As a banker in the UK who had spent time in the Middle East, it did not take long for Ian Dillon to recognize that there are real commercial opportunities in a segment that has been left outside the GCC banking system: low-income migrant workers.
“I had seen the challenger banks in the UK and Europe and I’ve been doing work in Dubai and the Middle East: banking in the GCC is not of the same quality as it is in the west and most of the population here are low-income migrant workers – there is just such a huge opportunity to bank these low-income migrant workers,” Dillon tells IFN Fintech. After six years with HSBC, Dillon packed his bags and left for Dubai where he and former university-mate Katherine Budd – who was in banking analytics – founded NowMoney, a mobile banking and remittance app targeting the large majority of the foreign worker population concentrated in low-wage jobs. Out of the 9.27 million residents in the UAE, almost 90% are foreign-born.
Since setting up two and a half years ago, the duo grew its team to eight members, secured funding, built its app, forged a partnership with an Islamic financial institution, expanded its user base manifolds and launched its pilot phase.
“When we first set up, there wasn’t really the support for start-ups as there is now – it was difficult and daunting as there was no support on starting a business efficiently and cheaply. But now, there’s a big push from all the major cities of the world for innovation and entrepreneurship – the ecosystem is much better now,” reflects Dillon.
Shariah at the core
For the founders, it was important that the core business was Shariah compliant, hence the decision to partner with a UAE Islamic bank through which all the payments will be made to other financial participants in the ecosystem such as exchange houses; Dillon could not reveal the partner bank. Aligning with a licensed bank allows the start-up to facilitate banking services; it holds a payment service provider license.
“The fact that we open ourselves up to the entire Muslim population and at the same time does not take away any of our services from other religious populations means that it is a really obvious thing for us to do,” Dillon explains.
A majority of the firm’s current users and target market are Muslims hailing from Pakistan, Bangladesh, Tunisia and other parts of Africa; as foreign workers are not allowed to open a banking account unless they have a certain earning power (AED5,000 (US$1,360.97) according to Dillon), low-income migrant workers access NowMoney through their corporate employers. The firm now has signed off five corporate clients giving it a total user base of approximately 4,000.
In its current form, users would have direct access to a current account, debit card and remittance services as well as be able to make bill payments and purchase mobile phone credit. The vision for the future is to be a full banking service provider offering credit and insurance.
“At the point when we offer credit, securing Shariah recognition would be a very important step for us to go through,” Dillon shares.
Expansion mode
Now trialling its app with its current base, Dillon shares that apart from focusing on increasing the number of users, the company is also working on rolling out the service in Saudi Arabia (the largest remittance market in the GCC at about US$45 billion annually) and Bahrain (the third-largest market) over the next six months.
“The GCC is the second-largest remittance market globally after the US, with over US$100 billion sent annually – so we are pretty much in the largest market we can be. Our focus will remain the GCC but once we’re established and grown across the GCC, then there is the possibility of going into other areas,” Dillon notes.