Financial inclusion plays a pivotal role in fostering inclusive growth and bolstering overall economic development. Over the past decade, there has been a remarkable transformation driven by technological advancements and innovation.
In recent years, several FinTech start-ups and mobile payment platforms have emerged as catalysts, enabling them to extend basic financial services to a significant portion of low-wage workers who have traditionally been excluded from the banking system.
One of these start-ups is the UAE-based digital payroll platform myZoi, which focuses on financial inclusion and smart money skills for the underbanked. It began its journey three years ago, in the middle of the Covid-19 pandemic, to address the challenges faced by those on the fringes of the formal financial system.
While working in Dubai in 2020-2021 as the head of cash management and correspondent banking at Emirates NBD, entrepreneur Syed Ali, now chief executive of myZoi, was introduced to co-founder Christian Buchholz, now the company’s chief innovation officer.
Mr Buchholz was leading design and innovation initiatives of SC Ventures, the FinTech investment and ventures arm of Standard Chartered, across several regions.
During a visit to Bangladesh as part of his research, Mr Buchholz identified the issue of financial exclusion, which primarily affected families of migrant workers employed in the regions such as the Middle East.
The migrant workers and their families faced financial exclusion, because neither party had access to bank accounts. “This lack of financial access created significant challenges when it came to transferring money between them,” Mr Ali says.
“These individuals who work in the UAE and other parts of the Middle East, as well as around the world, are truly remarkable. Despite coming from impoverished backgrounds, they are able to secure employment and support their families back home.”
It was Mr Buchholz who initially came up with the concept and brought other founders together under the SC Ventures platform to develop myZoi.
For Mr Ali, who has worked for more than 25 years in banking and financial services in the Middle East, South Asia, and the Asia Pacific regions, it was time to use his experience to develop digital solutions aimed at the financial inclusion of the underbanked.
With initial funding from SC Ventures in early 2021, myZoi, whose holding company Financial Inclusion Technologies has its headquarters in the Abu Dhabi Global Market, officially began building its platform to drive new solutions for underbanked workers.
The co-founders discovered the initial issue was the absence of a bank account.
“How can one begin to plan for financial freedom without the ability to conduct basic transactions in a commercially effective, cost-efficient, and convenient manner? Saving money, investing, and other financial activities become impossible without this essential tool,” Mr Ali says.
He explains that the team chose to start in the UAE due to its unique demographic, since “90 per cent of the population are expats, and there's a sizeable proportion of the population who are either unbanked or underbanked”.
As the team did more research, they discovered there are significant gaps in the market not only for blue-collar migrant workers but also for the companies that employ them.
“In the UAE, there is a system known as the wage protection system, which mandates that employers must deposit their employees' salaries into a bank account or an equivalent. However, due to the fact that salaries below Dh5,000 [$1,360] are not attractive to banks, many are hesitant to open accounts for these individuals,” he says.
“While some banks do provide access to financial services, comprehensive access for this segment remains limited. This poses a challenge for corporates as well.”
While there are companies in the market offering payroll cards to address this issue, not everyone “truly promotes” financial inclusion, he adds.
“While there is competition in the market, the current landscape is somewhat fragmented in terms of meeting the needs of customers. Some companies are primarily focused on payroll services, while others specialise in cross-border transfers or other financial services,” Mr Ali says.
The solution myZoi came up with is a digital wallet, accessible through a smartphone app. Its approach is positioned as a business-to-business-to-consumer (B2B2C) solution, targeting companies that employ blue-collar migrant workers.
“Once a company mandates myZoi’s services, the team can onboard their employees," he says. "This allows them to receive their salaries directly into our digital wallet, conduct domestic transactions, and send money back home efficiently and cost-effectively.”
MyZoi “offers a comprehensive solution that covers all aspects of financial management. From corporate payroll services to facilitating international money transfers, myZoi aims to bridge the gaps in the market”, he adds.
Financial inclusion means that people and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way, the World Bank says.
Financial inclusion has been identified as an enabler for seven of the UN’s 17 Sustainable Development Goals.
The World Bank also considers financial inclusion to be key to tackling extreme poverty and boosting shared prosperity. Financial access facilitates day-to-day living and helps families and businesses to plan for long-term goals and unexpected emergencies.
It says the number of adults without access to an account has declined from 2.5 billion in 2011 to 1.4 billion in 2021. As of 2021, 76 per cent of the world’s adult population had an account.
About 22 per cent of the Gulf's population is unbanked, compared with 60 per cent in North Africa, 2021 research by consultancy Strategy& shows.
Meanwhile, 79 per cent of young adults in the Mena region are unbanked and 72 per cent of the poorest people can benefit from financial inclusion, the Arab Monetary Fund says.
To secure a more equitable future, the UAE Central Bank made financial inclusion one of its key areas of focus, unveiling an initiative in February last year.
The programme is aimed at accelerating the digital transformation of the financial services sector, with the goal to make key financial products more accessible to UAE residents.
“MyZoi’s approach to developing this solution was to minimise the number of intermediaries involved in the process, as this can lead to increased costs for sending money internationally,” Mr Ali says.
The company holds two licences from the UAE Central Bank. The first is the stored value facilities licence, which authorises it to issue digital wallets that are an alternative to bank accounts.
The second is the retail payment services and card schemes licence, enabling myZoi to facilitate payments, transfers and provide cards for cash withdrawals at ATMs and domestic transactions.
Mr Ali says that by being part of the Standard Chartered group, myZoi’s “strong relationships with financial institutions worldwide” have allowed the team to establish their settlement partnerships and payment rails in key markets.
In the UAE, a significant portion of blue-collar migrant workers are from countries including India, Pakistan, Bangladesh, Nepal and the Philippines.
In some of these core markets, myZoi forged direct settlement partnerships with local banks, Mr Ali says, enabling his team to facilitate “seamless and cost-effective money transfers for customers in destination countries”.
He says the company has not yet established partnerships with any banks to provide lending solutions, but it is a priority on the team’s road map as they explore potential partnerships.
The company aims to officially launch its services soon after conducting live beta testing with corporate clients and individual users over the past few months. This marks the beginning of its journey as a full-fledged service provider.
It has already secured partnerships with several corporates and has provided payroll services, domestic transactions and cross-border transfers to nearly 1,000 users during this testing phase, Mr Ali says.
The company’s revenue model primarily revolves around earning fees and FX margins on payments and transfers. Similar to standard practices for cross-border home transfers, myZoi’s services will include fees and currency conversion margins to generate revenue from.
In September, the company secured its second round of funding totalling $14 million from a consortium consisting of SBI, a Japanese VC firm and SC Ventures. This investment marks a significant milestone for the team because it is their first external funding round that has been publicly disclosed.
While SC Ventures remains a majority shareholder, Mr Ali says myZoi is open to engaging with strategic external investors who align with its business goals. The team is also in discussions with interested parties to explore potential partnerships that will further enhance its market position.
The company is currently providing services to users primarily in the UAE, with plans to expand into other markets within the Gulf region. MyZoi is also exploring markets with a large blue-collar migrant worker population or underbanked populations.
Going forward, the goal is to build scale and make a positive impact in these underserved communities as a purpose-driven venture, he says.
Q&A with Syed Ali and Christian Buchholz, co-founders of myZoi
What already successful start-up do you wish you had started?
Mr Ali: Most companies would have been start-ups at some point in time. I admire those that have had a big, positive impact on the world. There are so many such examples, but I really admire Steve Jobs’s vision behind Apple. It would have been really cool to start Apple.
What new skills have you learnt from launching your venture?
Mr Buchholz: I’m coming from a design-thinking background and launching my venture has taught me a multitude of new skills in the execution of larger scale development and the importance and complexity of compliance for a financial institution.
What is your next big dream to make happen?
Mr Ali: I feel that enabling financial inclusion and digital literacy for the underserved are milestones on the way to their broader socio-economic upliftment. We are planning to expand myZoi’s mission to benefit our users’ families and communities and create a movement that makes a meaningful difference to people’s lives around the world.
If you could start all over again, what would you do differently?
Mr Buchholz: I would place greater emphasis on meticulous planning and selecting the right vendors from the get-go. This would have sped up some of our development processes and choosing partners who align with our vision and can deliver high-quality services to support our growth effectively.
