Banks in Trouble as Digital Banks are Making Nigerian Youth Save Better
You can usually find Yewande Oyebo in her little Lagos office space, designing bags, notepads and mugs — her earphones plugged in, the world shut out. She can afford that sanctuary. In 2017, she quit her job in a global tech company to launch Ankara, her lifestyle brand. But a year earlier, she had signed up on PiggyBank, a digital platform designed to help Nigerian millennials save. That made the move from a steady income to the uncertainty of entrepreneurship easier.
Before joining PiggyBank, Oyebo would manage to save only sporadically. But a few months after signing up, she started setting more ambitious goals: to fund her lifestyle brand, to travel, to buy a car. And for the most part, she has met those goals. And she’s not alone.Barely out of one of its worst recessions in recent decades, Nigeria’s economy is struggling, and rising inflation has stifled the ability of Nigerians to save. There is hardly enough money to spend, and Nigeria’s commercial banks, which bundle savings accounts with checking accounts, don’t make it easier to maintain separate savings.
But from this crisis is emerging a series of fintech platforms that are helping young Nigerians save better. There’s PiggyBank, which launched in 2016 and works on simultaneously securing money and instilling financial discipline. Customers earn a minimum of 6 percent annual interest, and if they keep their savings longer, can secure even higher returns. Between 2016 and 2017, it built a savings customer base of more than 53,000 registered users. CowryWise, which started in July 2017, combines digital savings and investments with wealth management, all online. Over the past year, its user base has grown 30 percent month-on-month. Alat, launched in May 2017, describes itself as Nigeria’s first digital bank. Diamond Bank, a retail bank, in 2016 launched what it calls the Diamond eSUSU platform, modeled after Esusu, a traditional West African contributory and rotational savings practice.