RIYADH: Anyone buying a car on finance in Saudi Arabia is likely to face a bewildering array of leasing options. The question that torments them: what is the best option given their credit rating?
Arib, a Riyadh-based fintech startup launched in December 2018, has helped consumers solve the problem. The company’s journey began when the founders encountered customers caught off guard by the deluge of choice.
“I was shocked,” Waleed Talat, CEO of Arib, told Arab News, “when I discovered that many customers spent weeks or even months trying to find the best finance deal. started to think about how to solve this problem.
Talat, an Egyptian national who has resided in the Kingdom for 22 years, reached out to his friend and co-founder Mohammed El-Dessouki, who worked with a major car leasing company, and shared his thoughts.
A computer engineer with a wealth of project management experience in various government entities, Talat took the reins and developed a digital loan brokerage app called Syaarat, later dubbed Arib.
Instead of visiting each lender and asking them for their best deals, the platform allowed a potential loan seeker to complete an online form and receive a tailored choice from around 25 lenders within 48 hours.
“Since the first month, we’ve found real demand from end users because we’ve solved a real problem,” Talat said.
Arib now has 25 employees, with a technical team located in Cairo and a marketing team based at its headquarters in Riyadh. Talat manages the operations. El-Dessouki leads sales, marketing and finance. Omar Al-Hammad, the third co-founder, manages government and banking relations.
In April 2020, Arib applied for a digital brokerage and financing license with the Central Bank of Saudi Arabia, also known as the Monetary Authority of Saudi Arabia. The license covers auto leasing and other personal finance products. The company expects approval within the next month.
“Right now, we manually refer to banks and get their response on each application. With the license, we will be able to integrate with the Saudi Credit Bureau (SIMAH) and see the credit score ourselves and connect with financial institutions to get real-time online offer for the end user,” said talat.
He further added that the license could enable his business to venture into real estate financing, personal loans, credit cards and other financing products available in the Kingdom.
The license will also increase the company’s revenue. Arib’s existing revenue model is based on car dealership commissions with an incentive of 0.5-1% for each financing transaction. By the end of 2021, Arib completed a total financing transaction of SR55.3 million ($14.75 million). Its total turnover to date is SR 2.8 million.
“Once integrated into SIMAH, our income could be multiplied by three or four. The whole process will be automated. In 2022, we expect to achieve approximately SR100 million in financial transactions and SR5.5 million in revenue.
The numbers are stacked in favor of Arib. According to Focus2move.com, a market information company specializing in the automotive industry, the Kingdom saw a 24.6% annual increase in the number of new cars in 2021 to 585,351.
Recent data from SAMA also revealed that the Kingdom’s auto finance sector was worth over SR 75 billion in 2021, with the entire consumer credit market exceeding SR 1 trillion annually. The business opportunity is already giving early risers a head start.
“We did two investment rounds,” Talat said. “We closed a pre-seed round in February 2021, during which we raised $800,000 from five angel investors, primarily linked to Riyadh Angel Investors.
“Then, at the end of 2021, we opened a funding round led by Merak Capital. They invested $1.5 million,” he said while adding that he plans to deploy those funds primarily on regulatory, development and marketing expenses.
The government, for its part, is supporting fintech innovators through Saudi Fintech programs and developing an ecosystem to nurture the industry. Soon, the digital brokerage opportunity will be huge, and no one will want to miss the bus this time.