Technology

Connect Money scores $8M to enable non-bank businesses to offer embedded finance services

Connect Money Scores 8m To Enable Non Bank Businesses To Offer Embedded Finance Services

Solar Kat Latest Tech

Banking-as-a-service (BaaS) platforms are instrumental in driving access to digital financial services by introducing fintech capabilities to non-bank businesses. Multiple businesses are tapping these platforms to circumvent the need to build their own tech infrastructure and the bureaucratic processes of acquiring the requisite regulatory approvals to offer financial services including card payments and lending.

Globally, projections show that businesses will over the next decade keep tapping BaaS platforms to launch new financial services, grow their revenues and improve customer experience and retention. The increased adoption will drive the BaaS market value to $22.6 billion by 2032, sustained by a 19.3% compound annual growth rate (CAGR), according to a recent report by Allied Market Research.

As BaaS becomes ubiquitous, Egyptian fintech Connect Money is out to tap its popularity to explore emerging business opportunities out of African markets. The startup is enabling trade companies to issue white-label debit and credit cards to their customers for access to various financial services, including payments and credit.

Launched early this year, the fintech is now plotting growth within and outside Egypt, including in markets like Morocco and Kenya, backed by $8 million seed funding from a round co-led by Egypt-based VCs DisrupTech Ventures, Algebra Ventures and Lorax Capital Partners, with participation from One Stop Capital and MDP.

Connect Money was co-founded by Ayman Essawy (CEO), Wadi Jalil (CTO) and Abdelaziz Sarhan (COO), who saw the opportunity to help businesses bank  their customers.
 

“We have seen this in Amazon with the payment services and in many other digital platforms. We believe that even traditional businesses are capable of banking their customers and increasing consumer stickiness, to eventually become real banks. This is what we are trying to build; a one-stop shop for traditional and digital businesses so that they don’t have to build the infrastructure or invest millions in CapEx. They just pay a subscription service per-card per-month, which we then manage  from the back-end,” said Essawy, who prior to founding Connect Money co-founded LuckyOne, a consumer app for credit, offers and cashback rewards. He is also part of the team that launched DSquares, a 12-year-old loyalty platform provider that has operations across several markets, and is set to IPO in Saudi Arabia “within the next couple of years”.

Essawy said Connect Money has many use cases in various spaces, including agriculture where, for instance, supply chain companies can provide white-label cards and become banks for farmers.

“Basically, the whole value proposition sits at connecting those businesses to cash users. So we are talking about embedded finance as the core market,” he said.

In general, Essawy said, the platform can be tapped by businesses, especially those that have long and costly settlement cycles, to make instant payments and disbursements. Companies can also embed loyalty programs in the cards as lenders tap the tech to digitize their operations and provide credit. Essawy said their clients get these capabilities at a fraction of the cost and without lengthy waiting periods to acquire licenses from regulators to offer the financial services.

Connect Money’s support to businesses includes card issuance, KYC, customer support and mobile banking app development.

The startup joins a handful of fintechs in the nascent BaaS space in Africa, including Nigeria’s Anchor, Maplerad and Bloc, which are making financial services easily accessible to the masses by enabling businesses to provide tailor-made financial services to their consumers.

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