Saudi FinTech Hakbah raises $5.1 million in series A funding round

The social savings app will use the proceeds for product development and growth

Hakbah’s social savings platform allows the digitisation of traditional group savings. Photo: Hakbah

Hakbah, a FinTech savings platform in Saudi Arabia, has raised $5.1 million in the latest funding round as it seeks to boost household savings and promote financial inclusion in the kingdom.

The series A funding round was led by venture capital firm VentureSouq.

New investors included private capital fund M-Capital and Abu Dhabi Global Market-regulated venture capital fund manager Bunat Ventures.

Existing investors, Dubai-based venture capital company Global Ventures and the Dubai International Financial Centre-based Aditum Investment Management, also participated in the round, the start-up said on Thursday.

“We’re working to build a savings platform through which individuals can save easily, quickly, collectively and with impact – on our mission to double individuals’ savings ratio in Saudi Arabia by 2025,” said Naif AbuSaida, founder of Hakbah.

“With the sizeable savings groups and household savings markets, and 60 per cent of the population under 30, there is a significant opportunity for efficient, digital solutions to transform Saudi Arabia’s savings habits.”

Social savings is an informal “money pool”, in which family, friends and colleagues contribute regularly to a collective fund that allows them to take turns to borrow what has been saved by the group.

Also known as a savings circle or chit fund, it is an ancient savings system that is popular in Saudi Arabia, India, China, Africa and Latin America, particularly for underbanked or unbanked communities.

The funds are typically used for anything from paying rent to bills and school fees or even financing a small business.

Increasing household savings in Saudi Arabia, the Arab world’s biggest economy, is a key priority under the kingdom’s Vision 2030 plan, which aims to diversify the economy away from hydrocarbons.

Saudi Arabia also launched the Financial Sector Development Programme as part of its Vision 2030 plan to help diversify the country’s financial sector and boost household savings.

Proceeds of the latest funding round will be used for product development, with a strong focus on machine learning and further developing Hakbah’s savings engine, the start-up said.

Capital will also be ring-fenced to attract and nurture talent, it said.

The company also plans to enter two regional markets in the near future, either via partnership or a strategic alliance.

Hakbah has raised $9 million to date. Initially bootstrapped by Mr AbuSaida, the start-up closed a $2 million pre-series A funding round in April.

Founded in 2018 and launched in 2020, the company has a customer base of more than 500,000 users, of which 70 per cent are between 21 and 35 years.

Hakbah’s social savings platform – which can be integrated with any banking system in less than a week – allows the digitisation of traditional group savings with the purpose of spending on financial needs, the company said.

Hakbah’s users share the pool of money. This elevates traditional savings behaviour, allows saving for purpose and increases financial literacy, the start-up said.

When users sign up to the platform, they create their own savings groups, called Jamiya, and invite trusted family and friends to join.

About 70 per cent of Saudi citizens do not have an emergency savings fund, while the country’s household savings rate averages about 1.6 per cent, Hakbah estimated.

Operating in the kingdom’s $216 billion savings market, Hakbah is permitted by the Saudi Central Bank to test its services under the Regulatory Sandbox environment and graduated from the DIFC FinTech Hive Accelerator Programme in 2019.

The start-up recorded an increase of 18 times in total savings under management and increase of four times in revenue this year, it said.

Musaab Hakami, general partner of Fintech at VentureSouq, said Hakbah aims to modernise financial savings and increase financial inclusion.