Digital platform Yap says it’s able to scale up faster than online banks tied to legacy lenders.
NEOBANKS GAINED GROUND around the world as they promised a digital revolution in the way we manage our money. A new wave of fintech startups offer customers the opportunity to skip time-consuming visits to branches, transact via their smartphones, and skip excessive fees.
So far, fully-fledged digital banks have been slower to take off in the Gulf. While European startups have picked up millions of customers, a competitive market and tough regulatory landscape in the Gulf have made it difficult for standalone digital banks to gain a license and compete with legacy players. Although some UAE banks have launched their own offerings to fill the void, these products have often been viewed as extensions of traditional banks rather than separate digital-first entities comparable to Revolut in Europe, for example, which has its own banking license.
But a new Dubai-based neobank thinks it can be the first startup in the UAE to spark a significant change in the way we bank. Yap launched its digital banking platform on Sunday, offering users bank accounts, Mastercard debit cards, and a “360-degree view” of their spending habits. The company does not have its own banking license, but has partnered with RAK Bank to provide international bank account numbers. Yap says however that it is independent from RAK Bank and that it is in talks to expand into more countries through partnerships with other banks.
Yap’s pitch isn’t exactly breaking news in the Gulf, according to Ambareen Musa, head of financial comparison site Souqalmal.com. She points to Liv and Mashreq Neo, digital banking platforms launched by Emirates NBD and Mashreq Bank, as examples. Other neobank projects are also in the works: last October, the Abu Dhabi state-owned company ADQ (which holds some of the UAE’s biggest assets, including Abu Dhabi Airport) announced plans to set up an unnamed neobank, with an initial capital of $544 million, using a banking license of First Abu Dhabi Bank. Dubai Holding has also announced similar plans.
But Yap’s independence is key in allowing it to compete with services like Liv and Mashreq Neo, according to Yap CEO Marwan Hachem, who says the startup is able to scale its offerings faster (and better) than the digital banks tied to legacy banks. He points to companies like Revolut and Chime in the US as examples of startups that are able to quickly build and scale their offerings around the needs of customers; Yap plans to do the same with customers in the Middle East and Africa.
“We built it to the need of local customers, and we spent a lot of effort on the user experience,” says Katral-Nada Hassan, Yap’s head of product experience and innovation.
One example stems from Hachem’s own efforts to teach his teenage daughter financial literacy. UAE banks require customers to be at least 21 years old before they open a bank account, so Yap will be rolling out a feature that allows customers to create “sub-accounts” for their children. These features all tie into the startup’s plan to help customers dive into real-time data about how they spend.
Yap says that around 25,000 customers have already registered to come onboard the platform. The company plans to stagger account registrations over the next few weeks, while it rolls out new features.