A large portion of Egypt’s population lacks access to traditional banking, forcing many to rely on cash transactions and informal lending. Khazna, a fintech startup founded in 2019, is tackling this issue by offering financial services tailored for low- and middle-income workers. The company provides solutions like salary advances, digital payments, and microloans to help employees and contractors access much-needed financial services.Khazna recently secured $16 million in pre-Series B funding, bringing its total funding to over $63 million. The investment will support its expansion plans as it prepares to apply for a digital banking license in Egypt and expand into Saudi Arabia.When we covered the fintech in 2022, it had just raised $38 million pre-Series A with over 150,000 customers across its products. Today, Khazna has grown its user base to over 500,000 people; that number is half what it was targeting twice by the end of 2022, according to what Saleh shared at the time.The company focuses on workers earning three times less than Egypt’s minimum wage, providing them with affordable financial tools. About 100,000 users receive their payroll through Khazna, allowing the company to integrate financial services such as loans and insurance directly into their payroll accounts.For the remaining 400,000 users, Khazna offers lending services, helping gig workers and pensioners access credit. CEO Omar Saleh explained that the company initially focused on payroll-backed credit and pension lending, contributing to its break-even last month. “What we did over the last two and half years was to focus on our core product, which is credit offering to payroll and pension recipients and also unsecured loans to gig workers,” co-founder and CEO Omar Saleh told TechCrunch on a call. “This is the most profitable and core product in our journey, and getting it right was very important because it has helped us to hit profitability.”Khazna provides other services like bill payments, buy now, pay later, medical insurance, and a rent-to-own product. But by embedding itself into both payroll and lending, it is strategically moving toward becoming a full-fledged digital bank for Egypt’s underserved communities. But one thing is missing: unlike traditional banks, Khazna, like many fintechs in Egypt, doesn’t have access to customer deposits, making it expensive to fund loans. So far, Khazna has relied on wholesale debt financing in dollars (USD) and the Egyptian pound (EGP) to fund its lending operations.To reduce borrowing costs and offer more affordable loans, Khazna is now working to obtain a deposit-taking license in Egypt. This license would allow the startup to accept customer deposits, allowing it to lower its cost of funds. “The biggest game changer here is for us to get access to user deposits. There’s a huge opportunity for us to capture part of that market as well in a way that will make our cost of funding much more attractive than it is
Mar. Feb 4th, 2025
