively because of structural technology and infrastructure disadvantages, he points out.
“The themes of localisation, democratisation, leveraging technology and building a more comprehensive financial experience are at the forefront of what we do,” Mr Farra says.
“While we started with investing and trading, these themes and execution capabilities also allow us to expand our addressable market beyond our existing focus. We want to be the home-grown regional champion in that space.”
The platform allows users to both buy and hold a dividend-paying stock for the next 20 years, or, alternatively, be more in the moment and trade the euro around the release time of the market-moving non-farm payroll, Mr Farra adds.
“It is a unique offering in that from the same account you can buy or sell Emaar, Tesla, gold, euro and Bitcoin,” he says.
“Since the launch, amana’s clients have shown equal interest in trading Mena shares, international shares, derivatives and cryptocurrency. The one-account trade-all concept is fulfilling a real need in the market.”
The platform is also hyper-local in its approach. Everything is conceived and carried out with the Mena customer in mind, including onboarding, funding and product offering.
Users can navigate amana in Arabic or English.
While there are no minimum funding requirements, users can fund their accounts in local currency without incurring fees.
“We also integrated open banking into our app, meaning that you can transfer money from your local bank account directly to our app,” says Mr Aboujeb.
“We have also integrated Apple Pay and Google Pay for more convenience.”
Users do not need to pay for access to the amana app. The platform benefits from several revenue streams and unit economics that improve with scale, according to the founders.
Zero commission is applied to trade US stocks. Pricing for Mena shares is “one of the most competitive in the region” as amana does not apply a mark-up, Mr Farra says.
“We want users to think of our app as a tool to make their financial goals come true. It represents ownership of thousands of companies and more in their pocket,” he adds.
The trading platform also offers fractional ownership of Mena shares.
To date, through the amana app, more than 80 per cent of all Mena shares are bought fractionally.
“The benefit of fractionalisation that Robinhood spearheaded in America, amana has brought to this region,” Mr Aboujeb says.
“Fractional shares fit with our purpose of increasing access as it would take less money to start investing and is a powerful tool for diversifying one’s portfolio quickly.”
The investment platform also seeks to improve financial education, given the limited financial literacy in the region.
It has embedded social media features into the platform, including enabling users to participate in investor educational courses and watch live broadcasts of investment events.
Amana also signed an exclusive regional partnership agreement with Real Vision, a US provider of financial education content.
“Our focus is on user engagement and enabling users to invest smarter,” Mr Farra says.
Amana unveiled a new investment app in October 2022 and has since acquired more than 60,000 users, mostly in the UAE.
The company has been self-funded by the co-founders since its inception, with its shareholder equity worth $23 million.
“We have significant skin in the game, and an employee stock ownership plan is in place to reward the company’s senior leadership,” Mr Aboujeb says.
While amana was started with a dozen people, today the company employs 85. Based in the UAE, the investment platform has offices in five other countries.
Referring to challenges faced, Mr Farra cites the fragmented nature of Mena markets.
Regional expansion can be complicated, given different regulatory, legislative and consumer preferences from one country to another, he says.
“Still, we are well-positioned to expand regionally and internationally,” he explains.
“Much of amana’s infrastructure and technology that was developed enables global scalability. We believe customers, no matter where they live, have a similar desire for access to financial services that historically have not been affordable or open to them.”
The next step for amana is product and geographic expansion.
“Becoming a single-money app is a long-term journey,” according to Mr Aboujeb.
“New areas being contemplated include greater utilisation of social community connectivity. With the expanding application of artificial intelligence, we expect to see new ways to deliver more optimised and personalised financial outcomes while connecting financial services further with additional parts of a customer’s everyday life.”
Q&A with Karim Farra and Ziad Aboujeb, co-founders of amana
What already successful start-up do you wish you had started?
Karim Farra: We look up to Charles Schwab, the broker-turned-financial services company that revolutionised the American market by cutting fees, focusing on technology, offering thousands of products to its clients through an open investment platform and focusing on small investors.
What is your next big dream?
Ziad Aboujeb: We would love to further transform amana into a digital financial supermarket where customers can do much more than invest and trade.
Positioning ourselves to become the dominant financial relationship with our customers and owning the majority of the economics throughout the value chain of the products and services that customers typically access on any given day. This type of vertical integration would be the next big objective and a unique differentiator in the marketplace.
It would also be a place where other financial institutions can sell their product offering to our retail clients.
What new skills have you learnt while launching your start-up?
KF: The need to keep reinventing oneself, keeping positive energy and forward momentum, and maintaining a growth mindset.
If you could start all over again, what would you do differently?
ZA: Keep it simple. In the life of our company, we reached a point where the challenges of complexity were greater than the challenges of scale. Complexity is the silent killer.
Who is your role model?
ZA: Our fathers have always inspired us and pushed us to be better. They had a willingness to take risks and go against the grain.
They taught us to never get too comfortable and provided us the chance of having access to more opportunities than they did.
Where do you see yourself after 10 years?
KF: Keep building. The hardest thing is to keep your edge and stay on your game as you succeed and grow. Companies become irrelevant over time … as soon as you accept that you are successful, you die.