Fintech firm to launch Pakistan's first financial 'super app,' plans expansion to Middle East

KARACHI: An Islamabad-based fintech firm is all set to launch Pakistan’s first financial super app by the end of the month that will help the country’s population open digital accounts and enjoy cross-border payment facility, the company’s top official said on Friday.
“We are planning to launch Pakistan’s first financial super app by the end of June,” Talal Ahmed Gondal, cofounder and chief executive officer of TAG Innovation, said while talking to Arab News. “Our intention is to target women and youth in the first marketing phase who don’t have access to formal bank accounts.”
“In the next stage, TAG plans to launch Pakistan’s first digital bank,” he continued, adding that his organization would operate as an electronic money institution (EMI) for now and offer relevant services to the intended target market.
“The app will enable users to open digital accounts within three minutes,” Gondal explained. “The users will then be able to make peer-to-peer transfers, dispatch money to bank accounts, pay utility bills and recharge their mobile credit. Their phone number will also be their account number.”
The fintech startup has been authorized by the State Bank of Pakistan to operate as an EMI and is launching its pilot phase.
TAG recently closed $5.5 million in a pre-seed round led by venture capitals from the United States, including Quiet Capital Management and Liberty City Ventures. Other participants were Fatima Gobi Ventures, Unpopular Ventures as well as strategic investors like Visa and Angels Investors, the TAG chief informed.
The funding round makes it the largest ever pre-seed in the Middle East, North Africa and Pakistan region. The position was previously held by an Egyptian fintech, Telda, which raised $5 million, according to the data compiled by various venture capital institutions.
Gondal said Pakistan was among the difficult markets for funding since the economic ecosystem was still not mature for the purpose.
“In the US, it would have taken us a maximum of five weeks, but it took us five months here to generate the funding,” he said, though he also recognized that Pakistani market was still untapped with a huge potential.
The TAG chief said his company would utilize the funding for its commercial launch and to expand its outreach in the Middle East to facilitate remittance inflows and cross-border payments.
“We will Initially launch our services in Pakistan but offer them in the Middle East by the end of the year,” he said, adding that TAG wanted to begin the process from Saudi Arabia by hiring a local team since that was where “the highest number of expat Pakistanis live.”
“The funds will be transferred between Saudi and Pakistani TAG accounts within a minute at a very low rate,” he continued while pointing out that the facility would be offered with the help of Saudi banks.
Gondal said that large number of women and youth, particularly students, did not have access to formal banking channels.
“Existing players are mainly targeting lower income segments, but we will offer services to all income groups as the first B2C operator across Pakistan,” he said, adding: “The farming community will also be tapped to receive or make payments for wheats or subsidies.”
According to the World Bank, Pakistan has the third largest unbanked adult population in the world with about 100 million people without their own accounts.
“There are 60 million total bank accounts in Pakistan out of which unique accounts are estimated at 20 million,” Muhammad Sohail, chief executive officer of Topline Securities, said. “About 70 percent of Pakistan’s adult population lacks access to bank accounts.”
According to Pakistan’s central bank, the country has a low volume of electronic transactions due to low banking penetration, lack of trust and awareness related to digital payment methods, limited interoperability and high cost of transactions.