Fintech

Saudi entrepreneurs launch fintech startup to spur growth of open banking in GCC

Published

8 months ago

2 June, 2024

Saudi entrepreneurs launch fintech startup to spur growth of open banking in GCC

JEDDAH: Fintech startup Thimsa aims to streamline business payments with direct bank transfers by launching a beta platform in the United Arab Emirates and Bahrain, targeting the growth of open banking in the region.

Co-founded by two Saudi entrepreneurs together with a financial expert, the startup seeks to facilitate instant B2B payments and payments, while also offering e-invoicing and subscription features.

The predicted growth of open banking in the Gulf Cooperation Council countries motivated Rayan Azab and Salah Khashoggi to partner with Dubai-based fintech entrepreneur Ash Kalra to lead this venture after four years of market research.

This comes as open banking is expected to account for more than $124 billion in transactions in the GCC region alone by 2031, up from $14 billion in 2020, with an annual growth rate of 22%, according to a report by Allied Market Research.

Sharing the story behind Thimsa with Arab News, Azab said: “The journey took about three or four years, but realistically, we started this year with the different experience we have.”

He added that they have studied the market and know that fintech usage in the region is one of the highest in the world thanks to a young and vibrant generation across the GCC.

“We advised and collaborated with a couple of other fintech companies, and then decided (to found the company) as open banking regulation was implemented in the last few years,” Azab said.

Rayan Azab. Provided.

The entrepreneur added that the process has become easier over time, highlighting the decision to now enter open banking as the reason behind founding Thimsa. He noted that the partners have different experiences that he believes will contribute to their success.

“We are three partners. Kalra has had fintech experience in Canada and the US for over 12 years, while I have been working in business for over 14 years. Also, I have a consultancy firm apart from Thimsa. Salah Khashoggi, founder of Tamra Capital, is also part of our team and brings his experience from Saudi Arabia,” he added.

Through open banking, the company says its platform can access shared financial data via 350 integrated APIs, allowing businesses to streamline processes, create personalized financial services and adapt to evolving customer needs.

Furthermore, the fintech company highlighted that its solution can accept payments in over 60 currencies from more than 150 countries.

Explaining their decision to launch the payments management platform in the UAE and Bahrain first, Azab told Arab News that they wanted to test it in smaller markets before entering larger ones such as Saudi Arabia.

He added that they are aligning their efforts and developments with regulatory changes and expansions made by the local regulator as it improves its framework.

“Saudi Arabia has recently advanced its open banking initiatives and is poised to become a regional leader in the sector,” he explained.

Highlighting the potential impact of the growth of open banking in the GCC on their trajectory, Azab said that the segment is already established in the region and that they are not introducing something completely new.

“We’re just renovating it. Thimsa will come and help small businesses that can’t afford to just go and do the huge bookkeeping or whatever,” she said, adding that they will add value to these businesses.

Speaking about their platform, he explained that the technology offers instant payment management, business management and, most importantly, business-to-business and customer-to-business functionality.

Azab concluded by saying that they have faced many challenges, but have gained significant experience in understanding the market and its growth trajectory. Furthermore, he said they are working closely with regulators.

Salah Khashoggi. Provided

Envisioning that the platform could change the financial services landscape for GCC businesses, Khashoggi told Arab News that the region, especially Saudi Arabia, is undergoing a massive transformation in fintech and financial inclusion.

“We want to focus on enabling SMEs (small and medium enterprises). So, the idea behind Thimsa is how to help all these SMEs by making financing available to them as well as facilitating their operations. All this is the result of open banking,” Khashoggi said.

The co-founder added that without the regulation of open banking in Saudi Arabia, they could not have or even come up with something like Thimsa.

Speaking about their future expansion plans, Khashoggi highlighted that their main focus is product development. He explained that once they demonstrate success in Saudi Arabia and the GCC region, they will aim to expand their product offerings to the global market.

He highlighted that the beauty of fintech lies in its integration with the digital economy, making it one of the most easily exportable products globally. However, he noted that it is crucial to remain attentive to market demands.

“So if you want to expand into any other market, you have to localize the product to meet their needs,” he said.

He emphasized that their strategy involves perfecting the product here in Saudi Arabia before confidently venturing into international markets.

Asked how Thimsa can ensure the security and privacy of its users’ information, given its extensive use of financial data, it said this is entirely within the control of the regulator.

“The regulator sets a very high bar when it comes to sharing any data. Our customers trust us with their data for their benefit. We will not take it and use it, or sell it, or do anything with it. All this is not permitted by law. We will only use it for the benefit of the customer,” she said.

For his part, Kalra described Thimsa as a cutting-edge financial management platform, highlighting that it is based on the fundamental principles of open banking and finance.

“Open banking aligns very well with Vision 2030 in Saudi Arabia and works on real-time payment rails. This means it drives innovation, growth and inclusiveness across the market,” she said.

Highlighting the open banking landscape in the GCC market, particularly in Saudi Arabia, and discussing whether they will compete with banks, Kalra commented: “Open banking is a technology that allows banks to share their data with third parties like us, which drives innovation and growth in the market.

“For the Saudi market this is a big problem. So, one of the pillars of Vision 2030 is to diversify the economy, and open banking does just that,” he said.

Ash Kalra. Provided

Kalra added that this allows existing banks to work with third parties like them, and said: “So we’re not competing against the banks, we’re actually working with them.”

Describing the technology and how their platform would make managing payments easier, he said Thimsa uses a microservices architecture and API-based technology.

“We collect a lot of data from the bank about businesses and consumers and innovate around it. So, this is a key technology used by Thimsa,” she concluded.

Source

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

6 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

6 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

Source

Fintech

M2P Fintech About to Raise $80M

Published

6 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

Source

Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

6 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”