Fintech
Connect Money gets $8 million to enable non-bank companies to offer integrated financial services
Banking-as-a-Service (BaaS) platforms have become instrumental in driving access to digital financial services by introducing fintech capabilities to non-banking businesses. Many companies are leveraging these platforms to circumvent the need to build their own technological infrastructure and bureaucratic processes to acquire the regulatory approvals needed to offer financial services, including card payments and loans.
Globally, projections show that over the next decade, companies will continue to leverage BaaS platforms to launch new financial services, grow their revenues, and improve customer experience and loyalty. Increased adoption will increase the market value of BaaS 22.6 billion dollars by 2032, supported by a compound annual growth rate (CAGR) of 19.3%, according to a recent report from Allied Market Research.
As BaaS becomes ubiquitous, Egyptian fintech Connect Money is poised to leverage its popularity to explore emerging business opportunities from African markets. The startup allows commercial companies to issue white label debit and credit cards to their customers for access to various financial services, including payments and credit.
Launched earlier this year, the fintech is now planning growth within and outside Egypt, including markets such as Morocco and Kenya, supported by $8 million in seed funding from a co-led round from Egypt-based VCs DisrupTech Ventures, Algebra Ventures and Lorax Capital Partners, with participation from One Stop Capital and MDP.
Connect money was co-founded by Ayman Essawy (CEO), Wadi Jalil (CTO) e Abdelaziz Sarhan (COO), who saw an opportunity to help companies finance their customers.
“We’ve seen this at Amazon with payment services and many other digital platforms. We believe that even traditional companies are able to bank their customers and increase consumer stickiness, to eventually become real banks. This is what we are trying to build; a one-stop shop for traditional and digital businesses so they don’t have to build infrastructure or invest millions in CapEx. They simply pay for one card subscription service per month, which we then manage from the back end,” said Essawy, who before founding Connect Money co-founded LuckyOne, a consumer app for credit, offers and cashback rewards. He also does part of the team that launched DSquares, a 12-year-old loyalty platform provider that operates in multiple markets and will be listed in Saudi Arabia “within the next two years”.
Essawy said Connect Money has many use cases in various settings, including agriculture where, for example, supply chain companies can provide white-label cards and become banks for farmers.
“Basically, the whole value proposition is about connecting these businesses to cash users. So we are talking about integrated finance as the main market,” she said.
Overall, Essawy said, the platform can be used by businesses, particularly those that have long and expensive settlement cycles, to make instant payments and disbursements. Businesses can also embed loyalty programs into cards as lenders leverage technology to digitize their operations and provide credit. Essawy said their customers get these features at a fraction of the cost and without long waiting periods to acquire licenses from regulators to offer financial services.
Connect Money’s support for businesses includes card issuance, KYC, customer support and mobile banking app development.
The startup joins a handful of fintechs in Africa’s nascent BaaS space, including Nigeria’s Still, Maplerad and Bloc, who are making financial services easily accessible to the masses by enabling businesses to provide tailored financial services to their consumers.