Banking & Finance

Fintech Sarwa beefs up investment platform

February 2, 2024, 8:28 AM

An investor in the Dubai Financial Market. 'Whether you’ve $10,000 or $1 billion to invest, you should have the same opportunities,' said Sarwa's CEO

Aim to ‘democratise’ finance
New asset classes added
Appeal to first-time investors

Sarwa Digital Wealth, an Abu Dhabi-based fintech, will this year add several new asset classes including private equity and real estate to its robo-advisory platform, the company’s CEO told AGBI.

This development is indicative of a broader trend among fintech companies in the region, which are evolving from addressing isolated banking challenges to diversifying their services.

A robo-advisor is a digital platform offering automated investment management services, based on algorithms with minimal human intervention.

“In fintech specifically, I think we’ve seen the first wave, which was unbundling what banks are doing,” said Mark Chahwan, CEO and Sarwa co-founder

“Now we’re starting to see fintechs saying, ‘people trust us with X, why don’t we give them Y?’”.

Sarwa’s platform enables customers to invest in mutual funds, trade individual stocks, exchange-traded funds (ETFs) and cryptocurrencies, as well as earn interest on their deposits. Sarwa means “wealth” in Arabic.

The platform is set to introduce a variety of new asset classes usually exclusive to ultra-high-net-worth individuals, including venture capital, private equity and real estate, which will be made accessible through fractional investments.

“These are asset classes that for most people still are unattainable,” Chahwan said,

“Technology is an enabler to fractionalise everything and give ordinary people the same tools as the ultra-wealthy.”

The CEO said customers have shown interest in accessing “less liquid and riskier” asset classes, to include as a small percentage of their investment portfolios.

Sovereign wealth funds have made significant investments – and gains – in these areas, he noted, underscoring the challenge for knowledgeable but not traditionally qualified investors to access such opportunities.

Chawan, who founded Sarwa after years of working with some of Canada’s largest asset managers, believes the fintech’s triumph will ultimately be when retail investors “can have a similar portfolio in terms of asset class allocation as a billionaire”.

“Whether you’ve $10,000 or $1 billion to invest, you should have the same opportunities,” he said.

Fractional investing enables investors to buy shares of an asset, making it possible to own parts of high-value investments with smaller amounts of money. Sarwa’s top customer segment is UAE residents in their late 30s and 40s.

“At that stage of their lives, they’re more serious about wealth building, have started to enjoy greater financial stability and are more serious about investing,” said Chahwan.

About 60 percent of Sarwa’s customers are first-time equity investors.

“We would’ve failed if it was just the same people switching from one platform to another,” said Chahwan, whose company, he says, is democratising access to financial services.

Sarwa equity investors invest in both foreign and domestic stocks. US equities are especially popular, said Chahwan.

According to Crunchbase, Sarwa has raised $24.9 million from venture capital firms. These include Mubadala, Abu Dhabi Investment Office, Kuwait Projects Co (Kipco) and Middle East Venture Partners.