Fintech

Accel leads a $4 million investment in Egyptian corporate card platform Swypex

Published

11 months ago

8 May, 2024

Accel leads a $4 million investment in Egyptian corporate card platform Swypex

Image credits: Swypex

Cards are gaining ground in Egypt, with over 30 million in circulation (prepaid cards, in particular, are more used than debit and credit cards combined). This increase in card usage, around 14% over the past four years, is mainly due to incentives introduced by fintech companies and banks, which attract millions of Egyptian consumers who previously relied mainly on cash for their transactions.

The adoption of corporate cards tells a different story. Companies of all sizes have been hesitant to adopt corporate cards due to limited access and inadequate spending controls over their use.

Traditionally, banks have been the primary providers of corporate cards across the country; however, fintech companies are now entering the scene to drive adoption. Swypexone such fintech that offers corporate cards and management tools for businesses has raised $4 million, which it will use to expand its platform’s business and technical capabilities.

Image credits: Swypex

They are facing around 3.8 million businesses in Egypt challenges with complicated and rigid financial systems, according to a UNDP report. Like many others across Africa, these companies use multiple disjointed methods to manage their finances, causing inefficiencies. Employee fraud is also a problem, with companies losing an average of 5% of their revenues each year due to fraudulent activity that often arises from cash transactions such as asset misappropriation and financial misrepresentation.

Preparations for launch

However, there are significant benefits from a regulatory perspective; for example, Egypt’s largest bank, the Central Bank of Egypt (CBE), has launched initiatives such as the Instant Payment Network (IPN) to reduce cash-based transactions and encourage digital payments.

Several fintechs in Egypt, including Swypex, are leveraging such initiatives to launch necessary financial services while adhering to central bank guidelines. CEO Ahmad Mokhtar explained that the startup, founded in early 2022 but only now emerging from stealth mode, has spent its first year acquiring essential licenses, ensuring regulatory compliance and working with payment processors and bank sponsors. Swypex rolled out the beta to 100 customers last December.

“We spoke to hundreds of different companies, from startups to SMEs, large corporations, enterprises and publicly traded companies, to understand what their challenges were at different stages,” said Mokhtar, who launched the startup with Tarek Mokhtar (CPO) e Sasan Hezarkhani (CTO), on the issue faced by Swypex. “We realized that there were specific shared pain points that hadn’t been addressed in the last decade or two, such as businesses that are predominantly using cash and losing visibility over their money or using somewhat archaic banking services, so they had to visit banks a lot to sign physical papers and documents to get things moving for their businesses.

All in one financial management platform

Mokhtar said Swypex provides companies with an “unlimited” number of corporate cards for their employees. The platform allows these businesses to set smart controls to manage spending, such as setting different limits and specifying usage permissions for ATM withdrawals and online transactions. After transactions, employees can upload receipts, invoices and expense details, which are consolidated into a centralized dashboard with integrated data from the government’s e-invoicing platform. In addition to ERP and accounting software integrations, Swypex offers businesses a simplified and comprehensive overview of all expenses and expenses in one place.

“Businesses using our platform can see spend distribution analytics at the level of each department, merchant, individual and category,” said CPO Tarek Mokhtar. “We also categorize all expenses on the platform to provide deep insight into a company’s financial health and each line item, which will help companies make more data-driven decisions based on the real-time visibility we provide them.”

Swypex’s competition in the corporate card space across Africa includes YC-backed companies such as Boya and Bujeti. In Egypt these are banks such as HSBC and National Bank. Mokhtar argues that Swypex is a better option for businesses because it allows for greater customization of its offerings and provides a broader range of features and services, including unlimited card issuing and advanced checks. “Our focus on things like user experience and instant controls on these cards, like blocking them, and integrating all that automation, is fundamentally new to the market,” the CEO said.

The two-year-old all-in-one financial management platform, which offers businesses their first three cards for free, generates revenue from interchange fees, floats and FX markups.

Increase in corporate cards in the coming years?

Accel, the storied venture capital firm that made its first fintech investment in the MENA region (though it backed an African money transfer app), led the $4 million seed round in Swypex. Investors who participated in the round included Foundation Ventures, The Raba Partnership and other angel investors.

That’s significant for a startup that exits beta phase after only a few months, especially in a challenging funding climate where traction and revenue are priorities. But there are good reasons why it has attracted investment even before its official launch: Swypex’s potential to address a sizable market (it targets a portion of the value cards and payments market over 10 billion dollars and is expected to grow at a CAGR of 10% over the next three years), as highlighted by Mokhtar, along with the founders’ background in large-scale product development for global companies such as Twitter, PlayStation and Spotify.

“As the payments industry continues to digitize, the opportunity to provide modern fintech products to Egyptian businesses has become even more important,” Richard Kotite, vice president of Accel, said in a statement. “Ahmad, Tarek and Sasan identified a gap in the market for a comprehensive B2B solution that addresses many of the key pain points that businesses regularly face, while driving step change in efficiency. We see a real opportunity for Swypex to become a fintech champion across the Middle East. The team is technically experienced and very ambitious and we are delighted to join them on this journey.”

Source

Related Topics:Accel Africa credit cards

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

8 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

8 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

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Fintech

M2P Fintech About to Raise $80M

Published

8 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

8 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.”