Episode 4, Part 2 Neobanking experience for SMBs & Entrepreneurs

On this edition of the podcast, we’re joined by the co-founder and CEO of Xpence; Saad Ansari. Xpence itself is a neobank which caters to SMBs and freelancers, in order to streamline the process of banking for business. We delve into the fintech space as a whole, what it feels like to work around myriad regulations, and how Xpence began its life as a consumer neobank, before shifting gears to cater to enterprise!

Episode Transcript

Divanshu Thakral 0.00

Hey guys, welcome back to my conversation with Saad Ansari, taking our discussion ahead from where we left. 

So Saad you know, since you’re undergoing, you know, various regulation or regulatory compliance checks and all that. When do you, when do we kind of see this going live for you guys?

Saad Ansari 0:19 

Okay, cool. So I’m just, I’m just gonna take a little bit of a step back and just our market. So, the GCC for those that are listening that may not be familiar with the GCC, this is the Gulf cooperating countries that are made up of Kuwait, Bahrain, Qatar, UAE, Oman and Saudi Arabia. We have, I think, somewhere a total population of about 50 million across the GCC. And I think somewhere between hazarding, a guess about 2 million micro small and medium enterprises, the problem that we have is that we have six different regulators, and there’s no passports in between our, our market. So just because I’ve launched in the United Arab Emirates, or I have launched in Kuwait doesn’t mean that I can offer my services in Kuwait because I need the regulatory approval to do it in Kuwait. And when you compare that to say, Europe, the European Union, you have 27-26 member states, I think if you take the UK out, and then you’ve got 500 million people, you’ve got, you know, 28 million SMEs there, and you can passport. So, if you have a financial services license issued in Germany, you can offer your services in France, or if you’re regulated in Portugal, you can offer your services and this Lithuania, for example. We don’t have that luxury. And, so what we did was recognize this very early on, so we set a couple of our team members, and their job is like going in advance to other markets and getting the regulatory approvals. So we have done like, we selected five countries that we see as where we need to be. We so far have licenses and two of them. We are commercially set up in the third and going through our licensing process right now. In the fourth country, we actually just signed with the bank. And once we’re allowed to travel to that country, we can then start the incorporation process and the regulatory process. The fifth country is still sort of just finding, you know, doing sort of underground research. But today, we have launched Xpence in Bahrain. So we’re in beta testing in Bahrain at the moment. Now, when we do our initial launch, we call it the right testing launch. So this is where the regulator imposes certain restrictions on us. And, you know, we have to prove to them that we are capable of you know, managing our business and so that’s where we are in Bahrain at the moment, and inshallah I, you know, confident sort of q4 in the United Arab Emirates, we should be launching something as well.

Divanshu  3:23 

I’m so happy to hear that. I’m seeing, you know, it’s great to see when your team has worked on something and when you’ve collaborated with a customer, and who has such, you know, vision. And when things go live,I think the best feelings.

Saad 3:40

Definitely definitely is, you know, I tell you the Divanshu one of my one of the things that I enjoyed the most was when we received our visa card. So we haven’t, we were sponsored by not sponsored our we’re part of the visa FinTech Fast Track program. So our cards are issued under the visa scheme. And so the one of the nicest feelings was to go and buy, yeah, go to Starbucks, and buy a coffee with your own card, right? I mean, that’s one thing, there’s one thing like, you know, you’ve got a nice like, I don’t know, you get a black card from your bank or something. But to have your actual own bank is something else. And then the looks that we get from, you know, from people I was flying. Last couple of months ago, I was when we were doing our beta launch in Bahrain. And I was at the immigration paying for my visa. And I gave the card that said the customer, the immigration officer got the POS machine to take the payment. And then he was looking at the card. And he said, Where’s this card from, and I said, this is from  Bahrain, because we launched our first cards from Bahrain. I’ve never seen this kind of card in Bahrain before. And it’s a great feeling. You know, in your wallet, it’s that card, literally, it is your side, it’s not issued by somebody else. So that’s a great feeling. I mean, to be able to show people, it’s not a prototype anymore, it’s not a proof of concept anymore, I can go buy something with my card, I can pay online today, for example, all of our subscriptions that we that we pay for it Xpence, whether it’s ours, your bills, our AWS bill, everything goes through our cards, and we have virtual cards set up. So I can dedicate one card for this card, we will pay all our figma services from this card and will pay all our MailChimp services from so we can then set cards for different services. And it just makes handling things easier. Because before that, to be honest, before this went live in December, November last year, before that it was my personal constant every time, you know, I get like one of my colleagues calling me up and saying, hey, Saad, you know, we need to sign up for this service. And I think everyone in my team has a copy of my personal copyright, so that they can sign up for services and that so, you know, so dangerous if it gets into the wrong hands. So it’s great now that we have our own our own cards, we can sign up to the services, and they’re all prepaid. So one of the great things is that, you know, that even if somebody got a hold of your digits, the maximum damage that can be inflicted is the balance of the card, nothing more than that. If it’s a direct debit card, it can, they could potentially drain your bank account, before you know it. So that way, you know, there is that element of security. But we’ve also built in a lot of cool features, you can instantly freeze the card block the card, you can restrict the card, so just say for example, you don’t want your employees using your card at Starbucks, you can just switch off food and beverage. And if you don’t go into any restaurant, any cafe and try to use the card, it just instantly declines the transaction. So we’ve built some really cool stuff and actually seeing that working in a real live environment is just there’s no comparison.

Divanshu  7:22  

Yeah, I mean, you actually answered the next part of my question, which where I wanted to understand the emotions attached to this, and this perfectly kind of summarizes the feeling of, you know, pulling out your own card, and then getting it swiped. And then people ask what card and where does it come from? You know, it’s amazing, yeah, we completely understand that second part, you know, where do you have to kind of use your card for subscriptions and then your entire team had it? I think that’s the same with me and I completely relate with that problem. You know, there was a time that I would not know, who has my card details and where is the transaction coming from? So I used to actually message my team who did this transaction. But they never kind of, you know, use it anyway, other way. But still, I mean, there is danger still, you know,it is there.

Saad 8:18  

Yeah but you know, Divanshu the funny thing is that most major banks  have a solution to this, they have corporate cards, right? But the problem is that corporate cards are typically a credit product. So that means that the bank is lending to you in some way. So that kind of wipes out the majority of SMEs because they don’t qualify for lending. And then these, even these corporate card systems, they are still so archaic, that even if someone used it, you wouldn’t know until the end of the month that it’s been used. Here, you are being told in real time. So to give you an example, this morning, one of my colleagues called, and we use a service called Mailjet. And one of my colleagues said, Hey, I need to, we were add, so we had a new guy joined the team, he wanted to give an extra seat in Mailjet. We wanted to give him an extra seat in the mail jet. So my colleague called me up, he sent me a message and said, Okay, I’m going to, can you issue me a card for $12.99 or 12 euros 99. So I can register. Instantly, you can do it. And then within two, three minutes, message comes back that you know, so and so has use this card at Mailjet, and you know, straight away and then and then you can write a reason, you know, why this transaction took place and attach a receipt or to the thing, so then you’ve got that you’ve got that there. And, you know, one of I would say that, you know, a lot of my like a good part of my week, day month gets spent in just going over the expenses, and and looking through bank statements to see here, you know, it’s all being done automatic automatically for you in an organized way. And you can see who is spending what, there’s a lot more that we want to do with it. This is just the beginning. But these are just some of the use cases that we have today. 

Divanshu 10:21 

Absolutely. No, I think as a business owner, I completely relate to them. And I think of myself thinking, you know, what’s next? And how can we kind of connect ourselves or even associate ourselves with the, you know, with the neobank? Till the time you don’t come to India?

Saad 10:39 

Yeah, well! 

I mean, look, I know, I do know of a couple of guys, I know. I believe there’s one called Happay. I’ve not used them, but I know that they are big in the corporate card space. I don’t know if they might do prepaid, I think Open does it as well. Yes, yeah. And Tide definitely. In the UK, do it. I don’t know whether they will do that launch in India. But you know, the corporate space is really the corporate card space is a really interesting one. And you’ll see that there are some, I will call that call the neobanks. But there are some fintechs that are solely focused on corporate cards, like one of my favorite ones is a Danish one called Clio. They have a really nice system. And then there’s a French one called Spendesk. They’re quite cool. But these guys really focus on just the spend side of things. Whereas what we’re looking at is a holistic solution. So it’s not just the corporate spends. Corporate spends is one part of what we do. So you’ve got banking, you’ve then got your cards, you’ve got invoicing and billing. There’s a few different things that are being created at the moment. But yeah, one of I guess my probably my favorite product in the market and kind of like I wouldn’t say who we aspire to be. But somebody that we look to as a leader within this is a French neobank, SMEs called Qonto. I think those guys are really doing a great job in being able to serve from a single freelancer to a large, large enterprise, I think that’s the kind of model that we are looking to get going in the Gulf. 

Divanshu  12:25  

Nice. I’ve heard of Qonto. I mean, the solution is pretty much you know, something that you would like to, you know, kind of bring to your geography. 

Saad  12:47 

Exactly yes.

Divanshu  12:49 

Yes so Saad, I mean, you chose experience design, you know, right, in the early stages of building your product, right? Not a lot of startup founders do that, they when they building product, they kind of, they take an approach, very lean and they’re taking the, you know, using design thinking at a later stage, you know, in the broaden you one of those entrepreneurs that believed in the kind of power of design and what design can bring in And, you know, at this stage, you know, I would like to understand even though the product is not out there, as in any impact impacts that you would like to share, you know, that that the design helped you with, with ways to design vis-a-vis wasn’t like that the way it is right now. And I know it is good because I know you as an entrepreneur, you focus on details, you focus on very minute, you know, aspects of a particular product. So design is very great, that, you know, it’s a very great output that you have right now.

Saad 13:55

Thank you Divanshu.It’s a really good question. I don’t really know where to begin on this one. I think that different schools of thought. There’s quote that I love, I think it’s attributed to Reed Hoffman and he says something like, if you’re not embarrassed by your first by your MVP or your first release, then you’ve released too late or something like that. I kind of get the idea of being lean and failing fast and, get something out there, try it. But if we go back to what we were talking about earlier with the banking services and people’s trust and things. I think that today we today where we are in 2021 with how, you know, people are so used to now mobile

applications and doing everything on the mobile and the key word is experienced because as I’ve named quite a few different neobanks and services, you know, and at the core, there is not much differentiating them. Right. They allow you to manage your spend. You can issue cards,et cetera. So how do you differentiate, say a spend desk from a PO. Then it comes down to experience and, and it’s the same with banks. I mean what’s the difference between you opening an account with Citi, with Citibank or opening an account with ICICI or, or what other banks or RBI or whoever it might be? Why, why do you go to one and not the other? And it really does come down to that it’s the experience. And so we put experience at the let’s say, at the center of everything we do that everything has to be built around delivering, um, a great customer experience. 

And, that’s why I think that when we began, we wanted to show because onboarding at the time. So when we’re talking about 2019, so two years ago, everyone like investors, stakeholders, banks, and regulators would always want to know about onboarding because that’s where you, that’s your first line of defense, right? Are you letting it on the right or wrong people into your platform? And it was such a critical component. That we wanted to make sure that it is something that has not been seen in our market. It has to be, it cannot be the same as what already exists. And that’s why, I think we took that approach.

And, and in general, you know I want things to look beautiful. I mean, I do understand that we need to be lean and we need to release quickly and change. So now slowly the team is going into that more sort of iterative mode and being leaner. Working in sprint. So, now that we’ve got a design system in place, the idea is that we do tweaks to the design system, but we’re not going back and changing the whole thing. Then I think at one point once we built the majority of the product, get that user feedback. Then we’ll probably do design 2.0 and go back and look at, you know, where we can improve it. But I think one of,for me, when it came to design, I think one of the most important things was consistency that you maintain throughout the application.

So if you do something in one place, then make sure that the experience is consistent. Don’t introduce a whole new thing. And the other thing was that, although I’m not, I don’t believe in copying and cheating but I think that we can learn from others. You know, and we’re so used to using things like Instagram and Facebook and Snapchat and, you know, are there elements that we can borrow from there or improve upon them or adapt them to our industry and application. And that’s one of the things that we’ve been looking at as well, too, to ensure that people are familiar, because if we designed something that was so out of this world and new, you know, it might excite the technophiles. But it might, you know, completely put off the 99% of our other customers. So we’ve had to, you have to put that experience there at the center, the heart of, of what you’re building, at least that’s my, um, that’s my belief.

Divanshu 18:49I am completely in sync with your beliefs. I think right now, the whole situation, the whole scenario where products are so advanced and the experience that people are kind of using on a daily basis, it’s gone so ahead that taking a product out with taking an experience that is sublime won’t work. I mean, you know, what you quoted makes sense, but today’s date. It is very competitive to kind of hold that quote true. I think big lean is important, but ensuring that experience at the center of everything is more important, I believe. 

Saad 19:33


True. I’m, yeah, I’m firmly in that camp as well.

Divanshu 19:36

Right. So, you know, coming to my last. You know, kind of part of this podcast here. And I want to understand our, not actually understand. I mean, you’ve been too generous with the entire journey and the entire information that you’ve helped us with then helping our audience understand about this domain. You know, as an entrepreneur you’ve had multiple ventures. As an entrepreneur, if you would like to give a piece of advice, to our listeners, to people who are building new products, people who are running their own businesses or startup founders, if there’s a piece of advice you would like to give, what would it be?

Saad 20:19

Good question. I think if, you know, earlier you had a question about emotions and I said to you that the great emotion of using your own card. Finally, seeing your products in use. But, you know, the highs are one thing. I think anyone that’s going to dip their toes into the sort of entrepreneurial sea or ocean needs to understand that. It’s not, it’s not an easy journey. So when you kind of look at it, The Zuckerbergs and the offices and Elon Musk’s of the world today, they are very, very successful. Remember they are three people out of 7 billion people. Not everyone gets there as though we can aspire to that kind of success.

But behind that so much hard work so much. Blood, sweat and tears go into it. And that’s often hidden. I, you know, one of the things that I do quite regularly, as I read about other entrepreneurs whether they’ve been successes or failures from all parts of the world, and I see that, hey, you know, my journey so far is not very different.

The kind of lows that they’ve gone through where people talk about, you know, having to exist on eating ramen or, going to great lengths to get their product to where they wanted to be. Resilience and persistence is important. But, but you also, at the same time, you know, and linking back to pivoting earlier in our conversation that you need to, you, can’t also be stubborn and just keep going in one direction. You need to be able to read the signals that you need even, or not. So I think, you know, it’s not a light, it’s not a, it’s not an easy journey. It’s a very tough journey. People will, you know, people will never understand the less you speak to another entrepreneur. Others will not understand. People will say, why are you leaving your job? Or why don’t you go and get a job? And you know, the kind of disdain that people look at entrepreneurs with, like when you say I have a startup, they think he was some kind of, you know, jobless loser. They don’t actually realize what you’re trying to do until you become successful. And then they’re like, ah, okay. It takes time to get things going. I think one of my pieces of advice would be persistence. I definitely, you know, don’t be an island, you need support. Reach out to fellow entrepreneurs and I’ve always found other entrepreneurs are quite open to share their experience and their advice. I have a very good friend of mine who, um, you know, he’s from, he’s based here in Dubai, originally he’s from Kerala. Runs a startup here in Dubai and we meet up once a week for coffee in the evening. And we just do, we vent to one another about all the things that, what we will find is that whilst the venting is, oh, you know what, I’ve been through that.

And this is how I handled it. And if I were to do that with anyone else, I do that with some of my good friends that are in the corporate world. They just don’t understand. Right. They don’t understand where you’re coming from. So you don’t get yourself that right support system and you need good health to be able to manage the stress and the emotional rollercoaster of what running a startup is. That would be my overarching need to constantly learn constantly, every interaction with somebody is a learning experience, you know? Whether you’re pitching and you are listening to investor;questions, each of those, you know, learn from what they learned from what they’re telling you or what they’re asking you and experiment constantly experiment and change things. You’re constantly tweaking your things to get better and better and better. That’s what, if you, you know, since we’re both from the sub-continent, and cricket is passionate in the past time, the differences between playing 2020 and a test match entrepreneurship is a test match, right? You’re not going to go after every single ball and hit it for six. The aim of the game is to stay in, right. It’s get through those five days. As a startup,get past the five years. Right? 

So that would be a little bit of my advice there. 

Divanshu 25:08

Beautifully put there, Saad.

I think  when you were saying all this, all this was resonating in my head. You know, I probably had the same emotion and the same journey. Stages where your friends, especially in the corporate, they don’t understand why are you taking this journey? What, you know, what lies ahead of you? You don’t know. And I completely understand the whole emotional trauma, or I would say that the training that they know that happens at the end of the day.

So, but the next day you wake up and you want to fire it again. So that’s the beauty of being an entrepreneur, I think. And you’ve really put it in a beautiful manner. 

Saad 25:48 

Thank you. 

Divanshu 25:49

That was such an insightful conversation. Businesses and products get impacted through design in ways more than what we can imagine.

If you would like to listen to such conversations, stay tuned, subscribe to Business & UX Story. Till then stay safe and keep listening. Thank you.

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