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As the countdown to 2022 continues, Thndr, a rising Egyptian online investment platform, is bracing for regional expansion and hopes to become the first one-stop investment shop in the Arabic-speaking world, said the CEO.
“We would love to build this investment supermarket where individuals in this region have access to local and international investment products,” Thndr co-founder and CEO Ahmad Hammouda told Zawya.
Founded in 2019, the commission-free trading mobile app seeks to democratize share ownership in the region by simplifying the process of opening and managing an investment account. With no minimum investment requirements, the company has so far had more than 160,000 registrations, out of which 50,000 are actively using the app on a monthly basis, said Hammouda.
EMPOWERING LAY INVESTMENT HOPEFULS
The owners take pride in the fact that nearly 90 percent of their users are first-time investors. Thndr is promoting the Robin Hood investment approach, which empowers lay individuals to make their own investment decisions through a user-friendly platform that offers different products and all necessary resources.
“With Thndr, we are trying to build the easiest way to invest in the Middle East and North Africa,” said Hammouda. “We are building a relevant and intuitive app. This is an app for every individual.”
Thndr’s founders see a huge market opportunity in Egypt and the broader MENA region, where a population of nearly 370 million amasses $500 billion in annual savings. Half of the MENA population are aged between 14 and 45, and 62 percent have smartphones.
However, the investor penetration rate remains exceptionally low. Currently, the investor penetration in Egypt is 0.4 percent and hovers around 2 percent in the GCC region, said Hammouda.
At the moment, Thndr gives its users the opportunity to invest only in Egyptian equities and mutual funds.
“We [account] for almost 40 percent of the new coded investors in the Egyptian Stock Exchange,” said Hammouda. “[Their] average age is 29 years old, and more than 50 percent of our users come from cities outside of Cairo.”
In October, the company’s users accounted for 12.5 percent of those who submitted a retail order in the IPO of Egypt's E-finance for Digital and Financial Investments. Almost half of them had an order size of less than 500 dollars, said Hammouda.
“These guys would have never had an opportunity to participate in this IPO if they had to deal with the traditional brokerage house, because this was less than the minimum account requirements,” he said.
In 2020, Thndr became the first company to receive a brokerage license from Egypt’s regulators in almost 12 years. So far, the company has attracted investments from Y-Combinator, 4DX Ventures, Endure Capital, The Raba Partnership, and MSA Capital.
The company’s business model is based on generating revenues through distribution fees collected from asset managers. As to users, they can use the basic services for free, but they have the option of paying a monthly subscription fee to receive real-time data.
A PURSUIT OF EASIER REGULATIONS
Hamouda believes his app serves the country’s national strategy of financial inclusion well. “From day one we understand clearly that financial inclusion is not only about having a card but rather having access to financial services. Saving/investing is one important pillar when it comes to access to financial services.”
Thndr has been embroiled in talks with Egypt’s regulators to remove various barriers to entry for first-time investors. The company has been trying to convince government stakeholders to sanction new funding methods of investment accounts.
Having a bank account is currently a prerequisite for funding one’s investment account, Thndr co-Founder and COO Seif Amr explains. “The way you do it is, your transfer your money from your bank account. What we are trying to do is to work with the regulators on how you can add on other alternative funding methods that already exist in Egypt, whereby you do not need a bank account. These methods include pre-paid cards, e-payments platforms like Fawry, and e-wallets.”
Thndr is also hoping to convince regulators to approve digital onboarding, which would not require account holders to be physically present to sign paperwork.
“It is very difficult to say when these two initiatives can go live, but we are hoping sometime early next year,” said Amr.
BATTLING AN OUTDATED INFRASTRUCTURE
Beyond Egypt’s borders, Thndr is expected to launch its first platform in the GCC region in 2022. However, upscaling the business, whether locally or regionally, is not necessarily a smooth process. Thndr founders feel derailed by an “outdated” financial and technological infrastructure.
“We are connected to a lot of third parties, whether it is the [stock] exchange, clearance houses, banks, asset managers or other financial institutions. All of these parties have been traditional institutions that dealt with low volumes,” said Amr. “It is the first time that technological players are coming into the field focusing on scalable solutions.”
Upgrading the infrastructure to cater to high volumes of investments should be a common goal of all players in the financial ecosystem, Amr added.
Thndr is not the only fintech that seeks to democratize access to investment. Baraka, a Dubai-based startup, has recently launched a commission-free mobile investment app that enables users in the UAE, Saudi Arabia, Bahrain, Oman, and Kuwait to invest in 5,000 US-listed securities. Though they seek to expand in the same region, Thndr founders seemed unphased by the competition.
“For so long this place has been stagnant and the opportunity is big,” said Amr. “We see it as a very positive thing that there are players starting to sprout in this region and focusing on this specific mission.”
(Reporting by Noha El Hennawy; editing by Seban Scaria)
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