UAE Entrepreneurs Shed Light on Financial Inclusion Challenges
Time is of the essence in modern times, and speed is becoming an increasingly important dimension in our highly digitized world today. When the Dubai Chamber of Commerce & Industry published an entrepreneurship advocacy whitepaper in 2018, which proposed solutions to funding challenges faced by startups in the UAE, entrepreneurs were quick to call attention to arduous banking services and the obstacles they faced in opening bank accounts for their startup businesses.
It might seem like a simple request that banks should easily cater to, but this challenge was exactly what led entrepreneur Saad Ansari to found Xpence, a digital-only smart business account that targets freelancers, solo entrepreneurs and startups in the Gulf region. The Dubai-headquartered combines bookkeeping and banking in one app, where its main differentiator from traditional bank accounts is that provides a set of seamlessly integrated tools that enable invoicing, VAT payments, cash flow management, integrated payment gateway, and cashless petty cash in one place. Entrepreneurs can opt in to get a premium contactless Visa card to pay online or in-store, and access funds instantly from local and international ATMs. Another option would be for them to get physical Visa cards for team members or virtual cards for one-off payments.
The study by the Dubai Chamber revealed in a poll to entrepreneurs that it took about three months for them to open a bank account in the UAE. Apparently, those were quick to get it done, when compared to Ansari’s experience:
“It took us seven months to open an account with quite a hefty initial deposit,” he recalls. “Even then our bank hasn’t given us internet access yet! Some fellow entrepreneurs are still struggling even after a year.”
Despite some users being skeptical about his innovative solution and worrying about the safety of their money, the founder & CEO of Xpence assures that his users’ funds are securely held in an account with a local bank, meaning even Xpence cannot access these funds. In addition, Ansari adds that Xpence is currently regulated by the Financial Services Regulatory Authority – Abu Dhabi Global Market, one of the UAE’s financial regulators.
He states that Xpence has topnotch security measures in place, according to international standards such as the Payment Card Industry Data Security Standard, in addition to insurance coverage. Ansari surprisingly adds that entrepreneurs can often expect a response within 30 minutes to 48 hours!
Xpence is rolling out beta accounts soon for entrepreneurs based in the UAE, with future expansion plans that encompass Saudi Arabia.
In the meantime, another avant-garde FinTech startup in Dubai is targeting a large unbanked demographic in the UAE; low-income employees that banks are hardly able to profit from. The promising NOW Money provides bank accounts and low-cost remittance options to people who are paid less than Dh5000 per month, which represents around 70% of the UAE population, as per the Head of Communications and Engagement at NOW Money Vaishali Dialani.
“…whilst banks and exchange houses are moving their focus further away from low-income migrant workers leaving them unbanked, we are embracing the challenges and opportunities of providing them with financial services.”
Meanwhile, it’s not just entrepreneurs that have concerns on traditional banks’ unrealistic requirements. Varoon Sinha, Managing Director at business setup specialists HMT FZC – Smart Zone, considers that banks often set impractical terms and conditions for startups. He states that one of those obstacles is the fact that banks require that businesses maintain an unreasonable average balance in their accounts or face monthly fines; an unrealistic notion since entrepreneurs need funding by default and spend huge amounts to incorporate their business in the first place.
Although the gap is bound to become narrower as time goes by, it’s clear that legacy banks represent a challenge for young, emerging companies in the UAE and simultaneously FinTech startups are taking advantage of this to create convenient solutions for their fellow entrepreneurs. In the not-so-distant future, banks will need to become more flexible in terms of the requirements and processes needed to open accounts, if they wish to attract entrepreneurs and the emerging startup ecosystem.
Entrepreneurship, Neobanks, Xpence, Saad Ansari, Financial Services Regulatory Authority, Abu Dhabi, Dubai, UAE, Dubai Chamber of Commerce, digital banks, NOW Money, Vaishali Dialani, Varoon Sinha, HMT FZC Smart Zone