Leveraging Technology to Make an Impact through Financial Inclusion

This contributed article was prepared by Ahmed Wagueeh in a personal capacity. The opinions expressed in this article are the author’s own and do not necessarily reflect the views or position of Startup Genome.

Ahmed Wagueeh

Ahmed Wagueeh is the co-founder and CTO of Khazna, an Egyptian Fintech startup dedicated to improving the financial well-being of the 35 million Egyptians who lack access to formal financial services. Passionate about software development since childhood, he studied computer engineering at the Cairo University and worked for Intel, Valeo, and IBM, before co-founding Khazna in 2020.

"Fintech solutions can improve the financial well-being of millions of individuals who are overlooked by established financial services models."

In recent years, Fintech has expanded from the exclusive domain of large, established financial institutions. This has given rise to a variety of consumer-oriented solutions designed to provide access to financial services, especially for traditionally underserved populations. This enables people who lack access to financial services to gain access to critical lifelines such as insurance and credit lines, which are essential for battling life’s unexpected hardships and harnessing unforeseen opportunities.

Fintech Can Empower Underserved Populations

Access to financial services remains a challenging yet necessary endeavor. In countries that have yet to fully embrace Fintech, most traditional financial services cater to high-value segments of the market. The underserved have very few options except to rely on unpredictable, unstable, and often undocumented means of obtaining capital: personal loans from friends, family, or employers, for example.

In times of economic hardship, the inability to obtain the financial flexibility enjoyed by more fortunate segments of the population can negatively impact the health and well-being of underserved communities. Fintech has evolved to become a solution to this service gap, and at Khazna, our vision is to improve lives by extending world-class financial services to everyone.

The Fintech Landscape in Egypt

As an Egyptian startup, inspired by the Central Bank of Egypt (CBE)’s efforts toward financial inclusion amongst many strategies, utilizing technology to drive this, our mission begins right here, in one of the world’s most financially underserved populations. According to the World Bank’s Global Findex Database, 73% of Egyptian adults are unbanked. One reason for this is that, according to our research, 60% of the blue-collar workforce struggles to save money year after year, and opening a traditional bank account in Egypt often requires a minimum cash deposit.

Additionally, the inconvenience of traditional banking offerings and disinterest in incumbent institutions further distances Egypt’s working population from the economic safety net that formal credit and financial systems can offer. Therefore, a significant portion of the Egyptian population relies on uncomfortable and inconvenient sources of credit such as borrowing from friends and family to cover short-term financial needs.

Internet availability and access in Egypt, however, is a different story. As of January 2021, internet penetration in Egypt stood at 57%. Additionally, Egypt has the highest number of smartphone users in MENA. The median age in Egypt is 24.6 years, and this young, tech-savvy portion of the population is eager to use financial services and conduct various transactions online. Therefore, Egypt has become an incredibly attractive market for Fintech startups, especially homegrown businesses such as Khazna. We have a vested interest in Egypt and are striving to make a positive impact by creating a path to financial stability for underserved Egyptian citizens.

According to FinTech Egypt — an initiative spearheaded by the Central Bank of Egypt to support, promote, and develop the country’s Fintech sector — and infrastructure as well as lending and alternative finance are the Fintech subsectors with the highest growth potential.

Additionally, Egypt is home to top-tier economists. There are a lot of people working hard to achieve sustainability goals that also enhance the economy. Financial inclusion is at the forefront of the national and international sustainability movement, and Fintech solutions can improve the financial well-being of millions of individuals who are overlooked by established financial services models. It is against this backdrop that a new generation of Egyptian workers is emerging — a generation that demands more financial freedom to create generational wealth and climb the economic ladder.

Solving the Problem of Cash

At Khazna, we build technology to create an impact on society, and this impact is in the form of financial inclusion. In lockstep with the United Nations 2030 Agenda for Sustainable Development, we provide solutions to what we call the “problem of cash.”

Blue-collar workers in Egypt often struggle to obtain the requirements to open a traditional bank account. This puts key financial tools such as loans and credit cards out of reach for a large portion of the population, including people who are gainfully employed. Fortunately, the government has created a regulatory and technological infrastructure that supports the digitization of currency. As a result, economic activity and entrepreneurial opportunities have increased exponentially. For example, in 2017 there were approximately 70,000 POS (point of sale) machines around the country. In 2022, Egypt is home to more than 800,000 POS machines. This is a direct result of the infrastructure that the government has built. In summary, a digital economic framework enables significantly more people and small businesses to participate in the economy.

Based on this foundation, we strive to empower Egyptians financially through our products and services, such as the Khazna App and Khazna Card. By partnering with employers to validate employee data and creditworthiness, we offer multipurpose credit lines to users of our Khazna App. Users can take advantage of their credit line in several ways: withdrawing earned wages in cash, using “Buy Now, Pay Later” (BNPL) services, accessing bill payment services, and enabling companies to transfer payroll instantly to their employees. Our products are designed for ease of use with the customers’ needs on top of all product design and development decisions, to fit the mid and low-income segments’ requirements.

Our Khazna Card, a prepaid card launched in partnership with the Abu Dhabi Islamic Bank, provides unbanked cardholders with a wide range of financial services that would typically be out of their reach. Khazna Card users have instant, around-the-clock access to a multipurpose credit line on the Khazna App, even on national holidays and other periods when traditional financial institutions are closed.

Egypt Is Just the Beginning

As an impact-driven company, all of our services are developed by Egyptians in Egypt to empower Egyptians who lack access to formal financial services. The investment funding that we’ve received over the last two and a half years is a testament to our business model and the greater concept of positively impacting society through technology and financial inclusion.

Although our products are currently focused on the Egyptian market, our vision is to improve lives by extending world-class financial services to all. I hope this article serves as an eye-opening example of how startups in developing countries throughout the world can empower their populations through the creative use and application of Fintech.