Award winning FinTech startup sees opportunities as SMEs look for ‘life support’
Saad Ansari is a serial entrepreneur and graduate of The University of Manchester. He has an impressive track record and has picked up several awards and recognitions along the way, including an Ignition Award from The University of Manchester Intellectual Property arm (UMIP). He has used his MBA experience, network and access to faculty, to help test his concept, develop his strategy and ultimately design the business model and plan that has since attracted a lot of interest from a range of stakeholders.
Saad is the CEO of the team behind Xpence, which aims to provide access to intelligent business banking services and financial accounting solutions for entrepreneurs and SMEs through its own SaaS platform, initially addressing one of the major challenges for new businesses - opening a bank account. It is the region’s first digital-only business account. Around two years on from the original ideation of Xpence, the firm is now close to launching its first live products, having acquired licences in the UAE, Bahrain and Saudi Arabia.
“Over the last two years, we have rebranded our business to Xpence and refocused on the B2B market with an emphasis on SMEs, micro-business, and entrepreneurs. SMEs are the backbone of the regional economy and impact GDP and employment significantly; individually, they are small but collectively they are bigger than many of the largest corporations but don’t get the support they deserve. Banks treat SMEs as consumers even though they are ‘corporates’ – licensed businesses – but on a different scale and with different needs. We identified a niche that we can target and which banks currently aren’t reaching.
“When we started working on Xpence in earnest, with the award of a FinTech licence from Abu Dhabi Global Market (ADGM) in September 2018, we were one of only 10 companies developing FinTech services in this regulated environment. This was a game-changing moment for us and within a 4-6 week period, we had a licence and had raised funds to accelerate our go-to-market plans. The really big challenge for us was securing banking partners, who may also be our competitors. Neobanks (digital banks) ‘piggy-back’ existing banks and their infrastructure and they effectively buy services in bulk and then re-sell them to customers.”
In Bahrain, Xpence has acquired a licence for FinTech services with a central bank ‘sandbox’, issued in October 2019. The company has incorporated in Bahrain and is now in the process of setting up offices there. The team expects to be testing its first transactions, using cards already in production and ready to be issued in early Q3 2020. In Saudi Arabia, Xpence is following a similar roadmap, linking with a local banking partner and undergoing the local licensing process. The team expects to roll out services in Bahrain, followed by Saudi Arabia and then the UAE by the end of the year.
Change in the air
“Everyone is talking about the need for SMEs to adopt new business models and to adapt to survive. This unique pandemic situation is causing an economic crisis but how will banks react? Banks may become more interested in developing new revenue streams working with SMEs. The Xpence model means we share revenues with banks with little need for them to spend anything and with little financial risk beyond the norm.
“Ultimately, the Xpence vision is more than just offering bank services and aims to create a marketplace bank offering third party financial and non-financial services. The immediate benefit for our partner banks is the opportunity to upsell and cross-sell products to our SME customers, from loans to insurance. Xpence will also have a richer picture of the financial health of our customers than a normal bank, from payables to receivables, cashflow, and expenses.”
Inevitably, the pandemic has caused some delays but the team has continued to grow and recruitment has continued. Although the team has been working remotely, there are daily calls and twice weekly ‘sanity checks’ - social calls with the team to keep an eye on their health and wellbeing.
“One of the major challenges is fund raising and approaching VCs (Venture Capital) at this time. Last year, we were very active and holding physical meetings and now it’s all done through calls and virtual meetings. In the week before Eid, we spoke to several VCs in different parts of the world and it was a new and challenging experience pitching to investors without being able to meet in person and in some cases without even seeing one another on a video call.
“Looking ahead, this is the time to look at new business models and we hope that this will encourage SMEs and banks to look at Xpence, and help accelerate growth and attract funds. We can’t call ourselves a bank but effectively we are building a bank, so we need patience and recognise this takes longer, as we are dealing with people’s money and working in a highly regulated area.”
The MBA effect
Saad completed his Global MBA in 2018 and is still in contact with friends and lecturers from the programme. “We do a lot of business planning and this, along with market strategy and go-to-market aspects, have proved to be very helpful, along with the VC-PE workshop I attended. We have also hosted two groups of full-time Manchester MBA students on their International Business Projects and which have worked with us on problems we needed to solve. One of the things I most liked about the MBA was that the assignments were based on real business situations with a personal professional interest. Once I got my business concept beyond the idea stage, I was able to use assignments to help put the elements together, considering VC-PE on how to raise finance, and corporate finance on how we could value the business and ultimately what it might be worth.
“During the strategy management workshops, I could give presentations to get critical feedback from students, lecturers and academics at the business school. They would give very direct and useful views and insights. The advanced strategy management workshops were like a capstone and brought together all the learning, so I was able to put the business plan together through my MBA studies.”