Press release: Tez Financial Services Becomes the First Pakistani Startup to Raise $1.1 Million in Seed Round Led by Omidyar Network
Tez Financial Services, the first fully digital Non-Bank Microfinance Company (NBMFC) in Pakistan, today announced that it has raised USD$1.1 million in a seed round led by Omidyar Network, the impact investment firm established by Pierre Omidyar, the founder of eBay. Other investors on this round include Accion Venture Lab, the seed-stage investment initiative of global nonprofit Accion, and Planet N. Funds will help the company build its credit portfolio, enhance its mobile technology platform, and secure the company’s NBMFC license.
You can learn more about the challenge, opportunity, and impact in this video.
“Our aim is to become the primary financial service provider for the unbanked and underbanked in Pakistan,” said 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 percent of the population is unbanked, with only 23 percent of the population served by formal channels, and another 24 percent 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 percent of Pakistan will have 3G/4G coverage. The country already boasts 28 million mobile accounts—an indicator of consumers’ readiness to adopt digital financial services, especially in remote areas not served by traditional banking.
“New technologies, higher smartphone penetration, and falling data costs are fueling 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,” said 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.”
“Tez marks our first investment in Pakistan, a country with a significant need for innovative products that can bring its population into the formal financial system,” said 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 uses some of the latest technologies, such as artificial intelligence, to analyze consumers’ digital footprint trends, social behavior, and consumption patterns in order to customize its offerings to meet each individual’s needs through an all-encompassing, easy to use app, as follows:
- Cater to their short-term liquidity needs through Tez Advance
- Enable them to park their funds in short-term savings avenues through community-led savings (Digital ROSCAs) through Tez Committee
- Provide them security and protection via health and term-life insurance Tez Bima
- Economically empower them to grow their wealth by investing in tailored investment plans through Tez Sarmaya
Tez has integrated with EasyPaisa, UBL Omni, and SimSim as its branchless banking partners, resulting in the largest combined agent network for its customers. Tez has also partnered with two of the largest insurance companies in Pakistan—EFU Life and Jubilee General—to provide life and health coverage. VentureDive is the technology partner, fostering technological innovation at a global scale, with offices in Pakistan, UAE, and Germany. Tez will soon launch additional products that will help further advance financial inclusion in Pakistan.
Photo courtesy of Pabak Sarkar.