Wahed receives Series B investment from Saudi Aramco

Saudi Aramco leads the funding round in the Islamic fintech, Wahed, as it seeks to launch a neo bank.

June 17, 2022 | bobsguide

New York-headquartered Islamic finance company Wahed has secured investment from Wa’ed Ventures, the venture capital arm at Saudi Aramco Entrepreneurship Center, on its $50 million Series B round.

Wa’ed Ventures is leading the funding round, with several family offices and institutions making up the group of strategic investors.

The Islamic finance-focused tech firm intends to use the new capital to support its current growth phase as it plans to launch an “ethical” neo bank.

The proposed application will allow users to bank and invest in one app.

“The rapid popularisation of fintech solutions and their influence in advancing financial literacy and inclusion worldwide have created the right urgency for fintech products that are both ethical and easily accessible for individual investors,” said Fahad Alidi, Managing Director at Wa’ed.

According to its website, Wahed’s Shari’ah board screens out investments comprising excess debt, tobacco, alcohol, firearms, gambling, adult entertainment, impure foot stock, and usurious institutions.

Wahed’s recently appointed board of director William Haney said: “its (Wahed’s) digital tools have enormous potential to make the world of finance more accessible to those previously excluded.

The latest funding round follows a series of team expansion in recent months, including the appointment of Haroon Mokhtarzada, founder of unicorn fintech Truebill, and Lori Richards, former director at the SEC, as Wahed’s new board of directors.

In March, the company also created a risk and audit department to manage the company’s risk and risk-transfer strategies.

Wa’ed first invested in Wahed in 2020, leading a $25 million investment round.

As per the investor’s website, Wahed is the second fintech company in its portfolio after the UAE-based payment processing group, Paytabs.

Islamic fintech to grow in coming years

Wa’ed’s Series B round highlights the growing interest in Islamic fintech sector as the adoption of digital banking and services accelerates around the world, including in Muslim communities.

According to Global Islamic fintech report 2021, the Islamic fintech industry in the Organisation of Islamic Cooperation (OIC) region is projected to grow to $128 billion by 2025, marking a compound annual growth rate (CAGR) of 21% (compared to 2020).

During the same period, the report estimates that the conventional fintech industry will experience slower growth at 15% CAGR.

Despite the heavy concentration of the Islamic fintech market in the Middle Eastern and Asian regions, Islamic fintech groups like Wahed have also been established in North America.

Canada-based halal financing provider, Manzil, recently raised a $1.91 million of seed money in February for its scale-up efforts.