EXCLUSIVE: “Helping Hands” – Naif AbuSaida, Hakbah in ‘The Insurtech Magazine’

Hakbah Founder Naif AbuSaida explains how wealthtech meets insurtech in Saudi Arabia and opens new markets

As an expression of his, and his country’s, ambition to transform the Saudi Arabian economy, in 2016 Crown Prince Mohammed bin Salman announced the publication of Saudi Vision 2030. The document set out a long-term strategy to bolster the country’s fiscal position and diversify its economy from one that relied heavily on its natural resource of oil by the year 2030.

The transformation would create a ‘vibrant society’ through urbanisation, culture and entertainment, and laid out plans to encourage foreign investment, empower women in the workforce, and foster international competitiveness. It also led to the creation of the Financial Sector Development Programme (FSDP). The FSDP has become the cornerstone of the financial sector in Saudi Arabia over the past six years, promoting income diversification, boosting savings, and offering various financing and investment opportunities.

The government itself has stated: “The programme is strengthening financial sector institutions, advancing the financial market, encouraging savings, and fostering the growth of fintech startups in their pursuit of a world-leading financial sector.”

It created opportunities to tackle many areas where financial provision was lacking or products and systems could be improved: including addressing something of a savings crisis. The provision of free healthcare for all in the Kingdom and the social safety net of families providing for each other in times of need meant that saving was not a cultural habit. The figures make stark reading – 70 per cent of Saudi citizens lacked emergency savings, and the percentage of households saving regularly was just 1.6 per cent.

So it is within this dynamic that one fintech, Hakbah, came up with the idea of digitising ‘jameya’ – the discipline of ‘social saving’, commonly found in countries with strong family or tribal relationships, where members regularly contribute money to a common pot, with each taking turns to receive a lump sum from it. Crucially, there is no payment of interest, as interest, or ‘riba’, is not permitted under Sharia law.

Founded in late 2018 by Naif AbuSaida, and launched in the summer of 2020, Hakbah is an alternative savings platform with its first product, a mobile app for groups of family or community-based savers, now boasting more than 800,000 users. Some 70 per cent of these are between 21 and 35 years old. The platform has helped 80,000 customers save more than US$200million combined.

AbuSaida explains the genesis of the platform: “We looked at how people do savings traditionally, and one way is via groups,” he says. “These savings groups exist in different parts of the world and are called different things – the general term for them is ROSCAs (Rotating Savings and Credit Associations) – but they all operate in largely the same way [members all chip in regularly and take turns withdrawing accumulated sums].

“We wanted to build on those systems, encourage the ‘habit’ of taking part and use digital to drive the whole process.”

AbuSaida believes that the success of Hakbah is also very much down to the fertile environment that fintechs now find in the country.

“We enjoyed organic growth with zero advertising spend. It was pure word of mouth because we touched what people really wanted”

“The target, based on the FSDP, was for 525 fintech startups to exist by 2030. Today, we are already at 224 fintechs, exceeding the H2 2024 target of 168. And that is because of the ecosystem,” he says. “The digital infrastructure in Saudi Arabia is more advanced than Europe, US, or any other country. You can buy something via a mobile app and have it delivered the next day. You can do your entire loan or mortgage online. You can also attend a court virtually with a judge. Everything is digital here.”

Saudi Arabia has a 99 per cent internet penetration rate and one of the fastest mobile internet speeds in the world, at 215 Mbps.

“This is part of the enablement from the government, for whom innovation is very, very important,” says AbuSaida. “We go into meetings with them and they approve what we have presented, but then they ask ‘is that all? What else do you have?’ So, we then take them through what we are working on for the future. They give us initial approval, encourage us to officially start it and apply for final approval. It’s an exciting space to be in at the moment.”

Collaboration is key

Hakbah’s strategy involves forming alliances with industry leaders like Riyad Bank, Fransi Bank, ANB and low-cost airline Flynas. In September of this year, it announced another – with Tawuniya, the leading insurance company in Saudi Arabia. This collaboration provides Hakbah’s customers with comprehensive life insurance coverage during their jameya savings cycle. Extensive benefits include coverage for death by any cause and ‘passive war risk’. The enhanced financial security is designed to eliminate concerns related to unexpected future events and how that might impact other members of the family.

The two products from one provider align perfectly with Vision 2030 in supporting the Saudi government’s goal of increasing savings rates and promoting financial inclusion. It’s also Hakbah’s mission – ‘to empower individuals and drive positive economic change’ – according to AbuSaida, whose LinkedIn profile backs that up. His personal tagline is ‘shaping the future’.

Making the case for insurance is hard in Saudi Arabia. As in the UK, health care, free at the point of delivery, extends to everyone, so only the wealthy take out health policies. In times of crisis, the cultural norm anyway is for family or tribe to rally round. And when it comes to life insurance, for some time it was thought to be incompatible with Shariah principles. It’s not, says AbuSaida, but it’s held it back and with ‘too many industries, domains or verticals still not covered by insurance’, he believes it needs a trusted intermediary to introduce them.

“Sharia compliance and life insurance can work for Muslim society, but how many people have life insurance? The culture is not there,” he says.“So wealthtechs like ourselves have a great opportunity to play that role as an agent, if they have a strong proposal, including risk, customer protection, financial innovation, and social impact.

“The first thing we did when we partnered with Tawuniya was give life insurance to all our customers for free for the duration of the savings group, linked to the total amount saved. So if you join the savings group with a 50,000 or 60,000 riyal savings bond, you have this policy for the duration of the savings. Whatever happens to you, your family will not suffer.

“This is just an entry point. Insurance companies like it because overnight they will increase their customer base with Hakbah customers. And they can renew the insurance either direct with the insurer or within Hakbah.”

Tech can’t hope to change the insurance industry here or elsewhere, says AbuSaida, unless the tech builders really understand the nature of insurance and the community in which it’s being offered.

“It doesn’t require only an app. You need to get to grips with the fundamentals,” he says. “Life insurance, for example, in Saudi Arabia is an area where insurers don’t have good penetration because culturally it is not a fit. Here, fintechs have a great opportunity to complement a big insurance company’s offering right at the start of the journey.”

In Hakbah’s case, bolting life insurance onto a culturally familiar financial product like jameya was the key to unlocking a new market for its insurance partner.

“We designed a product from the beginning to be aligned with the behaviour and psychology of people,” says AbuSaida. “People just like to help each other. In the savings group, every month, a human being with their financial need – regardless of whether they are a housewife, student, employer or whoever – is given help, and that is powerful. You are doing good with your money without losing your money. And this means that people tell other people about their experience, without there being a financial incentive or reward.

“Because of that, we enjoyed organic growth with zero dollars spent on advertising. It was pure word of mouth because we touched what people really wanted.

This article was published in The Insurtech Magazine Issue 11, Page 21-22