PiggyVest Co-founder Eweniyi “The banks can afford to give more but they don’t”
West Africa Wealth and Society 2019 SME Entrepreneur of the Year Award Winner, PiggyVest Co-Founder Eweniyi discusses how her online savings platform can provide low-income users with a better return than banks.
- Leaner fintech platform offers savers choice in Nigeria where high inflation and comparatively low bank deposit interest rates are eroding savings
- Built in discipline in the app has enforced a savings culture
- Diversifying away from only treasury bills into largely ignored higher-yielding agricultural investments
With Nigerian commercial banks often not catering to lower income segments of the banking population, and emerging fintech platforms stepping in to provide financial savings and investment options to Nigerians and basic transaction banking services. PiggyVest, a savings and investment digital platform whose co-founder Odunayo Eweniyi was recently recognised as the Wealth and Society West Africa 2019 SME Entrepreneur of the Year Award, is offering a vehicle for savers to increase their returns.
“The banks can afford to give more but they don’t, there is a disparity there. It is left to us to educate people that you can get better value for your money.” Eweniyi said.
PiggyVest is a digital automated savings and investment platform which allows users to invest spare money with promises of higher interest rates than a typical savings account.
The new brand name PiggyVest, changed from Piggybank in February 2019, with the intention of better reflecting the variety of investment options now offered to customers since the company’s inception in 2016 as an online savings platform.
“We offer our users 10 - 13% interests on savings and we have a margin of 3-5% of saved funds taken as revenue. Revenue growth for us has been about 200 - 300% year-on-year.” Eweniyi said.
Providing savings opportunities for low-income savers not offered by banks
The motivation for Eweniyi to set up the enterprise is based on the reality that 80% of the population of Nigeria needs to save about 40% of their monthly income to be able to meet up with their responsibilities. This is mainly because Nigeria is still largely a cash-economy transacting in bulk and upfront due to a lack of an effective credit system.
“So if people want to rent a house, they are not just worried about the first and last month’s rent, they have to pay for 24 months upfront, which leads to people having to save up or go into debt, which is a vicious cycle that we are trying to break.”
With 250,000 registered users, total savings on the platform are $20 million, with approximately $10 million sitting on the platform. On average users are saving around 20,000 Naira ($55) every month.
The return on micro investments are up to 10% per annum on Core Savings (Piggybank Savings), over 13% per annum on SafeLock (Fixed Income Investment) and 10% per annum on both Target and Group Savings functions.
“The inflation rate here is about 11% rising to 12 % currently. Even then if you try to save with a bank you’re only looking at up to 4%. Doing treasury bills yourself can earn you 9-11%, 12 % if you have a large amount to invest. Therefore, as we are going to asset management companies with large funds, we are able to negotiate higher rates such as 16-18%.” Explained Eweniyi.
Built in discipline enforcing savings
PiggyVest is available on IOS and android and partners with payment processor Paystack who are licensed to process payments, therefore PiggyVest is not required to retain bank details. Four of the key functions it currently offers are listed below:
- Automated Savings - (Piggybank)- Interests are accrued daily on a users’ balance, and paid monthly
- Target Savings - Similar to automated savings but offer greater flexibility through the ability to saving towards a particular date
- Flexible Wallet - interest, and value added from the platform are paid into the Flexible Wallet for users to access this money at any time.
- Safelock option - is an investment tool investing in treasury bills, which gains interest up front, and a users’ capital returns at the end of an agreed-upon period, up to a maximum of 1000 days. This allows the user to invest in treasury bills who otherwise wouldn’t meet the threshold.
With commercial banks having to maintain costly physical infrastructure and employing numerous staff, they are able to offer lower interest rates, due to fewer staff and maintenance costs, and customers in Nigeria are increasingly transferring their savings onto leaner fintech platforms like PiggyVest.
“Just leaving your money in a Nigerian bank means that you get charged for it. We are an alternative to transaction banking, we have discipline built into the app – when you start to save with us you don’t have access to your funds for free, except for once a quarter, outside of that users will be charged. We have actually seen these enforcing savings meaning you have to save for at least 90 day bursts.”
Future strategies of diversification for higher yield options
Looking ahead into 2019 and beyond, PiggyVest will be diversifying into investments through their offsite tech-team. This investment strategy will not use users’ funds, but will be a listed option on the platform for interested persons seeking higher returns. Users of the platform will therefore also be able to raise capital for those seeking capital for projects.
“We don’t want to just do the usual treasury bills. Agricultural investments, which have higher than usual returns such as 27% in 11 months for example, are a largely ignored sector. So we are working with other start-ups and people who have relationships with farmers.” Eweniyi said.
Keywords: Savings, Alternative Banking, Fintech, Banking Interest, Technology
Guest: Odunayo Eweniyi