Cowrywise, a Nigeria-based wealth management startup, has received a licence to operate as a Fund/Portfolio Manager from the country’s capital markets regulator, the Securities and Exchange Commission (SEC).
The license means Cowrywise’s operations now fall directly under the regulatory scope of the SEC and should help improve trust with potential users. Before now, the startup used a trustee structure to offer investment opportunities, in partnership with regulated investment management companies like Meristem.
Cowrywise was founded by Edward Popoola and CEO Razaq Ahmed to democratise access to savings and investment products to the growing demography of underserved Nigerian millennials and the middle class.
Currently, the company boasts a wide range of investment products. These include savings-related products backed by fixed income instruments like treasury bills, which Ahmed has often claimed at 10-15% yield better interests- than what banks offer.
Cowrywise also has about 21 different mutual funds and at least 20% of the total mutual funds in the country are listed on its platform, making it the largest aggregator in the country. These assets cut across five investment company partners – including United Capital Asset Management, Meristem Wealth Management, Afrinvest Wealth Management, ARM Investment Managers and Lotus Capital.
For Cowrywise’s clients, a license from the SEC means greater protection of their assets. “With our own license, the SEC now becomes your “guardian”. They’ll double down on our existing security structure to keep you even safer,” Cowrywise said in a mail to clients announcing its new license on Tuesday.
Improving relationship with the regulator
With the latest development, Cowrywise becomes the second fintech startup in Nigeria to secure a license from the SEC after the regulator granted the inaugural one to Chaka a few days ago.
However, Cowrywise is the first fintech to get a licence in the fund/portfolio management category. Chaka, on the other hand, got a Digital Sub-Broker licence.
These developments point to an improving relationship between the Nigerian capital markets regulator and the several fintech players that provide investment services in the country.
Over the past few years, DIY-stock buying platforms such as Bamboo, Trove, Chaka, and Rise have emerged while startups like Piggyvest and Cowrywise, initially focused on providing digital banking services, have dabbled into investment management.
These startups offer Nigerians access to stocks, bonds, and other securities in both local and foreign markets. While they have gained popularity among the young middle class, as they provide a means to protect naira earnings from devaluations, the companies have been subject to a series of regulatory attacks. Regulation of the space has been mooted for some time now.
Efforts have been made to engage each other and, with the awarding of two licences within a week, those attempts are apparently yielding desirable results beneficial to not only both parties, but also the investing public.
What comes next for Cowrywise?
With the new license, the startup plans to offer more for its partners (fund managers) and investors on its platform.
Cowrywise also said it will be making its APIs public to help fund managers across the world access its services and open up more investment options to serve customers in Nigeria better.
“Digitizing the investment management infrastructure is an important next step in our vision to democratize access to investment products,” the startup said. “These APIs do not just apply to fintechs; any company can embed investment features in their products as our investment API simplifies regulatory, compliance, and technical hurdles.”
Cowrrywise commenced operations in 2017 and has since grown to have over 300,000 users on its platforms. It recently raised $3 million in a funding round led by Quona Capital.
By 2025, the company aims to introduce 10 million first-time investors to regulated investments, according to Ahmed.
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