For all the hype around financial technology companies, they have been mostly duds on the public markets. Not Tio Networks. Over the past year, the Vancouver-based fintech firm has been one of the top performers on the TSX Venture Exchange, more than doubling its market capitalization to a respectable $200 million. Its impressive earnings and revenue trajectory—following its major acquisition of Softgate Systems this summer, it’s on track to exceed $100 million in revenue this year—could have something to do with the fact Tio is a classic 20-year “overnight” success story.
Not long out of university, Hamed Shahbazi founded the company in 1997 as Info Touch Technologies, a developer of applications for self-service kiosks. The company found its true calling in 2002, when it created its first bill-payment app. The client, Cricket Communications, was targeting lower-income Americans with its affordable all-in wireless plan. But every Friday—payday—it found its stores inundated with customers who wanted to pay their bills in cash at the last minute. “We solved that problem for them with kiosks that took in cash, like reverse ATMs,” Shahbazi says. “That was a game-changer for them.”
With 28% of adults in the U.S. having limited or no access to bank and credit card accounts, Shahbazi saw a “wide space” worth US$1 trillion in GDP a year that needed to be filled. Enabling the working poor, many of them immigrants (hence the name Tio, which means “uncle” in Spanish), to pay their bills for a low fee and avoid late penalties or service interruptions was simply the right thing to do. “There are people serving this market, but they are charging too much, and by doing so, elevating the customer’s pain not alleviating it,” Shahbazi says.
Today, the kiosks represent a small portion of Tio’s business; Internet and wireless payments predominate. Shahbazi sees a future in prepaid debit cards and wallet apps for phones. “We didn’t achieve success with a breakthrough product. We put together customers and functions, and built a network piece by piece,” he says. Shahbazi didn’t set out to champion the cause of financial inclusion, he admits, but it went hand in hand with Tio’s success. “If you chase the money, you probably won’t get it. If you chase impact, you can monetize that.”