A lack of what Ambareen Musa, founder of Souqalmal.com, calls financial literacy in Saudi Arabia has sparked the company to focus on educating the general public about retail banking and personal finance. Souqalmal.com offers a comparison of several products from banks in the UAE and Saudi Arabia.
Souqalmal is now concentrating on informing the public on financial products through informative materials on its website as well as offering an interactive calculator that allows users to better understand their financial capabilities and liabilities.
“What we’re bringing to the market is not just a comparison website, it a financial educator for the region,” said Musa. “We publish around 50 articles a month and the top read articles are those explaining the basics; like how to open a bank account in Saudi Arabia.”
Musa adds that the lack of knowledge concerning person finance is especially prevalent in new younger customers and women.
“There is a whole generation of people who need basic financial guidance. The majority don’t even understand interest rates or how to calculate their monthly repayments,” Musa said.
Individual vs. corporate
It’s not just individuals struggling with understanding the basic of finances. Businesses also lack the needed knowledge on the details of insurance.
“Most founders don’t understand the kind of insurance they need, the only know the ones that are compulsory,” said Musa. “Insurance is not something that brings cash into your business, while finance to run your business will eventually grow it.”
“Insurance is a product for when things go wrong, it is too late to get insurance when things actually go wrong, and people don’t usually thing about that,” said Musa.
The Saudi dynamics
Because of Saudi Arabia’s large population, the country is thought of as the biggest market across the GCC. Given that information, many see the region as a hot spot for businesses in a variety of industries.
“Saudi Arabia is the holy grail of the GCC, it is naturally the second place anyone would want to expand into if you have managed to be successful in the UAE,” said Musa.
Despite its size and opportunity, Musa says Saudi Arabia is “probably one of the hardest markets to get into in the GCC… lifetime value of a customer there is much higher than the UAE, so in Saudi Arabia when a customer joins a bank they are likely to stay with them for about 25 years, while in the UAE that average would be between five to six years.”
A threat to the banking industry in Saudi Arabia is its lack of ability to connect with tech-savvy customers.
“In Saudi Arabia, 90 per cent of users access [Souqalmal] website through their smartphones, while that number is at 60 per cent in the UAE,” said Musa.
“They’re spending millions on offline marketing, but the Return on Investment is only third of what it used to be,” said Musa.
She went on to explain how banks have a hard time keeping up with the ever changing habits of the customer.
Through information and assistance offered by Souqalmal, banks in Saudi Arabia can now breathe a sigh of relief as there is a better way to understand financial consumers and their needs.
“We believe in in localizing the business, and financial education is something you need to understand from every country,” said Musa. “So we grow one country at a time but with very in-depth knowledge, we’ve preparing to go into Saudi Arabia nine months before the launch.”
After launching in the UAE in 2012, Souqalmal branched into the Saudi Arabia market September 2015. The company’s website is credited with its growth, as it provides information customers want and will return to get.