At an estimated below two percent average household savings, Saudi Arabia is seen staring at a savings crisis, paving the way for fintech saving platforms such as Hakbah to step in to tackle the crisis with digital products to promote long-term financial habits.
The home-grown startup Hakbah and several other fintechs are currently in the middle of launching an array of innovative products to digitize the $6 billion ROSCA (Rotating Savings and Credit Associations) market in Saudi Arabia, and also in the wider Middle East region, for a start to promote and grow saving habits among citizens.
“Hakbah is set up with the sole aim of tackling the savings crisis in Saudi Arabia initially – and maybe in the wider region later on – by innovatively digitizing financial habits, leveraging data, needs and behaviours,” Naif AbuSaida, who founded the startup, told Arabian Business.
“Our platform strengthens financial inclusion via social savings – and a solid value proposition – which is seeing an overwhelming response already, notching up as many as 120,000 active users,” AbuSaida said.
Industry insiders said this segment is already seeing the birth of more such platforms in the country, with few such ventures already up and running.
Majority of Saudis have no emergency savings
AbuSaida said a recent survey has found that as much as 70 percent of Saudis have no emergency savings.
Besides, the gender gap in savings in the country is also highly skewed, with 40 percent in favour of males.
The underdeveloped social safety net and pension systems, coupled with high personal debt, inflation and interest rates are the factors seen making it very difficult for Saudi households to save.
Additionally, the region has a young population, which is relatively reliant on dependents, leading to lower savings rates as households need to allocate more income to consumption.
“These factors have resulted in individuals and households not prioritizing savings for the future,” AbuSaida said.
The Saudi authorities have recently launched several initiatives to reverse the trend. Saudi Development Bank’s Zood Zood savings programme is among the many government-led initiatives to increase savings and financial literacy across the region.
Industry insiders said what fintech platforms such as Hakbah and others are focusing on is to increase savings mainly for the under-banked population, making traditional saving habits effortless, seamless, and personalized with their digital products.
“As much as 20 percent of our customer base is first time users in savings groups, which means we are expanding savings to a totally new segment,” the Hakbah founder said.
Platforms driving millions of savings
The drive by the fintech platforms are said to be leading to a significant pick up in the savings trend in Saudi Arabia in the recent months and years.
Hakbah alone is estimated to have helped as many as 18,000 customers to save over $35 million, while it mopped up an organic growth of 20 times in 2022.
The startup’s first product is focused on social savings – a group savings product meant to be used for meeting members’ financial needs – is gaining fast popularity, with the membership numbers seeing huge growth month after month.
“Group savings has an important factor – social solidarity – holding people more accountable to saving,” AbuSaida said.
He said the venture is currently focused on increasing its footprint, and impact, within Saudi Arabia, with its recently raised $2 million capital to be used for enhancing its savings engine algorithm to optimally serve customers seeking to save in an innovative, accessible manner.
Global Ventures, MENA’s leading venture capital (VC) firm, and DIFC-based Aditum Investment Management participated in the funding round, providing Hakbah with its first institutional capital.
AbuSaida also revealed plans for a full Series A fundraising round later this to support the venture’s growth plans.
“As SAMA supported innovation in savings products and working to increase financial savings in Saudi, Hakbah is seeing a golden opportunity in this sector and we will capitalize it,” he said.
“The savings sector has a vast market opportunity in Saudi Arabia,” AbuSaida added.
Follow us on
