Tez Financial Services, which describes itself as “the first fully digital non-bank microfinance company (NBMFC) in Pakistan”, has raised $1.1 million in a seed round led by Omidyar Network.(Omidyar Network and the impact investment firm, established by eBay’s founder, Pierre Omidyar.)Other investors in this round include Accion Venture Lab (the seed-stage investment initiative of global non-profit Accion) and Planet N. Funds.The new funds will be used by Tez to build its credit portfolio, enhance its mobile technology platform, and secure a licence.
“Our aim is to become the primary financial service provider for the unbanked and underbanked in Pakistan,” says Nadeem Hussain, co-founder and CEO of Tez, who has more than 30 years of experience in the global financial services industry.
“Tez delivers a seamless experience for our customers, providing loans in under 15 minutes as opposed to the usual month timeline from local commercial banks. Soon, we will be able to process life and health insurance claims in a similar timeframe.”In Pakistan, more than 50% of the population is unbanked, with only 23% of the population served by formal channels, and another 24% by informal channels, according to the World Bank. Despite the fact that the country has 43 banks, low penetration of formal financial services including credit (14%), savings (12%), and insurance (2%) is persistent.
Most unbanked and underbanked consumers use a variety of informal financial tools to manage their finances, but those can be unreliable, expensive, and inefficient. With more than one-third of the population living below the poverty line, minor fluctuations in income can raise significant short-term financing needs. That can mean the difference between paying a bill at the end of the month, such as tuition, or buying groceries.Mobile phones are changing all of that. The GSMA estimates that in two years, more than 80% of Pakistan will have 3G/4G coverage. The country already boasts 28 million mobile accounts.
“New technologies, higher smartphone penetration, and falling data costs are fuelling a great momentum for financial inclusion in frontier markets such as Pakistan. Tez is leveraging this to push the boundaries of banking in the country with an all-digital offering,” says Kabir Kumar, head of policy and ecosystem building at Omidyar Network.
“Tez’s diverse team is also well-positioned to bring about the products and services that really speak to the next generation of consumers in that country,” Kumar adds.
For Accion, this is the first investment in Pakistan, “a country with a significant need for innovative products that can bring its population into the formal financial system”, says Michael Schlein, president and CEO of Accion. “By supporting Tez’s all-digital model, we can help make an important difference for millions of underserved Pakistani families and businesses.”Tez says it uses modern technologies, such as artificial intelligence (AI), to analyse consumers’ digital footprint trends, social behaviour, and consumption patterns to customise its offerings to meet each individual’s needs through“an all-encompassing, easy to use app”.Tez has already integrated with EasyPaisa, UBL Omni, and SimSim as its branchless banking partners, resulting in the largest combined agent network for its customers.
It has also partnered with two of the largest insurance companies in Pakistan – EFU Life and Jubilee General – to provide life and health coverage.
