Omair Ansari, CEO of Abhi, on the Vator Innovation Podcast

Abhi provides working capital to SMEs and earned wage access to employees

Omair Ansari, CEO & co-founder of Abhi, sits down with Bambi Francisco Roizen to discuss financial wellness for companies and employees. 

Abhi is largely based in Pakistan, but has branched out to the United Arab Emirates and Saudi Arabia. It offers Earned Wage Access (EWA) to employees who often have to wait up to 45 days to get paid. The company also provides working capital broadly to small- and medium-sized businesses, such as invoice factoring, revenue-based financing, and payroll financing. 

Listen to Omair talk about the economy in Pakistan and the financial pain points for the workforce. 

Highlights from the interview: 

1:49 - Omair talks about living around the world from London to Nigeria to the US to Pakistan as his father was an international banker, which meant the family moved around every several years. But the experience was profound as Omair was able to pattern match across the different economies.     

4:37 - Omair explains why he started his venture in Pakistan. As an investor in fintech opportunities in Brazil, China and India, he saw a nascent opportunity in Pakistan. In Pakistan, there are only 500,000 unique credit cards across 250 million people. So credit penetration is low.

9:40 - The Pakistan economy is a very informal economy. While the official GDP is about $280 billion, unofficially it's more because there's no documentation. Even tax collection to GDP is below 1%, Omair explains. There’s only 1.6 million tax filers. This goes into the nuance of credit. The next stage of fintech is to use existing credit bureaus and data to find innovative ways of underwriting. In Pakistan, he is helping to gather that data as 99% of customers are touching formal credit for the first time in their life. In Pakistan, 70 million are receive a salary, but less than 5 million are white collar workers. Most Pakistanis work in road building, construction, textile and factories.  

13:39 - The financial pain points in Pakistan besides living paycheck to paycheck? In the US, bimonthly pay is the standard. In Pakistan, even good companies will pay employees every 35–40 days. And SMEs (make up over 85% of GDP), you work one month, you’re not paid for 2-3 months.   

16:00 - The challenge for workers in Pakistan is the delay in salary payments because employers aren't getting paid by their vendors. Typically, workers will go to their family and friends or ask for a salary advance from employers. Or they will go to loan sharks to pay their bills. Abhi fixes two pain points. We say they work today, they deserve to be paid. We also ended up doing invoice factoring to help SMEs get paid faster. [Invoice factoring is paying the invoice amount to the SME, and then getting paid by the vendor later]. 

19:18 - How does Abhi loan to both employees and employers and where does the buck stop? Omair explains that typically the SMEs are vendors to large multinational companies. Since they are likely to pay their bills, Abhi will contract with the large multinationals and take on the risk of the invoice being paid. They will then bridge the money to the employer.  

23:00 - Unlike the US where employees pay for the earned wage access benefit, in Pakistan, employees pay for the earned wage access service. This is because unlike the scarcity of talent in the US and the leverage that employees have, in Pakistan, there's no attrition problem. Workers can get paid daily via Abhi.  

25:22 - While 80% of Abhi's business is still in Pakistan, Omair breaks down the business via geography. He talks about how Saudi Arabia is technically an emerging market even though their GDP per capita is roughly $35k-$40k. But there are segments still in need. For instance, in the UAE, there are 10.5 million people of which 3-4 million earn less than $2500 a month (10,000 dirhams).     

29:16 - Abhi's B2B working capital product consists of invoice factoring; purchase order financing (funds to enable SMEs to get future invoices); revenue-based financing (working capital to grow the business); payroll financing (helping companies pay employees if timing is off for when companies get paid vs when they have to pay employees). Invoice factoring is the largest portion of the book when it comes to SME lending side. 

31:31 - Omair talks about getting into corporate cards but also his go-to-market strategy, which includes going directly to CFOs and HR, as well as working with accounting platforms such as Xero or payroll companies such as Decibel (they have over 260,000 employees they process payroll for).  

35:41 - Omair shares his thoughts on where revenue will come from in five years. The goal is that SME financing will always be a bigger part of our portfolio but rather than being 80% of the business, it will be about 60% with earned wage access accounting for 40%.  

40:40 - Omair talks about the economic/cultural and technological breakthroughs, such as the telcos creating a wallet that is pretty ubiquitous. This allows emerging markets to get away from a "cash economy." The banking infrastructure has also been established to enable the transferring of funds.