YPay: Youth Investment Syndicate

The recent events centering around Gamestop and r/wallstreetbets created a buzz around the world. The idea that a reddit community of amateur investors could outmaneuver major hedge funds, is so preposterous that when it came true, so it automatically started various debates. The existing regulatory framework came into question, but more importantly, this was a fairytale, where the oppressed poor prevailed over the corrupt rich. It dawned on me that could something similar ever happen in Pakistan? After reading about a fifth-grade student, who made thousands of dollars on his Gamestop shares, made me question that why doesn’t it happen here. Furthermore, I publicly feel ashamed that in the entirety of my 24 years of life, I have never spent a rupee on stocks.

In the recent times, Pakistan Stock Exchange has been the 7th best performing market all over the world. Pakistan has been able to fend off Covid 19 to an extent, and it has even shown growth with increasing exports. Therefore, saying that Pakistan isn’t the right place to dip your toes in the market, is an outrageous claim. Furthermore, I’m not alone when it comes to not investing in stock, but Pakistan as a whole, has only a 15% of investment to GDP ratio. To put the aforementioned number in perspective, Bangladesh’s investment to GDP ratio is over 30%, India’s is close to 29% and Srilanka’s is 31%. Hence, Pakistan is one of the worst performing countries, when it comes to investments.

The most common form of investment in Pakistan, is buying a plot or building a home, where you wait for few years for the prices to go up. Sadly, we don’t understand that what we consider as the safest bet, was the reason for the whole 2008’s financial crisis, and it has created a housing bubble in Australia. Yet, the reason we mostly invest money in physical assets like plot or gold, is because this is the most common type of investment around. I for one, have no idea how to invest in stocks, also, I’m extremely lazy to figure it out. To give more details about my consumeristic habits, so I only started using Foodpanda, when at nest, I couldn’t find a cheap restaurant around. I started using Careem because I couldn’t drive, also, I’m using linkedin, when after wasting a lot of years on facebook, I realized that all the right people might be on Linkedin. Thus, by considering myself as a sample and by analyzing my habits, we can easily understand that if I need something, so I always look out for the most convenient option around. Thus, if we model the general population on myself, so the one factor that we are missing in adding more investors, is Convenience.

Photo by William Iven on Unsplash

To solve this particular problem a local startup called “Ypay Financial Services” is making huge strides. Ypay was a part of SECP’s sandbox cohort, where they were able to prove their model, and eventually they acquired the Online Mutual Fund Distribution License. I decided to dig deeper and setup a small interview with Ypay’s cofounder Mr. Muhammad Furqan Karim.

Q) What is Ypay and why Ypay?

Furqan replied — Since we are a digital investment and saving platform, so we are providing access to asset management companies and investments to the youth demographic of this country, so first, there is a financial literacy gap in our youth, and second, the accessibility of investment avenues is hard to come by. Therefore, you have asset management products, which are normally offered by Asset management companies, so we are making these products accessible to early professionals and students, who lack the relevant knowledge and would be interested in small ticket investments.

Q) Some of the key milestones you achieved till now?

Furqan replied — In 2020, we were accepted in the SECP’s sandbox cohort, where we were able to secure a Financial Advisory license called “Online Mutual Fund Distribution” license, so currently, we are the only independent private online Mutual fund distributor, and we have a centralized platform for mutual funds.

Q) How difficult it is to operate as a fintech in Pakistan?

Furqan replied — It is extremely difficult to operate in the fintech industry, as you have to get a lot of licenses. If you’re holding anyone’s money or you have money in your wallet, so you are automatically under the regulations of State Bank of Pakistan. If you’re in capital market, insurance market of digital identity, so there you’re automatically under the regulations of SECP. Since, we are a digital investment platform, so we are under SECP’s regulations, but we were lucky that we could get the license through the sandbox program, but we had to go through months long scrutiny to ensure that we met the requirements.

Q) Targets for 2021?

Furqan replied — Our 2021 target is very clear; we will be launching our product soon for the masses. You will be able to use Ypay’s app, and we will try to penetrate the market as much as we can. Whether it’s the university students or early professionals, we will be providing a platform to them to invest directly. Furthermore, the social consequence of all of our efforts would be that the Investment to GDP ratio of Pakistan would grow.

Q) Message to the readers?

Furqan replied — My message to the readers is that never lose hope, as patience and perseverance is the way forward. Covid 19 has largely affected all of us, and considering the amount of effort we have put in the last 1.5 years, again, I’ll say that patience and perseverance is the only way forward.

Startup growth Strategies and tech product development are the reasons that I get out of bed everyday.