$100 million startup: TAG Fintech is ready to enter new markets, Alexander Lukianchuk
TAG Fintech focused on one market last year. Thanks to the ideas of founder Talal Gondal and the experience of the CTO of TAG Fintech, it was possible to open an account for those who previously had no access to banking services in Pakistan.
Alexander Lukianchuk, TAG Fintech: “Pakistan undoubtedly has its own quirks. It is one of the largest countries with a very outdated banking infrastructure. Most people do not have access to banking services. At the same time, the market here offers endless opportunities for growth, the population of Pakistan is over 225 million and increasing every year. Mobile communication is evolving, high penetration of 4G mobile networks along with high growth in smartphone ownership. This market clearly needs high quality financial services and I expect the rapid growth of companies that can successfully enter this market”.
In 2021, the startup raised $5.5 million in Pre-Seed investment before entering Y-Combinator. This agreement was one of the largest advance agreements in the Middle East, Africa and Pakistan region.
According to Alexander Lukianchuk, TAG Fintech can become one of the most valuable startups. The total investment amounted to more than 12 million dollars, and the last investors valued the company at 100 million dollars.
Alexander Lukianchuk: TAG Fintech and emerging markets
There are existing financial services providers in emerging markets, but the quality of user experience and customer service in general is still a weak point for many of them.
Another significant challenge is delivering the breadth of functionality. Getting a high-quality product with wide features is quite expensive and requires considerable resources and time. It is difficult for each individual start-up to obtain such resources and therefore it is difficult to compete. It is not very practical to use a service that only performs a few of the necessary functions.
“In the coming years we will see consolidation in Western markets, smaller players will be absorbed by market leaders, models will be copied and improved. The result will be a more integrated infrastructure for consumers and regulators, said Alexander Lukianchuk.
Another driver in the West is integration. Services from different companies interact with each other. A good example in this area is Open Banking solutions, we see an update of this trend and a number of successful solutions have already appeared. The situation is different in emerging markets. Financial services are mainly provided by traditional banking tools, and the established banking sector is difficult to go through the stages of transformation.
It is therefore necessary to look at neobanking, if the task is to open access to services with minimal procedural restrictions.
“In the West, the market is definitely more competitive. Asia is different. For example, China and Singapore already have a well-developed financial infrastructure. However, many other Asian countries still represent a Green Field Opportunity for payment services and other banking services”, specified Alexander Lukianchuk.
TAG Fintech transformation and into new markets
As everyone knows, the startup ran into issues with EMI licensing after its launch. We are currently working on restoring the right to carry out activities. Regulatory issues proved more significant. It is one thing to create a product, and quite another to launch it in a market that is not used to it.
Commenting on the problems with the license, the CTO of TAG Fintech said that the main mistake when entering the market was underestimating the political aspect of trading in the country. Pakistan is a relatively closed system, where it is difficult to enter and start a business. Working in Western markets, more time is spent on technology and product, but in Pakistan the team has spent a lot of resources and energy on politics and bureaucracy.
“If you don’t understand the rules of the market you’re entering, that’s a big mistake. But I think we have learned it and are ready to move on, said Alexander Lukianchuk.
Currently, the company is planning to expand the geography of business activity. In particular, the opportunities to enter other regional markets, where there is an opportunity for innovative financial services.
Most likely, it will be possible to attract new investments and grow outside of Pakistan during the first half of 2023.
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Company name: TAG Fintech
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