Arab Finance: The financial landscape in Egypt is rapidly evolving, with fintech startups disrupting traditional models and financial inclusion efforts and bringing millions into the fold for the first time. AMAN Financial Services is at the forefront of this transformation, dedicated to empowering the unbanked and underserved through a diverse suite of financial products and services.

In this exclusive interview, Arab Finance sat down with Hazem Moghazi, Co-CEO of Business and Commercial at AMAN Holding. He shares AMAN Financial Services’ vision for inclusivity, innovative approach to financial solutions, and ambitious plans for the future.

1- What role does AMAN Financial Services play in the non-banking financial sector and e-payments, especially in the context of digital transformation and its positioning in the Egyptian market?

AMAN Financial Services has been a key player in the non-banking financial sector, particularly in electronic payments, since its inception in 2016. Our primary focus has been on addressing the needs of the underserved community, both on the consumer and commercial fronts. Remarkably, over 80% of our clientele falls within the unbanked category. Bridging this gap and incorporating such segments into the financial system is at the core of our mission and underscores our commitment to genuine financial inclusion.

Currently, we proudly serve nearly one million customers in the consumer and microfinance sectors, with more than 80% being unbanked or considered underserved. Aman's role extends beyond mere financial services; it is about empowering individuals and businesses, previously excluded from traditional financial avenues, by providing them with access to essential financial tools.

AMAN offers a seamless, digital path for all your financial needs. Our platform handles everything, from applying for products to integrating with a massive e-payment network of 140,000 outlets across Egypt. This focus on unprecedented accessibility positions AMAN as a leader in digital transformation, driving financial inclusion, and ensuring everyone can participate in the evolving world of non-banking financial services and electronic payments.

2- What are the unique services that differentiate AMAN Financial Services?

At AMAN Financial Services, our commitment to convenience and the quality of service sets us apart. Since our inception, our direction has been clear: to provide fast, easy, and diverse financial solutions.

What differentiates AMAN is our position as a one-stop shop for a wide array of financial services. Unlike companies that focus solely on payments, consumer finance, or microfinance, AMAN offers a comprehensive suite of services. We cover bill payments, payment acceptance, consumer finance in all its forms, and extensive microfinance services through our network of 200 branches across Egypt. Moreover, we take pride in being the first in the market to introduce Islamic finance, small and medium-sized enterprises (SME) finance, and nanofinance. This diverse range of offerings makes us the go-to digital platform for non-banking financial services, catering to the needs of all types of customers.

AMAN, powered by Raya Technology, is a cutting-edge financial services platform designed to revolutionize how customers experience finance. It leverages Raya's expertise and technology to provide effortless, accessible, and advanced financial services. It positions AMAN at the forefront of the rapidly evolving financial landscape and empowers customers with the tools they need to navigate it efficiently.

3-How do you plan to leverage the substantial investor confidence in the company to further enhance the quality and range of products and services offered by AMAN Financial Services?

At AMAN Financial Services, we recognize the pivotal role that investor confidence plays in driving our ambitious growth strategies. Our substantial investor confidence has been a testament to the success and potential of our business model. With consistent year-over-year (YoY) growth rates exceeding 50% in revenues, loans, and payment transactions, our focus is not only to maintain this momentum but to accelerate it further.

Our primary objective is to surpass our growth rates. We intend to continue being one of the top three players in every service we provide by continuously improving existing offerings and introducing cutting-edge new ones.

Backed by our investors' confidence, we are venturing into Saudi Arabia by the first quarter (Q1) of 2024, with a dedicated team led by a country manager. This marks the beginning of our regional expansion, aligning with our vision of dominating the domestic market and catering to diverse regional needs.

Beyond Saudi Arabia, we are actively exploring microfinance, consumer finance, and e-payment opportunities in various markets, adapting our services to their unique demands. Our goal is not just geographical expansion but also diversification to serve a broader customer base. Looking ahead, our aspirations include evolving into a digital bank. This transformation will enable us to provide a more comprehensive suite of services to our clients.

4-What is the rationale behind increasing the company's total capital to EGP 1.065 billion? And how will this contribute to the expansion of the company's services?

The decision to increase the company's total capital to EGP 1.065 billion stems from a strategic evaluation of our robust growth trajectory and a rapid expansion exceeding EGP 7 billion in the managed portfolio. To sustain this growth and comply with regulatory requirements set by the Financial Regulatory Authority (FRA), it has become imperative to bolster our capital base.

By increasing our total capital, we are ensuring compliance with the FRA's capital adequacy ratios, underscoring our commitment to operating within a sound and sustainable financial framework.

We opted for a balanced approach, boosting capital and securitizing part of our portfolio, unlike some competitors who solely rely on securitization. Aman's strategic decision rests on avoiding overreliance on securitization. Instead, we sought to leverage a combination of increased capital and targeted securitization to meet FRA requirements while preserving the health and integrity of our portfolio.

This capital infusion fuels our mission of financial inclusion. We aim to broaden our service offerings and pioneer new solutions within the non-banking financial sector, staying ahead of the curve.

5-How do you envision utilizing the increased capital to strengthen the subsidiary companies, such as AMAN Financial Services and AMAN E-Payments, and to invest in the Saudi Arabian market?

The decision to increase our total capital to EGP 1.065 billion is a strategic move that will be instrumental in fortifying all our subsidiary companies, including AMAN Financial Services, AMAN E-Payments, and AMAN Microfinance. This holistic approach is designed to provide comprehensive support, ensuring that each subsidiary is well-equipped for sustained growth and innovation.

The infusion of capital is a strategic enabler for expansion. We experience significant growth rates exceeding 50% in revenues, loans, and payment transactions. The increased capital sustains and accelerates this growth. It fuels our companies' competitive edge and market leadership in their respective sectors.

The increased capital plays a crucial role in expanding into the Saudi Arabian market. Our successful model will find fertile ground in Saudi Arabia, leveraging the expertise developed within our existing subsidiaries. This strategic move diversifies our presence and captures exciting new market opportunities.

Beyond fueling current operations, the capital fosters a culture of innovation. Our subsidiaries gain the financial agility to explore new technologies, develop cutting-edge solutions, and stay ahead of the curve. This approach ensures that AMAN remains at the forefront of industry trends and customer expectations.

6-Who do you consider to be the company's primary competitors? And what is AMAN Financial Services' share in the Egyptian market?

In Egypt's dynamic non-banking sector, AMAN Financial Services has emerged as a formidable player, boasting a meteoric 50% annual growth rate. We thrive in this competitive arena thanks to our strategic focus on innovation, customer-centricity, and comprehensive solutions.

Despite the landscape being crowded with competitors, AMAN stands out for its commitment to financial inclusion, diverse offerings across consumer finance, microfinance, SMEs, bill payments, and cutting-edge technology. This potent mix has earned us a significant market share: 10% in consumer finance, 10% in company microfinance, and a staggering 20-25% in non-bank SME business.

It is worth noting that our growth trajectory has been remarkable, particularly considering that AMAN Financial Services started from scratch six years ago with a 0% market share. Today, we proudly stand among the top three companies in consumer finance, SME, and bill payments. As we maintain our momentum and strive for faster growth, our commitment remains steadfast to delivering value to our customers and expanding our footprint in the Egyptian market.

7- Can you shed light on the company’s financial performance?

AMAN Financial Services has consistently demonstrated robust financial performance, marked by a remarkable growth trajectory. With an impressive YoY increase of nearly 50% in revenue and an even more substantial growth in gross profit, our company has established itself as a profitable entity.

Our commitment to sustainable business practices and diversified services has kept us comfortably profitable for over two years, proving the strength of our model. Even as we push into new areas like payment acceptance and SME services, profitability remains rock-solid, demonstrating our ability to balance innovation with financial stability.

Looking ahead, AMAN Financial Services continues to project strong financial performance. The anticipation is to surpass EGP 200 million in earnings after tax for the entire group this year. This optimism stems from our unwavering focus on growth, innovation, and serving our expanding customer base.

At the core of our financial strategy is a commitment to sustainable growth. The focus on maintaining profitability while expanding our services reflects our dedication to creating enduring value for our stakeholders.

8-What are the technological platforms and tools you have utilized? And how do you integrate them into the operations of AMAN Financial Services?

At AMAN Financial Services, we recognize the transformative power of technology in reshaping the landscape of non-banking financial services. Leveraging innovative tools, we have implemented dynamic and easy onboarding processes across our stores, branches, and mobile applications. AMAN SuperApp, equipped with facial recognition technology, allows customers to be on board in a matter of seconds with an accuracy level surpassing 99%. 

Automation is a cornerstone of our operational strategy. We have automated various aspects of our processes. From customer onboarding to credit assessment, our systems utilize cutting-edge algorithms to ensure accuracy and efficiency. This automation enables us to make instant and accurate credit decisions, offering consumers and merchants instant approval for their financial needs.

One of the most impactful technological advancements within our system is the implementation of credit assessment algorithms. These algorithms utilize a wealth of data to provide highly accurate credit decisions. 

Moreover, our SuperApp includes seamless e-payment solutions that empower customers to manage their installments online without incurring extra fees. This encompasses consumer payments and extends to bill payments and utility payments.

9-What are the biggest challenges and opportunities for AMAN Financial Services in the financial industry over the next five years?

The primary challenge faced by the company is the elevated cost of finance. This challenge impacts the overall financial landscape. The high liquidity and interest rates pose hurdles that need to be navigated strategically.

Access to comprehensive and reliable data is identified as a significant challenge. The scarcity of data on customers and market dynamics can impede the decision-making process and hinder the development of targeted financial solutions.

Regarding opportunities, Egypt's demographic profile, with a population exceeding 110 million, presents a significant opportunity for AMAN Financial Services. The predominantly youthful population creates a vast market for financial services, especially considering the focus on the unbanked and underserved segments.

The thriving growth rate of consumer finance in Egypt, experiencing over 30% year-over-year growth for the past 3 to 5 years, represents a substantial opportunity. AMAN Financial Services aims to capitalize on this trend by providing tailored financial solutions to meet the evolving needs of consumers.