After working as a banker in North America, Halima Iqbal moved back to Pakistan and quickly realized how difficult it is for local women to access financial services. It was 2017. Later, she met Farwah Tapal, a product designer and entrepreneur, who decided to return to Pakistan from Spain.
In 2018, the two young women decided to launch Oraan, a fintech company which aims to help Pakistani women access financial services and boost financial inclusion.
Oraan worked really hard to fill a gap in the country’s financial services, providing their customers, especially women, a safe space to save and break the taboo surrounding conversations around money.
In 2021, the fintech made $3 million in seed funding, making Halima Iqbal and Farwah Tapal the first women entrepreneurs in Pakistan’s Fintech landscape.
Pakistan’s Gender Gap in Financial Inclusion
Pakistan has long struggled with low levels of financial inclusion, with only a small fraction of the population having access to formal financial services: 79% of its 231 million inhabitants operate outside the formal banking system, according to the World Bank's Global Findex Database.
But women are disproportionately on the wrong side of this financial divide. In a World Bank survey of over 135 countries and territories, Pakistan finished fourth from the bottom for female financial inclusion.
In Asia, it was the third-lowest, after Afghanistan and Yemen.
However, there is optimism. The recent Karandaaz Financial Inclusion Survey (K-FIS), which tracks access to financial services in Pakistan, shows a remarkable growth in the financial inclusion of women.
Despite only 13% of Pakistani women having their own bank accounts, for the first time in the history of this survey, the level of female financial inclusion has gone into the double digits. And realities such as Oraan helped to achieve this goal.
Oraan Lets Women Fly
Founded in 2018, Oraan strives to provide digital savings to people using the ROSCA, or committee network, allowing people to save and have access to financial services that banks fail to provide.
A vast majority of Pakistanis save through committees, and Oraan has digitized the product to provide better access and ease all savings procedures. In other words, Oraan is a digital savings community for all women of Pakistan.
“Oraan means to take flight, and it takes us back to the values that we have, to empower women, because once you have the right kind of tools, the right of kind of education, the right kind of access, you are empowered to take your own flight, to take control of your own finances”, said Iqbal to local media
Based on Oraan’s research, only about 7% of Pakistani women are financially included, meaning they have at least a basic bank account. For many women, trying to access financial services means facing logistical and social barriers.
Fill The Gap with Digital Savings Through ROSCA Network
Iqbal and Tamal realized how ROSCAs were used almost everywhere across Pakistan to save money. Traditionally, ROSCAs are formed within communities, for example among family members, friends or neighbours. Then each person puts in a set amount of money per month. Who gets each month’s pool of money is decided by the committee, sometimes by a vote or random draw.
The committee system is extremely popular in the country, as it appears to be fairly straight-forward and saves people the hassle of formal paperwork.
Few decades ago, committees were common among housewives only but now teachers, white collars, shopkeepers and blue-collar workers are also using this mode of saving. The system of committee is deeply entrenched in Pakistani society.
Many banks, DFIs and other financial institutions do offer lucrative saving options, but all their offers fail to pull the people away from the ROSCAs.
According to Oraan, across different age, gender, economic backgrounds, from rural to urban to save money, about 41% of the Pakistani population has participated in a ROSCA and $5 billion gets rotated through them on an annual basis.> So Oraan digitized, and formalized, the whole process offering five-month or ten-month plans. One of the main differences between Oraan’s ROSCAs and informal ones is that users can pick which month they want the pool of money, because the app’s treasury management backend forms committees based on members’ needs and ability to pay.
By participating in ROSCAs through Oraan, users also have the opportunity to join committees with people outside their communities and social networks. Before accepting people onto Oraan, the app vets them, and it also manages each ROSCA, collecting and disbursing funds. In fact, the fintech partners with other providers to assess creditworthiness based on verified IDs, where users live, proof of income and personal references.
Moreover, people who participate in committees in Oraan, they also build a payment history, which can open the door to other financial services in the future.
Why People Should Move Online
Then here is the question, why should people, or women, in general switch to online committee networks, rather than retaining their traditional system of saving? First, digital committees help create a trail of money which, coupled with a centralized authority (the platform itself), brings in accountability and recourse in the event of a default. The receipt and/or ledger helps with basic accounting in committees, creating transparency for people within the group.
Another benefit of digital committees is the security factor. The participant has to go through a know-your-customer and credit check process to make sure there is no fraudulent behaviour that could negatively impact the group, along with the participant’s ability and willingness to pay to create an overall environment for responsible finance.
That’s why the key factor of Oraan success is its ability to understand users' mentality and to build the sense of community and sense of belonging. “We continue to build a community and make it feel like a community. I think keeping a customer at the center of whatever you want to solve for, listening to them, having that open conversation, also allows us to build that trust”, Tamal said to the media. “If you mobilize women financially, you mobilize a household. So being able to design for women, understanding limitations, understanding digital and financial literacy and building a product that services her needs, so that she is mobilized first, and then we mobilize the entire household. This is very important to what we have built and are able to build”, Tamal added.
What is the next Move for Oraan?
Oraan is looking towards making an even bigger mark in future, with grand plans of expansion. As the company has grown and understands the customer better, the fintech looks into financial services that fit well into the lifestyle: both the founders aim to turn Oraan into a digital bank. “We want to pay, we want to make deposits, we want to be able to make payments, so for us the question is how do we simplify those experiences and eventually become a full-fledged digital bank”, >Iqbal said.
