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Friday, April 12, 2024

HBL inks landmark investment in Finja, Pakistan’s leading fintech startup

HBL becomes the first bank in Pakistan to invest in a digital fintech startup with its Rs. 176 Million (USD 1.15 Million) participation in the last tranche of Finja’s Rs. 1.56 billion (USD10.15 Million) Series A1 round.

HBL becomes the first bank in Pakistan to invest in a digital fintech startup with its Rs176 Million (USD 1.15 Million) participation in the last tranche of Finja’s Rs1.56 billion (USD10.15 Million) Series A1 round.

Muhammad Aurangzeb, President & CEO – HBL, and Qasif Shahid, CEO and Co-Founder Finja signed the two organizations’ agreement. Umer Munawar, COO and Co-Founder, and Monis Rahman, Chairman and Co-Founder were also present at the occasion.

HBL joins an impressive list of leading global fintech funds that have invested in Finja including BeeNext, Vostok Emerging Finance, Quona Capital, and ICU Ventures. All investors from previous rounds topped up their investment in Finja’s Series A1 round.

For HBL, an investment in Finja serves two of the bank’s strategic priorities, namely, making investments into Digital Financial Inclusion and Development Finance companies, especially ones making an impact in agriculture and SMEs as these are the backbone of the economy, and proactively reinventing HBL to become a “technology company with a banking license”.

Since the beginning of the Covid-19 pandemic in April last year, Finja has scaled its digital lending portfolio by 550% disbursing over 50,000 digital loans to Micro, Small, and Medium Enterprises (MSMEs).

Despite being the backbone of the economy, small businesses in Pakistan have traditionally not been able to obtain credit to grow.

Message from CEO and Chairman Finja

“We are elated to have HBL participate in this funding round. Our ground-breaking success in digitally scoring undocumented small businesses has resulted in a 64% month-on-month portfolio growth for us since the outbreak of the pandemic earlier this year. Undoubtedly, HBL’s financial clout, massive network, and progressive leadership will help us elevate the country’s most important segment, the SMEs,” said Qasif Shahid, CEO and Co-Founder of Finja.

“These loans are critical for Pakistan’s economic growth. Our productive loans result in a 40% increase in SME revenue with less than a 1% default rate,” added Monis Rahman, Chairman, and Co-Founder Finja.

Message from CEO HBL

Muhammad Aurangzeb, President & CEO – HBL, commenting on the occasion said, “We are delighted to be investing in FINJA. Pakistan’s fintech landscape has immense opportunities.”

He added, “At HBL we believe that by making this investment we are not only developing the Startup ecosystem, but it will also pave the way for Pakistan to play a bigger role in the fintech space globally. SME lending is the future and therefore we are investing in Finja which enjoys a first-mover advantage over the market in digitally lending to SMEs in this country.”

Fintech in Pakistan

Fintech is the term given to financial service firms whose products or services are built upon technology, usually implying something innovative in the field. It involves removing barriers and improving accessibility

Around the globe, this emerging sector has impacted many fields like Banking, Insurance, Loans, Personal Finance, Electric Payments, Loans, Venture Capital, and Wealth Management to name a few.

According to a recent report, the first quarter of 2021 has been the best for FinTech funding globally, surpassing Q2’18’s previous record, which included Ant Group’s(Alibaba) $14B funding round. Between 614 deals, VC-backed fintech companies successfully raised $22.8 billion. This represents 15% and 98% year-over-year (YoY) growth, respectively.

Finja in Pakistan 

Similarly, Pakistan’s fintech industry is developing too, with organizations like Finja microfinance bank, which is banking the unbanked population of Pakistan and providing loans to the small traders and merchants digitally.

Finja Fintech

In partnering with commercial banks and telecom companies, Finja is increasing its reach to the mass population of Pakistan, 77 percent of whom are still unbanked.

On the other hand, HBL is Pakistan’s largest bank, not just by assets (Rs3.6 trillion), the data is from the end of 2QFY21, but also by lending (Rs1.1 trillion), deposits (Rs 2.7 trillion), customer base (30 million), bank branches (1,709), and small and medium-sized enterprises finance (Rs50 billion).

In leading the financial sector of Pakistan into the digital realm Habib Bank Limited offers various digital services like HBL Mobile, HBL’s own interactive mobile app, HBL InternetBanking, HBL WhatsApp Banking. These are all an effort to enter the digital space.