Banking-as-a-service (BaaS) platforms continue to be at the heart of driving access to digital financial services through their technology that offers fintech capabilities to non-bank businesses. Businesses are tapping these platforms to get past difficulties and time-consuming processes, such as building tech infrastructure and acquiring requisite regulatory approvals, to offer financial services such as cards, payments and lending.
Globally, projections show that businesses will over the next decade keep tapping BaaS platforms to launch new financial services, grow their revenues and improve customer experience and retention. BaaS platforms are preferred as they save entrepreneurs the trouble of establishing their own infrastructure and pursuing regulatory approvals to support such products and services as card payments. The increased adoption will drive the BaaS market value to $ 22.6 billion by 2032, sustained by a 19.3% compound annual growth rate (CAGR), according to a recent report by Allied Market Research.
As BaaS becomes ubiquitous, Connect Money, an Egyptian fintech, is out to tap its popularity to African markets. The startup is targeting trade companies in the continent to enable them to issue white-label debit and credit cards to their customers, extending them various financial services, including payments and credit.
Months after launch early this year, the fintech is now plotting growth within and outside Egypt, including in markets like Morocco and Kenya, backed by $ 8 million seed funding it has secured co-led by Egypt-based VCs DisrupTech Ventures, Algebra Ventures and Lorax Capital Partners, with participation from One Stop Capital and MDP.
Connect Money co-founder Ayman Essawy (CEO) told TechCrunch together with co-founders Wadi Jalil and Abdelaziz Sarhan that they started building Connect Money as they believe that brands that interact daily with consumers are capable of banking them.
“We have seen this in Amazon with the payment services and in many other digital platforms not traditional in Africa. We believe that even traditional businesses that trade with their stakeholders are capable to bank those business stakeholders and increase consumer stickiness and then become their real bank. This is what we’re trying to build, a one-stop shop for traditional and digital businesses so that they don’t have to build the infrastructure, they don’t have to invest millions in CapEx. They just pay a subscription service per card per month and we manage from the back-end,” said Essawy, who prior to founding Connect Money co-founded LuckyOne, a consumer app for credit, offers and cashback rewards.
He is also part of the team that launched DSquares, a 12-year-old loyalty provider that has operations across several markets, set to IPO in Saudi Arabia “within the next couple of years.”
Essawy said Connect Money has many use cases in various spaces, including agriculture where, for instance, companies that manage the supply chain for farmers can provide white-label cards to them and become their banks.
“Basically, the whole value proposition sits at connecting those businesses to cash users. So we’re talking about embedded finance as the core market,” he said.
In general, the serial entrepreneur said, the platform can be tapped by businesses, especially those that have long and costly settlement cycles, to make instant payments and disbursement. Companies can also embed loyalty programs in the cards as lenders tap the tech to digitize their operations and provide credit too. Essawy said businesses (their clients) get these capabilities at a fraction of the cost and without lengthy waiting period to acquire a license from the apex banks to offer the financial services.
Connect Money’s support to businesses includes card issuance, KYC, customer support and mobile banking app development.
The startup joins a handful of fintechs in the nascent BaaS space in Africa, including Nigeria’s Anchor, Maplerad and Bloc, which are making financial services easily accessible to the masses by enabling businesses to provide tailor-made services to their consumers.
