This Dubai-based fintech startup aims to make credit more accessible to consumers

When Maimoona Mohammed was looking for a simple car loan, she was taken aback by multiple rejections from different lenders. Digging deeper, she realised that the problem wasn’t just with her eligibility, but the way credit was ranked.

“This was a simple car loan; it wasn’t a big vehicle or was it something that needed a lot of documentation? I dug deeper to find that even my friend, who is a General Partner at a venture capital fund, was rejected. He was rejected because he was told that being a General Partner of a venture capital fund is not a registered job. It is funny how the world is moving ahead on so many different tangents but when it comes to the Middle East, things are quite primitive, especially access to basic financial services,” Maimoona says.

She adds that the evolution of credit tech has staggered in the lending market. While some digital and neobanking services focus on digitising paper and cash-based transactions through contactless payments, others roll out ‘buy now pay later’ schemes.

This led Maimoona to start Finllect in Dubai in 2021. The startup provides access to financial services to consumers who have a thin or no-file to build credit scores.

The background

Mainoona has worked in Europe and across different parts of the globe. She has been an asset finance lawyer and has worked with shipbrokers and port terminal operators, advising them on the sale and purchase of assets in the Middle East.

“I'm originally from the Middle East and with mixed heritage—partly Yemeni, partly Indian. I grew up in the Middle East and the UK, so my understanding of the markets has been different and diverse,” she says.

Frustrated by the way credit was scored, she decided to purchase the car in cash but also saw the need for change.

“It made me realise that the credit market in the Middle East is very unique and different from India, Southeast Asia, and even the western markets,” Maimoona added.

Through Finllect, Maimoona aims to financially empower people who have stable jobs and secure sources of income but don’t meet the traditional standards of employment set out by lenders. The startup’s goal is to help consumers build responsible credit using micro-payments.

It has created an alternative to traditional credit scoring which looks at different data points traditionally not considered by most organisations. Maimoona says the idea is to help consumers avoid incessant paperwork, too many interactions with the bank, and long waiting periods to qualify for credit.

On Finllect, one only has to link their bank account(s) to the platform and start building their credit score with the payments they make. The company calculates a customised credit scoring mechanism based on payments made in the last 24 months.

“Many consumers who joined our platform have had multiple credit cards or some sort of contract with the credit industry, and still couldn’t qualify for because they're being assessed through these traditional means,” says Maimoona.

India, for example, has CIBIL and CRIF scores, while North American and European markets have Equifax and FICO. Etihad Credit Bureau calculates credit scores based on the loans taken out in the past, and to what extent they were repaid.

However, Maimoona says the Middle East does not have a concept of transactional credit reference, some of the countries don’t even have a credit bureau.

“In the regions that do, the bureau began only a few years ago. To date, they are manually working with lenders and banks to help them develop a database and profile customers. Their definition of a ‘good customer’ is narrow, so almost anything and everything could get you rejected for credit. If you are in a fixed-term contract or you are a remote worker, the bank can reject you,” she explains.

Solving for a larger issue

“I think the fundamental issue that we've been focused on solving is access to credit. Introducing a new credit instrument in the market is not going to solve the issue as lenders look at risk from a traditional perspective. We provide lenders with the right infrastructure and framework to make those informed decisions and focus on data that speaks about the borrower's ability or capacity to pay, instead of looking at traditional data,” Maimoona adds.

She adds that access to basic infrastructure made it easy for her to start up. “While it's certainly not as economical as in developed markets where you can register a company for $20 or $200—even basic licences to start a business incur costs, but the challenges of starting are purely dependent on the sector and industry you are in.”

Maimoona underlines that this is particularly true for a heavily regulated industry like fintech, which is why working with regulators to get licensing becomes critical.

Market and future plans

According to CB Insights, the past few years have seen a significant push for the fintech sector in the Middle East. According to the report, the new funding in the segment was at $2.1 billion across 175 deals in 2021 to 2022. In 2022, until May, there have been 41 deals in the fintech sector, amounting to $503 million, with startups including Dubai-based BNPL startup Tabby raising funds.

Speaking of the overall fintech ecosystem in the Middle East, Abdulaziz Al-Turki, Managing Partner, Khwarizmi Ventures—a Saudi Arabia-based early-stage investment firm, says,

“Different companies in the Middle East focus on different problems. Broadly, they are either direct-to-consumer (D2C) or B2B-focused. In the past 10 to 15 years, the financial environment has been steadily growing. Fintechs are trying bring rapid change and improve the consumers’ day-to-day lives.”

He underlined that the entire Middle Eastern startup ecosystem is experiencing rapid growth and change. “There are more open-minded people willing to adopt technology, and are looking for tech to improve different aspects of their lives.”

The acceleration in digital adoption driven by pandemic-led lockdowns became the needed fertile ground for Finllect to amplifiy its offerings. The company is currently in its pre-revenue stages, and has raised pre-seed funding. The startup is also a part of Sequoia Spark’s first cohort.

While the team refused to share the revenue details, they monetise through merchants and lenders that work with them and have about 15,000 users on the platform.

“In the next six to 12 months, we plan to launch our own challenger credit card. This would be an instrument that completely takes off the burden from a consumer in terms of having to apply for paperwork, and also being able to access credit without having a traditional credit score. The product is completely reliant on the scoring system that we've developed, and it enabled consumers to instantly access a credit card without having to wait eight to 12 weeks,” says Maimoona.