Piggybankltd.com Review Is PiggyBank Scam or Should I Invest

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Meet Piggybank.ng, The Nigerian FinTech Startup That Just Raised $1.1million

A two-year old Nigerian fintech start-up this week announced that it has raised a $1.1M Seed Fundraise, to grow its online savings platform, Piggybank.ng . The company, started by Somto Ifezue, Odunayo Eweniyi and Joshua Chibueze , who first met at Covenant University, Nigeria, is tackling a problem endemic to Nigeria, and across Africa; savings. According to the company, 80% of Nigerians – and most probably all Africans – need to save at least 40% of their monthly income to survive and pay for every day expenses. However in a society such as Nigeria, with no credit system to speak of, the vast majority of payments are made in cash and savings, inevitably, slip away.

Enter Piggybank.ng. The concept and product is simple; savers can deposit as little as $1 a day into a their online Piggybank.ng account, and cannot touch their savings, until an agreed withdrawal date [unless they are happy to pay a 5% early withdrawal fee], whilst all the time accruing around 6% interest per annum on automated savings.

Piggybank.ng seems particularly popular with Nigeria’s Millennials, for whom going online via their mobile phones for day-to-day transactions is second nature, and who currently make up 60% of the company’s registered users. Having recorded staggering savings growth of 3000% between 2020-17, with the Piggybank.ng community having saved over $5M, the company has commanded the attention of a group of Nigerian investors, led by Olumide Soyombo , Co-Founder of Leadpath , who have helped the company raise $1.1M.

I caught up with Piggybank.ng’s Co-Founder and COO, Odunayo Ewiniyi, to find out more about the company, how they plan to tackle the $2.2Bn savings market, and how they plan to invest their newly acquired funds.

Tell us a little bit about Piggybank.ng

Piggybank.ng is an online savings platform that enables savers to put away funds that they don’t want to withdraw easily. They can save as little as $1 a day and then restrict when they withdraw their savings to specific set dates they choose. Unlike a regular bank’s savings account, where you can access the money at any time, Piggybank.ng helps its users maintain their savings discipline while building their savings culture, as they save towards something big. Piggybankers can earn on average 6% per annum on automated savings or 10.95% per annum on the fixed deposit product, Safelock and can withdraw funds for free once per quarter.

How did the company come about?

We are a team of three co-founders, myself, Somto Ifezue and Joshua Chibueze who met originally at Covenant University, Nigeria. We have worked together for almost 8 years now on different startups and businesses and in 2020, we came together again to tackle the huge issue of savings in Nigeria. Maintaining discipline in Savings was a problem that we as individuals had, and we later realized that we were not alone. The majority of Nigerians, in fact Africans, need to save a minimum of 40% of their monthly income, in order to survive and to pay for even the basics such as housing, access to healthcare and school fees. Piggybank was built to tackle this huge and under-served market.

What’s the difference between your product and using a regular savings account from a bank?

Unlike conventional bank savings accounts, the platform restricts withdrawals until an agreed date or users can withdraw their savings on a quarterly basis, whereby savings drawn outside of the agreed day attract a 5% early withdrawal fee. So while the platform is extremely simple and flexible to use, customers are also incentivized financially to keep their money in place, until the agreed date.

How have you grown your user base?

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We haven’t invested too heavily in above-the-line marketing, to-date, rather our growth can be attributed almost entirely through peer-to-peer recommendations; verbal endorsement from trusted people within your wider network is a super-powerful mode of marketing. Our users are our influencers, our advocates. They like the simplicity of our products, they see medium-long term results in their savings accounts and then they are compelled to tell their friends and family about us. We also initiated a unique referral program, Piggybank Stories , whereby our savers are rewarded when they share their story; Once a Piggybanker’s story has been sent in and approved, they receive a unique link that they can share with friends, family, colleagues or on social media. Rewards can then be earned as the new user who uses the link engages with Piggybank. Africans are storytellers, so we have applied this tradition, this genetic structure that sits in all of us, to build our user base, which saw a 3000% savings growth between 2020-17 and 20-35% m-o-m growth in user traction over the past 12 months.

How do you generate revenue for your company?

Piggybank.ng generates its revenues through asset management, and our revenue margins currently stand at 4 – 7%. So, every month, users save, and we invest a portion of that float, and plough back most of the interest we get back to our users. Our users earn an average of 6% per annum on automated savings or 10.95% per annum on the fixed deposit product, Safelock, which is higher than the average interests around.

How will you use this investment?

We recently applied for and secured a micro-financing license from the Central Bank of Nigeria [CBN], which was a long-term investment for us. We are also hiring talent in marketing, product and tech departments, as we continue to introduce new products and grow our user base.

Unlike other recent funding rounds, where start-ups have looked outside of Nigeria for VC investment, you’ve raised $1.1M from almost exclusively Nigerian investors – what does this say about the market?

We are extremely proud to have had such incredible support from the local Nigerian investment community, and I hope that our engagement with local investors now opens up opportunities for other start-ups, who often assume they have to go abroad for investment. Many of our peers have to fly across the continent, or head to the US or to Europe to raise a similar Seed Round. Whilst we’ve naturally held a lot of conversations with a number of different stakeholders through this fundraise process, essentially, as a team, we’ve been able to stay in Lagos and spend time working on and refining our product, and most importantly, talking to customers. There is wealth in Nigeria, and so much of it is channeled towards infrastructure, agriculture, real estate, petro-chemicals and so forth, but we have seen very little [in real terms] local institutional investment into the tech ecosystem, and it shouldn’t be like that. So we’re grateful for Olumide Soyombo of Leadpath , for connecting us with a local investor network.

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The saver of the month!

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Every month, we shine a spotlight on one saver, asking them questions about their savings culture and how the product is specifically helping them shape how they spend and save for future responsibilities.

Recently verified customer stories/feedback

“Piggyvest has really helped me a lot. Before I got to know about Piggyvest, I use to have trouble saving but now thanks to Piggyvest, all is well” Posted on Monday, 2nd of March 2020 by 23:37 PM

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“FEW YEARS AGO I HAD SERIOUS CHALLENGE IN MY BUSINESS, IN FACT, I WAS EATING FROM HAND TO MOUTH, TO SAVE BECAME BIG PROBLEM, IN THE YEAR 2020 I SAW A POST ON THE FACEBOOK PAGE ABOUT PIGGYVEST, THAT WAS HOW I DOWNLOADED THE APP, BUT AT FIRST I WAS. read more” Posted on Monday, 2nd of March 2020 by 18:43 PM

“I love the interest I get on a daily basis Piggyvest is good” Posted on Monday, 2nd of March 2020 by 06:28 AM

“I have always been terrible at savings, and this has put me behind on achieving some set goals because I’m always low on cash, but Piggyvest has helped me discipline myself and the little cash I get as an entrepreneur I get to keep a little of that. read more” Posted on Sunday, 1st of March 2020 by 19:29 PM

“Before I came across PiggyVest I had been very frivolous in spending, finding it so difficult to save, even with my numerous bank accounts, as my unhindered access to the funds in my bank made it so easy for me to filter away whatever amount I. read more” Posted on Sunday, 1st of March 2020 by 17:27 PM

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PiggyVest (formerly piggybank.ng) is the largest online savings & investing platform in Nigeria.
For over 4 years, our customers have saved and invested billions of Naira that they would normally be tempted to spend.

Office: Tesmot House, 3 Abdulrahman Okene Close, off Ligali Ayorinde Street, Victoria Island, Lagos.

© 2020 – 2020 PiggyTech Global Limited – RC 1405222

Nigeria’s Piggybank.ng raises $1.1M, announces group investment product

Seeking to tap into Africa’s informal savings groups the Nigerian investment startup Piggybank.ng closed $1.1M in seed funding and announced a new product — Smart Target, which offers a more secure and higher return option for Esusu or Ajo group savings clubs common across West Africa.

The financing was led with a $1 million commitment from LeadPath Nigeria, with Village Capital and Ventures Platform contributing $50,000 each.

Founded in 2020, Piggybank.ng offers online savings plans — primarily to low- and middle-income Nigerians — for deposits of small amounts on a daily, weekly, monthly, or annual basis. There are no upfront fees.

Savers earn interest rates of between 6 to 10 percent, depending on the type and duration of investment, Piggybank.ng’s Somto Ifezue told TechCrunch in Lagos with co-founders Odunayo Eweniyi and Joshua Chibueze.

Users need an account with one of PiggyBank.ng’s bank partners to use the products. The startup generates returns for small-scale savers (primarily) through investment in Nigerian government securities, such as bonds and treasury bills.

PiggyBank.ng generates revenue through asset management and from the float its balances generate at partner banks.

The startup looks to grow clients across younger Nigerians and the country’s informal saving groups.

“The market that we are trying to serve is largely the millennial market, though we do not exclude anyone,” said Eweniyi, the company’s chief operating officer. The venture also looks to meet a demand in Nigeria for accessible investment options, citing a survey they conducted indicating that as a top priority for people with discretionary income.

“Piggybank offers savings, but our vision is not just savings, but to become a holistic platform — a financial warehouse — where other financial providers can plug in their services for PiggyBank users,” said Eweniyi. She cited banks, investment houses, insurance, and pension funds as possible partners.

The company currently has 53,000 registered users — 60 percent of whom are Nigerian Millennials — who have saved in excess of $5M since 2020, according to a release.

PiggyBank.ng will use its $1.1M in new seed funding for “license acquisition and product development.”

The startup has taken preliminary steps to launch in other African countries (Kenya in particular) but could not offer exact details.

Groups will be able to choose savings options and goals through PiggyBank.ng’s app and receive automated disbursement of returns across their individual bank accounts, according to COO Eweniyi.

As for how the company assures savers it won’t become another Ponzi scheme, Piggybank.ng and its lead investor point to the startup’s pending banking license with Nigeria’s Central Bank. The company is in the process of acquiring a micro-finance banking license, something LeadPath Nigeria founder Olumide Soyombo confirmed on a call with TechCrunch. He also pointed to Piggybank’s client balances being held with registered banks, which are protected under Nigeria’s own FDIC type banking insurance.

Soyombo will take a role on Piggybank.ng’s board and he’d like to see them open up new options for individuals to input money on the platform. “The agent network business is a huge play we plan to go into. They’ve basically become like human ATMs,” Soyombo said. He referenced Nigerian digital payment company Paga and Safaricom’s M-Pesa with large agent network stations where clients can fund digital accounts with cash.

While digital payments products have caught on in certain parts of Africa, E-Trade type citizen investment platforms have yet to emerge at any scale.

Soyombo doesn’t see Piggybank.ng moving from fixed income investments to equities just yet. “Maybe down the line stocks could be an interesting play, but not right now. People are currently looking for a more risk free place to e-tail,” he said.

Soyombo believes Piggybank.ng has the potential to become an acquisition target.

“They usually only happen in our market with two main players: banks and telcos,” he said. “The banks have been slow to try new things in this savings space. Piggybank is coming in…and filling a particular need, so they are in a very acquisitive space.”

Beware of spare change investments

Updated Sept. 17, 2020: You may have heard of Acorns. Acorns is an investing app lets people automatically invest their spare change by rounding up the purchases they make with a linked credit or debit card. Acorns, currently valued at $860 million, has been lauded by investors and journalists alike for finally getting millennials interested in investing. (The demographic – notoriously skittish when it comes to the market — makes up the majority of Acorns’ over 5 million users.) But is the micro-investing app worth its fees? Check out our full Acorns app review.

How does Acorns work?

The Acorns investing app encourages you to invest your spare change using a system it calls “round-ups.” Acorns monitors your bank account and automatically invests the change from your daily purchases. For example, if you buy a coffee for $2.75, Acorns will round up to $3.00 and automatically invest $.25.

The “save your spare change” feature is Acorns’ key selling point, along with ease of use. Unlike financial tech startups Betterment and Wealthfront, which offer more robust investment services, Acorns was built to be mobile-first. It was originally available only as an iOS or Android app, though the company ultimately launched a web version.

Acorns review

Part of being an app means making the investing process as simple as possible. While Betterment and Wealthfront give you a wide variety of options to customize your portfolio, Acorns forces you to choose between their five default “smart portfolios” built with the help of Harry Markowitz, father of the Modern Portfolio Theory. The app will suggest one of these portfolios — conservative, moderately conservative, moderate, moderately aggressive, or aggressive — based on your savings goals and risk tolerance. You can alternately choose one yourself. Acorns will automatically rebalance your portfolio as the market changes.

There are no minimums to set up an Acorns account, but you need $5 to start investing.

How much does Acorns cost?

You won’t see many Acorns reviews telling you that there’s a danger to investing too little, but it’s important to understand how the return on an Acorns account stacks up against full-service investment apps. Acorns fees are $1 per month for all accounts with a balance under $1 million. The monthly fee rises $100 per month for every million you invest afterwards. Compared to traditional management, mutual funds, and DIY ETFs, this fee is incredibly low. Other portfolio advisory services, like Amerivest, charge as much as 1.25% and require a minimum investment of $25,000.

But, while Acorns’ fees seem low on the surface, Acorns’ traditional competitors aren’t encouraging would-be investors to build a portfolio around their spare change. When you’re dealing with just a few dollars every month, that $1 fee starts to make less sense.

For instance, if you make 50 transactions each month with an average of $.25 rounded up per transaction, you’re only investing $12.50 every month. At that rate, Acorns’ monthly fee is taking away 8% of your contribution to your investment portfolio in your first month. Keep in mind that Acorns doesn’t take its subscription fee out of your account, but rather a linked funding source so that the monthly fee doesnt’ directly impact your losses and gains.

The more transactions you have (the more you’re spending, perhaps multiple small purchases like coffee or fast food) this percentage will go down. At 100 transactions per month with an average of $.25 per transaction, you’ll invest $25 the first month and give 4% to Acorns. At 150 transactions, you’re investing $37.50 and giving almost 2.7% to Acorns.

Note that none of this takes into account the money you already have in your account, slowly (or quickly) growing (or shrinking) because of market changes. If your portfolio grows a few bucks and Acorns reinvests it, that effectively adds to your monthly contribution. However, until your portfolio grows to be thousands of dollars, your portfolio growth is unlikely to make a noticeable difference to your bottom line month over month.

Acorns vs Betterment vs Wealthfront vs Wealthsimple

Betterment only charges .25% in fees per year for its baseline price tier, amounting to mere cents per month while you are building up your portfolio.

And what about Wealthfront, another robo-advisor? They require a minimum balance of $500. They do, however, manage the first $10,000 of every account for free. Canadian robo-advisor Wealthsimple has relatively higher fees of up to .50%, but also offer a human touch.

Acorns features & services

To boost your Acorns balance, you can set up recurring deposits of larger amounts, get referral bonuses and earn extra cash to invest by shopping through Found Money, the core Acorns app’s rewards program, though these features aren’t as heavily advertised as the opportunity to invest your change. The services are popular, however, says Acorns CEO Noah Kerner, with a typical customer investing over $60 per month.

“The majority of our customers take advantage of Acorns’ full suite of tools and services, making the small $1 per month subscription quite reasonable,” Kerner told Policygenius in a written statement.

Acorns’ other services include:

  1. Acorns Later:Acorns Later is an individual retirement account available to Acorns investing app users. People who open an IRA through Acorns Later pay $2 a month for both accounts.
  2. Acorns Spend: Acorns also has an FDIC-insured checking account plus debit card, called Acorns Spend, that its Core users can pre-order. You pay $3 a month if you have Acorns, Acorns Later and Acorns Spend.
  3. Found Money: Acorns has a cashback program that’s a bit similar to one you might see with a rewards credit card. If you make a purchase through an Acorns Found Money partner, that company will automatically invest in your Acorns portfolio.

Is Acorns worth it?

Acorns investing is positioned as the best choice for many millennials looking to dip their toes into the waters of investing, but, as this Acorns review shows, it doesn’t mean it’s the best choice for you. As the chart illustrates, the Acorns investing app is relatively expensive. If you keep a small balance, you’ll wind up paying a high percentage of those assets in Acorns management fees.

If you can’t afford to fork over $500 right now and start your journey toward full-fledged investing, you might consider putting some money into a savings account instead. A high-yield savings account is usually free and will allow you to grow small amounts of money over time. Once you’ve reached a self-imposed threshold —either Weathfront’s $500 minimum or some other savings goal — you can revisit the idea of putting that money in an investment portfolio instead.

Acorns does waive the $1 account management fee on its core micro-investing app for college students, so, if you’re still in school, it’s an easy — and free — way to start saving. You’ll need a valid .edu email address to take advantage of that offer. Acorns is also worthwhile if you’re brand new to investing and looking for an quick, easy way to get started.

The best investment apps

These days, prospective investors have more choices than ever before. Spare change apps like Acorns can help you get more comfortable with investing, but you can also consider doing business with a robo-advisor like Betterment or Wealthfront, which mix automation (no trading or stock picking) with access to financial planners. There are also online brokers like Robinhood and Stash that let you trade and manage stocks yourself.

Want to learn more about new ways to invest? Check out our roundup of the best investing apps of 2020.

Disclosure: We may use affiliate codes when linking to third parties. These codes earn us a small commission, but their presence does not influence which services or apps we choose to recommend, or our reviews of them.

Adam Cecil writes for Policygenius, a digital insurance brokerage trying to make sense of insurance for consumers. You can read more of his writing on his site.

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