Pakistan based fintech start-up, TAG Innovation Pvt. will start offering financial services in the month of June.
It will launch with a limited number of customers and will start commercial operations in two to three months after it gets approval from the State Bank of Pakistan (SBP), Chief Executive Officer Talal Gondal said in an interview.
The startup focuses on having millions of customers for its digital wallets in the first few years under its electronic money institution license, Talal said.
The company has raised about $5.5 million in pre-seed funding, making it one of five biggest deals in the Middle East, Africa and Pakistan region, according to data from Crunchbase. The funding round was led by Quiet Capital Management, Liberty City Ventures and Fatima Gobi Ventures. TAG also received strategic angel investments from general partners of Andreessen Horowitz, Khosla Ventures LLC, Cannan Partners and Mercury’s Immad Akhund.
TAG joins other digital payment start-ups in raising funds as digital banks take off in emerging markets where millions lack access to banking services. Razorpay, an Indian startup that facilitates digital payments, said in April it was raising $160 million, while Egyptian digital banking app Telda raised $5m last month.
Pakistan has the third largest unbanked adult population globally with about 100m adults without a bank account, according to the World Bank. About 70% of the population doesn’t have a bank account, according to Raza Jafri, head of equities at Intermarket Securities Ltd. Potential customers complain about the lengthy documentation process and multiple branch visits needed to open an account.
In Pakistan, the system is broken,” said Gondal. “Some banks don’t even have a banking app. It’s that bad.”
TAG plans to make the process simple with potential customers needing just a copy of their national identification card and a selfie. Accounts should be opened within three minutes, Gondal said.
The startup received a provisional electronic money institution license from the central bank last year that allows basic banking services such as cash transfer, online shopping and a debit card.
SBP Governor Reza Baqir said in April that he welcomes digital banks in the country, including full-fledged digital banks and smaller ones to constructively shape the industry.