Generation Start-up: How Alaan is changing the way companies handle expenses

One of the most frustrating parts of being an employee is waiting for business expenses to be reimbursed. You have to keep track of receipts and fill out reports, while ensuring that the process is in compliance with company policy. The traditional method of expense reimbursements — where it can take several weeks for the amount to be processed — can also affect employees with financial and family commitments. Parthi Duraisamy, co-founder of Dubai-based FinTech platform Alaan , faced this problem during his stint with global consultancy McKinsey. “As a consultant with McKinsey, I was always travelling to different parts of the world to meet clients. As you can imagine, I had a lot of travel-related expenses, [including] taxis, hotels, flights [and] meals each and every day,” he says. “An issue that my teams always grumbled about was needing to spend time at the weekend to submit the receipts for all these expenses. It always amazed me that even a large institution like McKinsey did not have a better way to deal with expenses,” says Mr Duraisamy. Mr Duraisamy teamed up with McKinsey colleague Karun Kurien and founded Alaan in July 2021. “I came across start-ups solving this problem in other parts of the world, so I spent a fair amount of time speaking to businesses in the [Middle East], and I realised that the business payment [sector] in the region is ripe for disruption,” says Mr Duraisamy. Alaan is a corporate card that helps to streamline business payments. Instead of paying out of their pockets, employees simply tap the Alaan card on a point-of-sale device and upload a photo of the receipt on the start-up's artificial intelligence-powered platform. “Your job as an employee of the company stops there … because the money is deducted from the corporate account,” says Mr Duraisamy. At the back end of the platform, Alaan uses AI to “read” the receipt, the start-up founder says. “We take all the details of the receipt and then we match it to the amount, and then when the [person] in charge logs into the admin dashboard, they can already see the employee has spent Dh100 [$27] at this restaurant at this time,” says Mr Duraisamy. They can also see that “[the employee] has uploaded the receipt and [that] we have auto-matched and auto-verified this is as per the company policy”. This saves time for a company’s finance team, which often has to deal with mistakes in expense reports and missing receipts. They are also saddled with the task of creating complex expense reimbursement policies to ensure better flow. Operational inefficiency can cost companies between 20 per cent to 30 per cent of their annual revenue, according to a 2018 report by research company IDC. The Alaan platform can also be integrated with popular accounting platforms such as Zoho and QuickBooks. “Everything is synced automatically, which saves a lot of manual effort for the finance team members,” says Mr Duraisamy. Alaan, which has grown from a two-man operation to more than 20 employees in the past two years, has more than 100 clients, including companies such as online education platform Noon Academy, residential district Al Barari and used car marketplace Carswitch. The company has secured $7 million in seed and series A funding from investors such as 468 Capital, Presight Capital and Global Founders Capital. “Alaan has shaved off hours from team members in operations, accounting, finance and even marketing,” Jad Halaoui, co-founder of Washmen, a client and investor in the company, said in a statement last month. “Their product shows they have a deep understanding of what companies need, to streamline their finances and governance with simplicity.” Alaan's payment volumes crossed the double-digit mark in millions within three months of its launch and it averaged a monthly growth of 500 per cent last year. “We have always been a big believer of Alaan's mission and we invested in their seed round last year,” Fabian Hansen, co-founder and general partner of Presight Capital, said in the January statement. “The impressive traction that Alaan has achieved within the first three months of launch has only served to reinforce our conviction.” Start-ups across the Middle East , Africa, Pakistan and Turkey raised $7.2 billion through 1,473 deals in 2022, despite macroeconomic and geopolitical uncertainty , according to a report by data platform Magnitt. FinTech funding was the highest among all the sectors in the region last year, hitting $2.25 billion across 351 deals, the report said. Globally, the FinTech market is projected to reach $332.5 billion by 2028, from $112.5 billion in 2021, according to a Mastercard report. Similar to its peers in the FinTech sector, Alaan benefitted from the pandemic, which boosted the use of digital and contactless payments worldwide, says Mr Duraisamy. The start-up now plans to expand into other markets in the region, starting with Saudi Arabia, the Arab world's largest economy. Alaan, which is based in the Dubai International Financial Centre, has no immediate plans of expanding outside the Middle East. This region is “lagging behind” in terms of FinTech innovation, compared with markets elsewhere, says Mr Duraisamy. “The Indian market has something called UPI [unified payments interface], and they are [many] years ahead of other markets,” he says. “The US, the UK [and] Europe are four to five years ahead of the Middle East [in FinTech]” Although the UAE is one of the region's most advanced economies, a large number of business-to-business payments in the country are still done through paper checks and petty cash, says Mr Duraisamy. While bank transfers are better than other payment modes, there is a lot of “friction” that comes with it, he says. Friction in banking is associated with the relative difficulty of conducting a transaction. It can include everything from transaction fees to the time taken to get in touch with a customer service representative. Globally, digital payments are expected to grow to $8.26 trillion by 2024 , from $4.4 trillion in 2020, according to Statista. This year, total transaction value in the digital payments segment is estimated to reach $28.74 billion in the UAE and $106.30 billion in the GCC, the data portal said. The idea came during my time in McKinsey. We did a lot of travelling and when you travel, you have a lot of expenses. “Al aan” translates to “instant” or “immediate” in Arabic. We are trying to achieve this in B2B [business to business] payments. When pronounced differently, “Ahlan” also means “hello” — and we aspire to be the most customer-focused FinTech in the world. As a start-up going in the zero-to-one journey, we don't like to have certain projections about the company’s future performance. Our current target segment is businesses with more than 50 employees. That is because those are the businesses we feel have a real pain when it comes to managing all the employees. The largest customer that we have signed up has close to 1,000 employees. We aim to build an extremely high-performing team at Alaan, so we only hire for the roles necessary. Currently, we are expanding our business team to support the expansion into new geographies. The biggest thing, I would say, is I wish I had started much earlier. I would say that I am a risk-taker, whereas my co-founder is more cautious. This has worked out incredibly well for us as we play to our strengths and complement each other. With a forward-thinking central bank and cutting-edge payment infrastructure players emerging, I am certain that in a few years UAE businesses will have access to the best payment experience. Our aim at Alaan is to solve spend problems for businesses by going into partnerships effectively with the best that the ecosystem has to offer. We will always invest heavily in the product and innovate to serve customers better. We will additionally invest in new country expansion soon.

Generation Start-up: How Alaan is changing the way companies handle expenses

The Dubai FinTech has raised $7 million in two funding rounds and plans to expand into Saudi Arabia