Tunisian startup Kaoun is aiming to increase financial inclusion in Tunisia via its first product, a mobile and web app that allows users to create free bank accounts remotely.
Formed in January 2018 when co-founders Nebras Jemel, Anis Kallel, and Rostom Bouazizi put their studies in the United States – at Harvard University, University of Rochester, and Columbia University respectively – on hold to come back to Tunisia and build a fintech startup, Kaoun is building a pipeline for financial inclusion.
The company’s first product is Flouci, an application that helps users create bank accounts, facilitating the process through an innovative Know Your Customer (KYC) system via smartphone. The Flouci onboarding process can authenticate the customer’s national ID and uses facial recognition to confirm their identity before accessing the service.
Flouci wallets are then linked to the bank account and used to carry out their essential financial activities, such as paying merchants or making domestic remittances, by phone number or by scanning a QR code. The platform also enables users to create electronic signatures to digitally sign official documents and access a range of governmental services.
“Our goal is to digitise financial and governmental services to reduce barriers to entry for adoption, such as wait times, cost of transactions and distance to bank branches and government offices,” Kallel told Disrupt Africa.
Flouci aims to be a fully interoperable interbank network that ensures instant transfers. It uses distributed ledger technology to guarantee a cheaper, more secure and more reliable service.
“We also want to bank the unbanked to enable them to build credit history and access other financial services in the future,” Kallel said.
A low rate of financial inclusion is a problem in Tunisia and other emerging markets in the Middle East and Africa region. In Tunisia, 64 per cent of adults are financially excluded or under-served, with much of this low penetration attributed to the difficulty, inconvenience, and costs associated with opening a bank account due to strict regulatory requirements.
“This primarily affects those in the more rural regions of the country, as they have to travel farther distances to find the nearest bank branch. Consequently, rural Tunisians are more reluctant to rely on banks in order to manage their money which does not encourage banks to open branches because of the high overhead costs. We believe that Flouci can democratise access and increase the reach of these services,” Kallel said.
Despite the slow rate of adoption to traditional banking tools, Tunisia has high smartphone and internet penetration rates, something the startup is tapping into. To help it on its way, Kaoun raised funding from two angel investors last year, allowing it to develop the product and payment infrastructure, and also secured key partnerships with two Tunisian banks and the country’s National Digital Certification Agency.
“Our priority is to improve Tunisia’s financial inclusion index by banking the unbanked and providing better access to those already banked. For that to scale, we needed to build integration tools and re-imagine the existing infrastructure for client identification and money transfers,” Kallel said.
“We are partnering with two of the largest banks in Tunisia to test our new solutions and approve them at the central bank level, which was a year-long effort. We hope to scale our services to more financial institutions in Tunisia in the upcoming months, and start our expansion plans.”
Flouci makes money from its partner banks, which pay for identification service and payment infrastructure on a software-as-a-service (SaaS) model. App users pay a small percentage fee for P2P transfers and merchant payments, and a flat fee for bill payments.
Though Kaoun has earned the Startup Label as part of Tunisia’s newly enacted “Startup Act”, which gives startups with high growth potential access to advantages offered by the government, Kallel said one of its major challenges has been the country’s complex regulatory framework.
“Our technical architecture and product implementation has been specifically designed to be compliant with current regulations, but we needed to work with different stakeholders like the National Digital Certification Agency, commercial banks and the Central Bank of Tunisia to approve our innovative approach to customer identification and money transfers,” he said.
“This process can take a long time in the life of an early-stage startup, but our motivation is to be able to influence the fintech ecosystem and lay the ground for future startups to work more easily. Moving forward, the main challenge is going to be driving the behavioural shift in the way people access various financial and governmental services, and reaching the customers that has been historically excluded or underserved.”