In the financial sector of Saudi Arabia, a fledgling fintech company, Hakbah, is pioneering the digitization of gameya, a time-honored communal saving practice. Established in 2020 by entrepreneur Naif AbuSaida, Hakbah’s aim is to cultivate saving habits amongst those with limited banking access, thereby broadening financial inclusion within the nation.
With a background in banking and marketing communications, AbuSaida recognized the pervasive difficulty in saving money across the Kingdom and the broader GCC. He noted that a staggering 70% of Saudis lack emergency funds. This figure aligns with a statistic from The General Authority for Statistics in Saudi Arabia, which indicates a meager household saving rate of 1.6% – ranking among the lowest for G20 nations.
“There is a savings crisis in the region,” said Naif AbuSaida, the mind behind Hakbah. “In Saudi Arabia and other Arab countries, the norm is living from one paycheck to another. The challenge of saving persists across all income levels, and that’s where our focus lies.”
Experiencing a rapid customer base growth to half a million users and a quadruple revenue increase in 2023, Hakbah remains committed to serving the Saudi Arabian market, striving to make savings more accessible to its residents and citizens.
MAKING SAVINGS ACCESSIBLE
Gameya, the conventional saving method, operates as an informal collective fund where community members contribute periodically, with funds being distributed in turn to each participant. This system is particularly prevalent in the Middle East, India, and Mexico, and caters to those not served by traditional banking.
While Hakbah serves both public and private sectors, it primarily targets individuals without a steady wage, such as homemakers, gig workers, freelancers, students, and rideshare drivers. According to a PWC report, with 22% of the GCC population unbanked – a contrast to North Africa’s 60% – there lies a significant opportunity for financial inclusion.
Hakbah is transforming the user experience from offline to online by ensuring a seamless digital interaction. The platform mitigates common issues associated with traditional gameya, such as awkwardness in payment collection and the inability to contribute, by assuring coverage for any defaults or mispayments.
“Our customers pay us for management, and we stand as the guarantor, irrespective of the other gameya members,” AbuSaida elucidates. “We provide that certainty, digitizing the experience, integrating it into the financial system, and enhancing it for speed, efficiency, and peace of mind, while eliminating social discomfort.”
GROWING AGAINST THE ODDS
Despite economic volatility due to the pandemic, inflation, and interest rate hikes, Hakbah successfully launched its services. Through word-of-mouth alone, the startup has expanded its customer base and is now adding two additional savings programs to its primary gameya offering.
“The last advertising dollar was spent in March 2021,” AbuSaida states. “Our growth is fueled by customer recommendations on social platforms, a testament to the strong network effect in this region where personal endorsements trump advertising.”
The startup’s growth is also bolstered by Saudi Arabia’s concerted efforts to diversify its economy through Vision 2030, which includes the Financial Sector Development Programme (FSDP) aimed at supporting household savings.
Since its inception, Hakbah has garnered roughly $7.5 million in funding, with $5.1 million secured in the most recent round. AbuSaida attributes the successful fundraising to maintaining a robust bottom line. “We operate with the mindset of both a startup and a corporate entity. Funding is for enhancements and new features, but at its core, the company’s financial health is paramount,” he affirms. “Profitability and sustainability are key, regardless of the company’s size.”
While the startup continues to flourish, AbuSaida’s immediate goal is to command 50% to 70% of the Saudi market before considering regional expansion. His vision is steadfast: to mitigate the savings crisis, elevate saving rates, and improve living standards. “We aim to make a significant impact on savings within two years,” he concludes.