Pakistan has a high rate of unbanked citizens, which TAG Fintech is striving to address by offering easy access to bank accounts and Visa-powered cards through an intuitive mobile app that requires no KYC documentation or account opening procedures. Furthermore, tag fintech provides various other services like money transfers, peer-to-peer (P2P) transfer, recharging mobile phones and paying utility bills.
TAG Fintech raised a non-equity round in September last year at an estimated valuation of $100 million. Its investors included Liberty City Ventures, Canaan Partners, Y Combinator, Addition and Mantis among others.
According to a source with direct knowledge of the matter, the company plans on raising additional equity financing and expanding into new markets soon. They believe there is potential for innovative financial services across other Asian countries.
Asia has seen several billion-dollar startups rise out of nowhere by providing digital payment services to customers, particularly those without traditional bank accounts. Examples include Xendit in Indonesia and the Philippines, as well as Xindao in China.
An example is SadaPay, which recently received regulatory approval to open commercial operations in Pakistan. Through partnerships with public and private organizations, they offer banking services like disbursing salaries on Tag accounts, Visa-powered virtual and physical cards, as well as business-to-consumer (B2C) offerings such as paying other people online or topping up utility bills for users who sign up on their platform.
Though startups in Asia are on the rise, much work remains to be done to make the region as competitive as Western markets. A major obstacle lies in understanding what it takes to succeed in this market and recognizing what skillsets will be necessary.
TAG Fintech founder Talal Ahmad Gondal remains motivated despite these difficulties and has assembled an experienced team for leading his startup. These individuals have held prominent government positions and possess deep connections within Pakistan's banking and finance ecosystem.
They know the right people to approach and can collaborate with them to navigate a competitive landscape where incumbent banks dominate. Furthermore, they provide necessary lobbying support with the State Bank so their company isn't put at risk in any way that could negatively affect its relationships with banks.
One of the biggest worries investors have is whether a fintech company can succeed in an environment lacking adequate infrastructure for its products and services. While startups in Western markets face stiff competition, entering Asia with its smaller markets and less developed regulatory environment presents more obstacles.
TAG Fintech is well positioned to tackle Pakistan's unique banking challenge, as it boasts an unbanked population of over 225 million. This presents TAG Fintech with a significant opportunity and the right set of products to address it effectively.