Padmini Gupta, Xare - Bank your tribe by xaring your cards (S3E11)

Rise was born out of the idea to build a financial platform for migrants, helping them gain access to accounts, loans, insurance, and investment products. This was around 2018 when the term neobank was still not as used or in vogue. We built the first retail bank account proposition from a fintech in the country. We did insurance products with EXO. We pioneered buy now, pay later in the migrant space. So now what do we have? We've got thousands of people with bank accounts and cards here, but no way for their families to get access to that money. And then us, it's like remittance as a product hasn't changed in 60 years. It still involves moving money and spending money to move money. And we realized that the problem at the heart of migrant troubles was the one financial tool they use the most, that is remittances. And that's actually how Share was born.

Good morning. It's so lovely to be here.

My family actually lives in Dubai. They've been here since the 70s. I was born in the US when they were living in the US, and then we all moved back to Dubai when I was little. Initially did my schooling here, went back to college in San Diego, and then right after college I became a banker. Being in banking in California at that time, I rose up to the ranks to build a really substantial portfolio, around $250 million of commercial lending. At that time is when I realized this power that finance had to be a force for good in society. In the 90s, banking was actually a white boys' club, and there was this fast emerging set of minorities and women-owned businesses that really struggled to get access to finance. And that actually became my wheelhouse, working with businesses who are run by really smart, hardworking people but had not been invested in by typical high street banks. I also worked closely with the US Small Business Administration in filing some of their first loan programs for this community. And in that process, I won a couple of awards for being the best banker in California. My journey then, I wanted to leave the California bubble. It was around 2004. I wanted to work in emerging markets, particularly in development. That led me to do my masters at Oxford. Then I was invited to join the World Economic Forum as part of their Global Leadership Fellows program, and then I started working on climate change and then smart cities. I spent a few years with the World Economic Forum obviously on those initiatives. And then I moved to Dubai, back to Dubai again, about 10 years ago. That's when I started my own family and wanted to be close to my parents. And as the Dubai story goes, I came here for six months, it extended out to a year, and then now it's been over 10 years.

Yes, absolutely. Because there is a need in the market and banks weren't always able to see that need. It was people like me that were seeing this happening in the market, and then now technology is able to actually see it faster and reach the user faster.

In the end, it was not a straight line. It was a couple of points of reflection. So when I moved to Dubai, I actually started working with my family's businesses, which was mainly manufacturing, and in fact one of the first manufacturing units in the country. So when I returned back home, I had both finance experience and development experience, and I kept seeing this odd behavior in the country. UAE is actually home to 90% migrants. And many of these migrants live here for a very long time, sometimes 20 to 30 years before they actually go back home to retire. Individuals actually earn a middle class income in the countries that they come from, but I kept seeing this behavior of long-term employees asking for life event loans, so my son's education, marriage in the family, or emergency loans, accidents, medical needs. And from my family's companies, the first question I had is, why can't you get a loan from the bank you have back home? And I realized that for most of these countries, they don't give loans to non-residents. So for example, in India, the central bank actually prohibits loans to Indian migrants, right? So then the second question is, why can't you get a loan from an institution in the UAE? The response is that banks see them as risky and small ticket, and so it's not within their wheelhouse to serve these migrants either. The result is that actually 70% of the working population in the country is actually locked out of the formal financial system, both here and in their home countries. So I could see there was a problem, but I was busy. I was busy starting my own family, I was busy on the family's businesses. Then it actually hit me one day. There was an earthquake in Nepal, and my nanny had just started working with us about six months before that, and she was devastated, right? Her home had been demolished, her little shop that provided a small income for their family had been destroyed. And rather than going to her savings, which I would have gathered she'd had having worked in the region for over 15 years, she came to me and asked for a rather large sum of money to fix this financial need that she had. And I realized that she had not saved for herself for that period of time. I realized that there was a large need, a large gap in the market for financial services for migrants, and I had the experience but also I had the passion to do something about it.

Rise was born out of the idea to build a financial platform for migrants, helping them gain access to accounts, loans, insurance, and investment products. This was around 2018 when the term neobank was still not as used or in vogue. We built the first retail bank account proposition from a fintech in the country. We did insurance products with EXO. We pioneered buy now, pay later in the migrant base. And we also learned a number of lessons along the way. So what was interesting about what we learned is that actually people wanted banking, they didn't want an app, right? So while building Rise, we built this beautiful app and we thought, you know what, it's going to get us a lot of users because people like apps. So we launched in December of 2017, and after launching this beautiful app, we got six users on the app. And so we're like, you know what, we need to do something about it. So we started tele-calling service, we started that in January, and all of that effort got us to 17 customers. And then we sort of said, you know what, something else is missing here. What are we not thinking about our customers? So let's figure this out. Then we realized the challenge was that people wanted accounts, not apps, right? Their phone storage was taken up by apps like WhatsApp, Facebook, YouTube. They wanted the banking, the ability to park their money in a safe place, but not an app on their phone that utilizes their ability to communicate with their family. Instead, we moved the entire thing over to a chatbot over Facebook Messenger. By June of that same year, we'd added over a thousand customers a month, and then the next year, by the next two years actually, we had chatted with over half a million users. To contextualize what half a million users is, that's 5% of the population of the UAE, so it's an absolutely massive number. The second thing we learned in that journey is to speak their language. What does that mean? We realized that most migrants have never had the chance to talk to anyone about their finances. They weren't getting bombarded by calls from financial planners or trading companies. So we built a simple financial health check tool on the bot. This was a financial health check which helped migrants understand how well or badly they were doing on their finances, with 10 questions easily in local language and context. Really simple tool, but very effective. And then the third thing we did is we built a community. So we realized we had to cut through all that marketing noise and get to users for which this really mattered. And one of our first target segments was domestic helpers, because one in four women in the UAE is a domestic helper. So we launched the UAE's Best Nanny Awards. This was one of the best ways to not only drive awareness with nannies, but also help us position this as a product. This community was really important for us as we built and scaled Rise. This also brings us to what happened just before COVID, right? Rise before COVID was venture backed. We had the largest fund in the region, MEP. We had TFC fintech fund investing in us. We had 500 Startups investing in us. We had thousands of customers and multiple product lines, all helping migrants better manage their finances. And we had partnerships with some of the largest marquee names in the region, from EXO to Carrefour. And COVID hit, and in particular it hit our segment really hard. Most migrants actually still sent money home as cash, right? During COVID, sending cash home, getting cash, or even spending cash became impossible. So now what do we have? We've got thousands of people with bank accounts and cards here, but no way for their families to get access to that money. And then us, it's like remittance as a product hasn't changed in 60 years. It still involves moving money and spending money to move money. And we realized that the problem at the heart of migrant troubles was the one financial tool they use the most, that is remittances. And that's actually how Share was born. Because we realized, why did migrants need to move money for their families to spend money? What they needed was to move spending capacity. And essentially, Share allows anyone anywhere to share their cards with their loved ones. Share the card, specify limits, control what happens with the money, who goes to, how much of it is spent, and have visibility on where that money is being spent. Initially we built this as a product of Rise within Rise, but then we realized something else. Sharing money with loved ones is not just a migrant problem. If you think about it, like every dollar of consumer spend in this world actually starts as income in the hands of someone else, whether that's a business owner or a public servant. Then this income has to find a way to the dependent so they can spend it. How does that actually happen? How does that sort of two-thirds of the world which does not earn spend the money? By the way, that two-thirds of the world spends a lot of money. That's over $25 trillion a year. So the two-thirds of the world gets money either in cash, supplementary cards, wallet transfers, remittances in cash. How were we going to put a product together that works for this two-thirds? And Share essentially became the most elegant solution for providing dependent needs, right? It enabled your income earners to just share their cards and allow the family to spend without the need to move cash, without the need to create a wallet, without the need to issue a supplementary card from a bank. That's how Share became Share.

Share is an app. Imagine you, the card owner, right? You enter your card details, you create a link. On that link, you say, okay, I want to share say $50 with Norbert, and I want it to be one time only. Then I share the link with Norbert, and then you get $50. You can use the $50 on any of the sites available on our app. And literally any site is available on our app.

It's not my own mall, but essentially you can customize what mall you have. We've got a number of e-commerce partners on there, and then we've got people that are not e-commerce partners. For example, Amazon is on there, Friends and Pedals is on there, Snap Deal is on there. They're from different parts of the world. First we added what we thought was going to be highest usage, and then we created an AI-based tool that allows you to add any shop anywhere in the world onto the app. So you can customize where your money is actually being spent.

So look, there's a couple of things. We don't bypass any security measures by the financial institution itself. If the bank doesn't feel that a transaction is kosher, they will contact you, they'll message you, and you do have to answer those calls. Same thing with any other security measures that they have for your card, because we do not want to bypass any of them, and we do not bypass those. But here's the thing with what actually happens, right? Cards are actually being shared within trusted networks. They get shared a lot, much more than we recognize. More in the East, less in the West, but even in the West it's up to 40% of sharing happens. In the East, of course more, I think up to about 80%. So this behavior is not unusual. What we're essentially doing is we are replicating behavior that is happening in real life on the app, and we're allowing people that would share anyway, you using the card information maybe like taking a picture of it and sending it over, we're allowing them to do this in a way that is much more secure and allows for much greater amounts of transparency and the ability to actually control what happens, right? You don't want someone walking around with your card all the time, or saying, okay, you know what, you know, I've got an emergency, but then you see a bill for a huge TV. So in some ways, it creates much more transparency. And the other important component of it is that information is held on the device. There's no central database that we're using, so it's much more secure in itself. And then there's another point to this, Norbert, is the one that we don't often think of, right? When we allow someone to use cash, we feel we know where that cash is going. Even with a card, we feel we know where that card is going to be used, but there's not 100% transparency until after the fact. And with cash, it's not 100% transparency unless you're looking at the receipts after the fact. It essentially creates much more sort of dependability on where your hard-earned income is being spent and how it's being spent.

No, you can restrict it on the merchant side.

Yes, and that's the beauty of it. See, most remittances or cash sending that happens from hard currencies to soft currencies, when you're sending a thousand bucks over, what you're thinking about is just the remittance fees that it took you to send the money over, but you're not looking at the actual loss of value in the money. And sometimes it takes a while to spend that money, right? You could have actually been earning on it. There's multiple reasons to actually share versus remit, or share your card instead of sharing the actual card.

Yeah, let me clarify a couple of things. When we built Share, we built it with migrants in mind. As it grew, it started growing outside of the migrant space and being used by families locally as well as cross-border, and by friends as well, of course. We have focused on Share and the growth of Share. We still have the ability to give bank accounts through Rise, but that is not our focus area right now. So Share is the growth business right now. We also have a Share Club. How does it fit into the overall Share offering? Share was essentially built to allow people to share with their loved ones: mom, dad, spouse, kids. It was also meant to be an innovation over remittances and to be able to use your debit or your credit card. Our initial thesis was that people actually share, right? And so how do we layer it for greater value? Share Club was our sort of innovation to that, which is, let's allow people to build clubs of people that they can share. You can add your card in, not the whole card, but just a portion of the card in, and see what sorts of discounts and loyalty points and offers you get, and how can you share those with people within that closed network, within that trusted network. That has allowed us to create groups of families that can do that within each other. People who also have full cards can say, okay, you know what, I've got these 10 cards, I can add them on, I can use these discounts within my family group. And trusted networks also include friends, right? So friends sharing with each other, because one day I may want to buy from Amazon, the next day I may want to buy from Snap Deal. I may have a discount on Amazon and you may have one on Snap Deal, and then I can exchange that out with you and actually improve my savings over time. So that's the benefit of Share Club: you can actually allow person A to take advantage of person B's discounts. This is your best way of knowing, okay, where do I want to shop and what's the best card I use for it, and how can I get access to it? And the Share Club allows you to do that very quickly, because someone in your network has that card and you can then get instant access to it if you allow that person to get access to it.

India is a huge market, and a huge market for us. And UPI has actually become the ubiquitous payment system in India, processing close to about 8 billion transactions per month. It's a huge number, right? It's a closed loop system with access only available to people holding an Indian bank account. And so like any other closed loop system, it doesn't actually cater to a number of legitimate cases. For example, tourists visiting India, Indians without a bank account including minors or elders, or even non-resident Indians. And just like cards are universally used and accepted, there's a massive opportunity to build more interoperability for UPI. And RVE was the first product that did this at scale of tens of thousands of customers. One of the reasons we purchased it is exactly that, because at Share we're serving millions of migrants who depend on us to better manage their financial lives, and India is the largest migrant exporter in the world, the largest remittance recipient, and yet with UPI providing almost 100% digital payments coverage, millions of non-resident Indians are locked out of the system. The recent announcement to allow NRIs to access UPI on their sort of NRE/NRO accounts is a good first step, but we're actually building those rails to allow them to access it now using RVE. So bringing RVE into the Share fold allows us to do this very quickly and at scale.

Yeah, it's an amazing system.

Absolutely. One of our top five markets is the US, and that is absolutely with zero dollars spent towards marketing it to US consumers. And it's actually a huge number considering how much fintechs actually raised to get the same number of customers in the US with marketing spend. So that's one of the reasons that we looked at the US as a market that we were going to grow into. The other reason is this: as we grew, we realized that our product is being used in over 180 countries across the world, and the US was our fifth largest market. Being in the US makes a lot of sense. Based on our studies, about 40% of people share money in the US, right? They actually share the card details, they share money in terms of cash. So why not launch your product Share there? And you can think of the other layers as well: our AI platform which allows us to add e-commerce players very quickly to the platform itself, and then Club as well, because US consumers are also very savvy about how much have I saved, where can I get points, where are the offers at. So I think the whole sort of product stack makes a lot of sense for US consumers.

While we are building Share, actually the whole purpose of Share is to reclaim that soul of banking for everyone, and to empower the one-third of the population that earns an income to share their financial resources with the two-thirds of the population that does not, and establish a fair financial system. And we've started achieving that mission. We're going to get deeper into it to provide equal access to people to financial products. So it's a wholeheartedly qualitatively good mission. You don't necessarily say we need to have 10 million migrants on the platform by 2025, or we've got 3 million plus users on platform. We're in over 180 countries. I can see a really good path forward where we're going to tax that. Let's see how that happens.

Thank you, Norbert. A pleasure to be on your show.