No, CowryWise and PiggyVest are not building digital banks - yet

Image credit: George Osodi/Bloomberg

Over the last two weeks, two of Nigeria’s most popular financial startups, PiggyVest and Cowrywise, unveiled new features for their users. In late July, Cowrywise, a wealth management startup, launched Stash, a wallet that holds cash for users and also comes with an account number for other transactions.

With the account number feature, Stash allows users to make cash transfers directly from their regular bank accounts to their Cowrywise accounts. Stash funds can be used to invest directly in any of the Cowrywise’s investment packages or the money can be sent to other Cowrywise users at no extra cost. Users can also send funds from Stash to regular banks accounts at the cost of ₦25 per transaction; half the cost of inter-bank transfers.

No, Cowrywise and PiggyVest are not building digital banks - yet

Cowrywise is a popular financial app that offers users as much 15% returns on investment., much higher than what regular banks give.

Just a few days later, PiggyVest followed suit and introduced its own dedicated bank account number, NUBAN. Like Stash, NUBAN allows users to fund their PiggyVest accounts directly from multiple channels, including internet banking, USSD and bank transfers. 

Joshua Chibueze, the startup’s Chief Marketing Officer (CMO), told TechCabal that NUBAN was made possible thanks to a partnership with TeamApt, a fintech company with a CBN approved switching licence. PiggyVest relies on TeamApt’s partnership with Providus Bank, a regional bank, to offer NUBAN.

“We consume the APIs created by TeamApt through their partnership with Providus to create a seamless experience for our customers which solely enables them fund their wallets,” said Chibueze.

The new features are designed to help users transfer easily among other benefits, but speculation has been rife about both startups becoming “digital banks”.

A TechPoint report led the way but representatives of both companies reached by TechCabal said they have no plans at present to become digital banks.

“Stash does not convey a pivot. The feature is simply another option that helps customers fund their savings and investment packages,” Cowrywise wrote in an email.

“We have been clear from day one about our vision of building the wealth management platform for the next generation.”

The company says its focus remains on financial planning, savings and investment, not credit facilities like banks.

PiggyVest outrightly denied it has any plans to emerge as a digital bank, “at least not yet,” Chibueze, the CMO, told TechCabal.

No, Cowrywise and PiggyVest are not building digital banks - yet

PiggyVest has evolved the services it offers to users since the start of 2019. But the company is not turning to a digital bank any time soon.

Chibueze said the company formerly known as PiggyBank, rebranded to focus more “on the investment landscape in Nigeria and plug millennials to sustainable opportunities to ultimately help them achieve financial freedom.”

The company’s movement in this direction has been evident over the last couple of months. Originally created to help young people develop the habit of saving, PiggyVest has since added an investment plan and an insurance plan to its service offerings.

“We have morphed into more than just a savings platform,” PiggyVest wrote following its rebranding in February 2019

“[We] are growing into a robust financial management platform with many products planned for the next few years to enable you to better manage your finances.”

Nevertheless, any pivot into a digital banking landscape requires more licencing and regulatory approval than product development. For one thing, the cost of acquiring a banking licence will put a strain on the finances of the two companies at the moment; both of which have collectively raised about $1.4 million.

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