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OfferZen Updates: How Cowrywise is Empowering the African Community to Save and Invest
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How Cowrywise is Empowering the African Community to Save and Invest

04 August 2020, by Anthea Hartzenberg

At our final Future of FinTech fireside chat, we spoke to Razaq Ahmed, the Co-Founder and CEO of Cowrywise about how FinTech can empower everyone – including first time users of financial services – to save and invest. He shares more about how the YC company – that has over 100 000 downloads of its investment app – is working to grow opportunities for all generations in Nigeria, Africa and beyond.

Transcript of the discussion

Anthea [00:11]

Good evening, everyone, and welcome to the Future of FinTech fireside chat with Razaq Ahmed. My name is Anthea Hartzenberg, and I head up external engagement here at OfferZen, and I’m really delighted to have you join us this evening. If you’re joining for the first time, this is the fourth event in our series.

Anthea [00:31]

If you’re keen to check out any of our previous chats with Lyndon Subroyen, who’s the Global Head of Digital and IT at Investec, or Shola Akinlade who’s the Co-founder and CEO at Paystack, you can go to our YouTube channel or simply go to OfferZen.com to check any of those out. Tonight, I’m looking forward to the conversation with Razaq, and we’re going to kick off the evening while we wait for the rest of the audience to arrive with a quick poll to start us off.

Anthea [01:05]

It is a couple of questions for us to get to know you a little bit better. You’ll have about two minutes to complete the poll, and it should be on your screen right about now. The first question that is on the screen now is at what age did you start coding? Which is, I think, a very relevant question for our audience. And we do have a huge audience from South Africa, the tech community so very keen to see what those results look like. Phil and Razaq, actually, at what age did you guys get interested in coding or start coding?

Razaq [01:53]

What if someone doesn’t code at all?

Anthea [01:54]

I was actually thinking back now to your background, Razaq, and I realised that we actually never have discussed the question. Well, it must be very interesting working at a FinTech company having started a FinTech company with no coding background. Is that putting you in a good start or what do you think?

Razaq [02:19]

Yeah, well, I am not a coder, my Co-founder is, but of course, I have a strong interest in coding. I know my way around it, but not that I could actively code.

Anthea [02:37]


Phil [02:38]

Less than 12, less than 12, I’m proud to say. 11? But it was a very long time ago. I’m older than I look. It was on the acorn atoms, schools. The acorn atom was the one before the BBC Micro in 1981 it would have been, and that was when I became instantly obsessed like neurotically obsessed with these machines. Once I saw them in the computer room, I was just thrilled.

Anthea [03:09]

Nice bit of history there as well. And, Phil, you’ll have to match that to question number three then, tabs or spaces?

Phil [03:17]

These days, I don’t care very much anymore because it made me neurotic. I had to stop in the end. But I mean, tabs really.

Anthea [03:24]

Cool. That can be a very controversial question.

Phil [03:27]


Anthea [03:30]

I think question number four is on its way, sorry.

Razaq [03:33]

Yeah. My first interface with coding was in VBA Excel as an analyst, which was one of the core programming languages as we have it now. But there is a lot of logic that we need to put together to create financial models and stuff like that. That was my first experience with logic and stuff like that. It was quite exciting and that actually as a route to where we are today. It plays an important part in where we are today as a company as well.

Anthea [04:18]

Definitely looking forward to hearing a bit more about the history of Cowrywise a bit later. The final question, how do you fuel yourself for the day? Personally, I have to say that I am a bit of a tea fan. Rooibos tea – a South African favourite kicks me off in the morning. I have made the transition from coffee. Yeah, very good for me. Razaq, Phil?

Razaq [04:45]

I just sleep sleep, just a bit of a nap. And then I’ve been drinking water. I take a lot of water these days. Just because I’m trying to take less carbonated soft drinks. I’m battling, but I’ve seen the changes. It helps a lot in terms of keeping in shape and complementing that with some exercise. I have not been very active with exercising, but what I intake has been something I like to focus on.

Anthea [05:24]

Cool. Phil?

Phil [05:29]

Black coffee for me, but not now. Thanks. Save it for tomorrow morning.

Anthea [05:34]

Good to know. And if I look at the results coming in, it looks like most of the audience are also into water like you, Razaq, water is leading by about 11%, which is very good to know. And then tabs. Yeah, it’s very strong ahead in the battle between tabs and spaces.

Phil [05:54]

Thank God for that.

Anthea [05:55]

Tabs has 73% of respondents, and the age at which the audience started coding is kind of split. It looks like the majority of people started between the ages of 13 and 24. And there’s about 3%, one person who started under 12, which is also very interesting. Yeah, interesting results.

Anthea [06:20]

I’m gonna give the audience about 10 more seconds and then we’ll close the poll for this evening. Yeah, tabs is still our great winner. With black coffee at about 26%, also not bad. And there are two people who selected others for the fuel question. Thank you very much, everyone. I’m closing the poll now. Thank you so much for participating and giving us some of the insights there. You should see the results on your screen, and we will also share it later.

Anthea [07:00]

But this evening, we are jumping into our fireside chat with Razaq. Before we do that, I just wanted to share a bit of housekeeping with you. This is a Zoom webinar, which means you can see us, but we, unfortunately, cannot see you. Please be mindful of that as we go through the evening. Another important thing here is, you can submit your questions using the Zoom Q&A functionality. There is a chat functionality which you can use for, adding random thoughts or comments throughout the session. For the Q&A’s, it’s best to pose your questions.

Anthea [07:39]

A few other things to note before we jump in, if you drop off the call, simply join again with the link that you joined originally with, when you joined, at 18h30. And then finally, we will be sharing a Q&A survey with you after the event. We’d love to hear your thoughts on the event this evening. Please do share your feedback with us. But now though, I’m going to be handing over to Phil, who will be our moderator for the evening, and I look forward to the conversation. Phil, over to you.

Phil [08:11]

Thanks. I’m Phil Barrett. I’m Head of Product at OfferZen. I’m looking after tonight’s fireside chat, asking the questions. I’m pretty excited about this one because, certainly in my previous career, before I arrived at OfferZen, I did plenty of FinTech work, looking at how you get ordinary human beings to do things like spend their money wisely, save their money, invest their money, that kind of thing.

Phil [08:45]

And these are very intriguing, difficult topics. There’s lots of human psychology, as well as lots of amazing technology in there. It’s going to be super cool to be chatting to Razaq. Razaq is the CEO and Co-founder of Cowrywise, in case you didn’t know. And Cowrywise is a FinTech company that is democratising access to investment products and digitising the wealth management industry in Nigeria, which is no small challenge, I would imagine. It’s pretty hard to do in South Africa. And I bet it’s even harder in Nigeria, so we will find out.

Phil [09:19]

It’s a Y Combinator company and was part of the most recent cohorts of the catalyst fund program. In 2019, Cowrywise was named by Inc, as one of the 100 companies in the world to watch out for, which is pretty breathtaking. And Razaq is one of only 400 CFA charter holders in Nigeria, which is quite amazing. I would have thought there would be more. Well done, Razaq, anyway. That’s a bizarre introduction to Razaq with a mixture of different factoids about him. But thanks for joining us from Lagos.


Razaq [09:58]

Yeah. Thank you. I am excited to be here. I’m looking forward to the discussion.

Phil [10:04]

Cool. All right. Before we start one reminder to everybody out there, listening and enjoying the show, you should add your questions to the Q&A. As we go through these, things will pop into your head, stick them in the queue challenge and Anthea will select the most appropriate ones, and we’ll ask those questions after seven o’clock.

Phil [10:27]

Okay, the first question for Razaq that we have is getting some context. Cowrywise is a Y Combinator company. And it’s the first Nigerian startup to be selected for the JP Morgan backed catalyst fund accelerator portfolio, which is a pretty impressive resumé. Can you tell us the Cowrywise origin story? How did you get there?

Razaq [10:51]

Yeah, thanks, Phil. I’ve had the opportunity of answering these questions sometimes in the past, and every time I answer the question, I begin to see a new dimension to the old original story, frankly, a new refinement, because for every event that happens, there is always that connection with the roots at every point in time.

Razaq [11:15]

The origin didn’t happen at a point in time. It was a journey where we are as a company and how we started was a combination of so many events in the past, ranging from how my Co-founder, Edward, came in. We attended the same university in Nigeria here, not in the same department, but interestingly, his brother was in my department. We were in the same department, and in the same dormitory at the university with his brother. We actually had some interesting projects together while we’re in university, and that project was a student free enterprise, it’s currently called Enactus.

Razaq [12:08]

It’s a student competition that involves developing economic empowerment projects in different communities, and then coming up with the impacts of such projects and presenting the project to a panel of judges. Then the team that wins at the national level represents that country at a global level.

Razaq [12:35]

We had the opportunity of working together at that point while we were at university. Then after school, everybody left. He did computer engineering, and I did economics. In terms of career, our paths were different. He joined the Interswitch industry, which is one of the biggest FinTech companies in Nigeria. And probably in Africa as well because of the appraisers in East Africa. I joined investment management, which is very much in line with my career paths.

Razaq [13:09]

But the meeting points started to come in when I started in my previous piece of work. I started having a lot of questions around where people can invest money, especially in retail, the retail investors, from schools, from the industry, those who are not in the investment management industry who just started earning money, their first salary job and then looking for where they can put the money. In the Nigerian investment industry, in the Nigerian capital markets, the stock market was quite interesting at that point.

Razaq [13:45]

That was in 2008/2009, just before the global financial crisis hit, and then the impact came into Nigeria, a lot of people lost money. There was a real investor worry generally, in terms of where people will put money, people were very scared. That is where the whole idea of Cowrywise began to take shape.

Razaq [14:10]

Then we thought about how we could leverage telecoms infrastructure to make the investment opportunities available to everyone. At that point, Edward had moved from Interswitch to African telecoms advantage, and there were serving MTN infrastructure across Africa. He was pretty much into the telecoms industry.

Razaq [14:33]

I was into the investment management industry. The idea was how do we leverage the telecoms infrastructure to provide financial access to millions of people that the telecoms company has already had access to, but that failed like it didn’t work because the unit economics was just not making any sense. Just because the telecom companies on the side of this part of the world, is something similar to a value-added service. Our idea then was that we would transform recharge cards, which is a popular way of topping up and recharge cards into money, and then move that money into an investment company, so for the telecom companies, what we’re seeing is the movement of cash.

Razaq [15:26]

And they were asking for a 30% cut of that. If the telecom companies get 30% of that, a customer, say hypothetically, a customer moves $100 and the telecom companies get $30. So we get $70. When a customer comes back for its $100, where do we get the $30 from? From a technical point of view, it was very feasible, it made sense, but from the economic point of view, it was just a dead on arrival. It didn’t work. That idea was dead on arrival.

Razaq [16:01]

And then we had to look for a different way to make that idea work. The original vision was very clear, very simple. We were very clear from day one, and we wanted to make financial services, especially savings and investment products accessible to the mass markets. Telecom came in because they already had millions of customers. So okay, let’s just ride on their successes, but that didn’t work.

Razaq [16:28]

At that point, that was when we had the development of modern payment infrastructure in Nigeria. And that gave us an option to think about. So we had the likes of the development of APIs that allowed recurring charges on cards. And so we had to experiment with that to see if it worked, and it worked. Users started using it, like friends and families. We hadn’t gone public then.

Razaq [16:56]

That was late 2016, early 2017, and we hadn’t gone public then, and then users started using it friends and family, we started getting feedback. And then it was just Edward and me. As I mentioned earlier, we attended the same school. Edward is a CTO who was a guy programming the entire thing. He’s not a good designer.

Razaq [17:20]

But you see he put up something on the web that worked. We’re just using the web platform only we didn’t have an app, a mobile app, which was just the web platform. But the web platform was a bit mobile responsive, so it wasn’t that bad, after all. But the most important thing is that it worked. We were able to charge users from their cards, and we were able to create plans for them. And we were able to link them up with a savings product with an existing financial service provider in the industry. That value chain was successfully created.

Razaq [17:55]

And the UX wasn’t bad, and users loved it. That feedback actually gave us that additional index that probably told us that we were doing something right. So the overall history wasn’t something that just happened at a point in time.

Razaq [18:11]

Looking backwards, the dots were connected right from our experiences at school, from the different career paths that we chose. He was in tech, telecoms, and financial technology. I was in investment management, and then we brought tech and finance together to form Cowrywise. Basically, it was like a perfect marriage of technology and finance coming together to solve a major problem in the country.

Phil [18:41]

Fantastic! So you and Edward were the first two, but your third employee was a designer. Why was it so important for you to focus on product design that early on in the business?

Razaq [18:54]

Yeah, he was actually the first employee, so to speak. Edward and I were Co-founders, and then the first person we brought in was Feyisayo. His story was quite an interesting one. Because as we all know, there is a very strong rule for psychology, behavioural economics when it comes to digital products. And that behavioural economics and the psychology of it can best be conveyed to users through designs. I got to meet Feyisayo for the first time on A Public Forum in Nigeria.

Razaq [19:38]

There was a forum then called Radar Tech Ecosystem, where tech enthusiasts could come in and discuss different topics ranging from design to back end development, everything tech. It works kind of like Quora, where you can just talk and talk. Then there was a day Feyisayo designed the logo for DigiBank. DigiBank is the most capitalised or the biggest bank in Nigeria in terms of market capitalisation. Yeah. So he redesigned DigiBank’s logo for free. And he posted it in the forum. And I looked at that logo, and I saw it based on my own assessment that the logo he designed out of boredom was much better than the actual logo that Digi was using.

Razaq [20:35]

But a lot of people do that. A lot of designers when they are bored, they just come up with a design, they come up with something. So immediately I saw that logo, I thought the guy who designed this out of boredom, if he’s given a good piece of work to do, then we might see something fantastic. I messaged him privately, can we have a chance to meet, I liked the logo you designed. He was excited Oh, thank you. He appreciated it, and then we fixed the meeting.

Razaq [21:09]

He then came around to our office. And at that point, we were about to make a very important decision for the company in terms of our design. We wanted to upgrade the look and feel of the websites. And we couldn’t get someone in India to do that, most of the people we got in Nigeria that could do it for us were asking for a very, very high fee, and we couldn’t afford it.

Razaq [21:36]

And for some other people that we knew who could do, they didn’t have the time or were otherwise engaged. We didn’t want to contract it out because we knew it would continuously be something, we would need to build rather than just a one-off thing. But the solution we got then was actually to contract it out to someone in Hong Kong starting at $500 to design it and then give it out to someone else to render. We paid him the $500 and he designed the product, the landing page, we showed him the type of landing page we wanted.

Razaq [22:22]

After designing the landing page, it now needed to be rendered, and we needed the front-end engineers to do that. That was the day he came to Edward and me, and we showed Feyisayo, the front design, okay, this is the new look we want for Cowrywise to wear and all of that. And he mentioned that he could do it. Well, we didn’t trust him. We just felt like it. If you could do it, that’s fine. Then we give you the okay – you should do it. And he left the office around noon and, in the evening, the landing page had been rendered, and we were blown away. Wow.

Razaq [23:06]

So the guy in Hong Kong, we just called him to say he shouldn’t worry, he should just go with the $500, that he shouldn’t bother anymore, and that’s how we brought in Feyisayo to the company like full time. And since then he has performed extremely, extremely well. So the whole idea around design is, design is about growth. Because as a FinTech company, we do not have the luxury of having physical branches like banks do. Every interface that we have with the customer is via digital, the app, the signup, the user experience, everything is digital. And that means the design needs to be watertight, and the user experience needs to be very, very fantastic for us to blow the user’s mind.

Razaq [23:53]

So the rules the philosophy around design is about growth and building trust. If we can build products that have a very appealing design and that works, we’re able to build trust. Immediately a user interfaces with the products. And in the Nigerian ecosystem, we’ve gotten a lot of feedback around how design can be used as a good hack, especially when it comes to digital products. And design to us is not just something that looks beautiful, and it is something that works, that creates a fantastic user experience for the customer. And that has always been the philosophy from day one.

Razaq [24:35]

So I think we’re lucky from the beginning before we went public, to have put design at the forefront of our growth story. So I’ve put design at the forefront of when customers trust and every design iteration we’ve done reports on the web and on mobile apps, the Android and the iOS app design, has always been at the forefront.

Razaq [25:03]

So if want to achieve a very different growth milestone, we don’t just see growth in terms of marketing alone. Like outbound marketing alone, we see growth from three-point of views, design, engineering, and marketing. So do those three things and put them together to show that you achieve growth, and it has been working extremely well.

Phil [25:29]

Fantastic I’m jumping a bit though. There’s, the question of the environment, I guess, that you’ve been operating in. And regulation is always a key part of any environment for FinTechs. There’s new innovation, new products, and services. Great. That’s fantastic. How is that playing out in Nigeria? How have Nigerian regulators responded to the kind of some of the new innovations that you’ve been bringing to the market?

Razaq [25:59]

Yes. I think it’s about timing first. And it’s also about aligning the product innovation or process innovation, every innovation in the FinTech industry, aligning that with the core mandate that the regulators want to achieve. In Nigeria, for example, the CBN has a very ambitious mandate, ambitious vision of achieving financial inclusion.

Razaq [26:27]

The Securities and Exchange Commission also has an ambitious mandate of ensuring retail participation in the capital markets, and to achieve those ambitions, existing models can’t work because they’ve been around for hundreds of years. The oldest Nigerian bank is a hundred years or more than 100 years old, so they’ve been around for more than a century. To move the needle, you need innovation in the FinTech space.

Razaq [26:57]

And what we have seen that regulators have done is actually, regulatory reception has been relatively good. From the SCC and CBN. CBN has introduced a couple of licenses for payment service providers who are building modern payment infrastructure in Nigeria. And they’ve allowed them to appraise and they continuously refine the regulatory framework to ensure that that customer’s interests are protected.

Razaq [27:27]

And that is actually at the core of it. Because if one of the core elements of regulation is to engender trust, to build trust when customers know that you are regulated, you then, to some extent, trust is built. Therefore, for the SCC as well, last year, SCC launched a FinTech roadmap, it was quite an interesting story, the launch of FinTech roadmap in Nigeria, which actually spelt out their vision for the industry from the perspective of FinTech. Adopting FinTech solutions to deepen the markets to build capital formation, and so on and so forth.

Razq [28:08]

And early this year, they came up with one of the exposure drafts for crowdfunding, which was quite an interesting path. And overall, they’ve been relatively accommodating in terms of allowing innovations to thrive. Last year as well, ICC introduced a sandbox to ensure that new products are tested, but that sandbox hasn’t been as functional as it should be.

Razaq [28:38]

But the intent gives what the SSC is thinking through. What they’re thinking about in terms of aligning productive work. Clearly, I remember one of the engagements we had with SSC in Abu Dhabi at the end of last year. One of the themes they mentioned is that in the Nigerian capital markets, the demographic structure of the country is nowhere represented in the Nigerian capital markets. Nigeria is a very young population, just like in other parts of Africa, the average age is about 18 or 19. But the majority of these young people don’t participate in the capital markets.

Razaq [29:27]

What you see in the capital markets is completely different from the demographic structure of the country. And that caused concern, because we talked about capital formation, and, development of the capital markets, you need to put the retail investors in the forefront and to attract the retail investors, the existing investment management companies need a different model to that.

Razaq [29:51]

Their existing model won’t attract the retail guy, the young guys, people who just want to invest, just like they tweet. Invest just like they buy stuff from Amazon. Just open an investment account just like they’re opening an Amazon account so that digital experience is what they have become comfortable with. To build an investment platform or a savings platform that speaks to that peculiarity requires FinTech innovation.

Razaq [30:24]

And the regulators are interested in leveraging those innovations, to deepen the market even more. That’s to a very large extent regulation has been even though it’s lacking in terms of regulators either the innovators are in the forefront, their regulators are coming behind.

Razaq [30:47]

Private regulators could still do more, but overall their responses have been relatively positive. Also important to note is that in that space, just as we have innovation that is encouraging new investors, they’ve learned from the young population to come into the market, and to build a better financial lifestyle for themselves.

Razaq [31:13]

We also have situations where you have fraudulent platforms, hiding under the guise of an investment platform to different people. And that’s one major area that regulators need to come in. If the regulator’s don’t come in, then there will be a mix of between those who are doing the real thing and those who are fraudulent because right now anyone can build a website, and promise people 50% returns, and that’s where a lot of people, some people fall victim because what people don’t understand is the fact that you cannot get that kind of promised return from a legitimate investment opportunity.

Razaq [31:58]

That is also where education comes in and regulation. So overall regulation has been good, and it could be better. But it has been good in terms of allowing FinTech innovators to progress and to move the needle in some of the mandates that regulators have in front of them.

Phil [32:20]

So where are you planning to take Cowrywise next? What’s your ambition in Nigeria or even the rest of Africa?

Razaq [32:29]

Interesting question. Where we started out in Nigeria, and what we have seen, is that we’ve been able to build a platform, an integrated platform in Nigeria, that wouldn’t have been possible five years ago. If we had wanted to build this same platform five years ago, it would have been very close to impossible to do that. And having built that out, our ambition is beyond Nigeria as a country.

Razaq [33:08]

We have a pan-African ambition. And that African ambition is about how we make the African continent. How do we foster intra-African investment opportunities? Right. And this is not about moving physical capital from Nigeria to Ghana, from Ghana to Nigeria, but it’s about empowering the retail investor to be able to diversify across Africa, where the opportunities are, for example, the South African market is much more developed than the Nigerian markets, and it’s much bigger too, which links to the question you asked earlier about having just one charter, and also regard thousands more than 1000 charter holders, the Nigerian capital market is not as big as that of the South African market. But Nigeria has to market in terms of retail reach, the question is, why can’t a Nigerian be able to invest in South African markets with just some clicks? Why can’t a Ghanaian be able to invest in the Kenyan market or South African market? Or the European market, with just a few clicks?

Razaq [34:18]

And that’s the ambition we have. How do we allow intra-African capital mobility and capital allocation to different assets, ranging from equities, ranging from fixed income instruments, and so on and so forth? And that’s where we are going actually, but to do that it will require us to have the opportunity to ride on a pan African payment infrastructure because Africa today doesn’t have a uniform currency.

Razaq [34:49]

We all have different currencies, which means if I want to invest in a South African company, there has to be some form of exchange conversion. And from there Africa runs off from Ghanaian city, and so on and so forth. There has to be a payment infrastructure that allows capital movements and conversion across African countries.

Razaq [35:11]

And that’s actually in the works because we’ve seen a couple of African payment companies having that ambition as well, just as they had that ambition and executed it excellently in the interior and some other parts of Africa, we are looking forward to ensuring that that works, yeah, asset classes as well.

Razaq [35:34]

There must be real development across the world, in terms of the definition of asset classes. And blockchain might also be an important element to look forward to and share when it comes to cross border payments and to enable access to some of the financial services that an average person will not automatically have access to.

Phil [35:57]

That is a fantastic vision. Okay, we are going to move on now to questions from the audience. It’s still not too late to add your question to the list people and see if Anthea will pick it. The first question is one from Richard. Thanks, Richard. And he would like to know, what are your key takeaways from participating in the Y Combinator program? Because I guess that was a pretty special experience to be able to participate in that. What were your key takeaways from participating in that program?

Razaq [36:30]

Wow. Initially, we did not want to participate in Y Combinator. We didn’t want to apply. And we applied late. And after the application and after we were successful, we knew how silly we were not to have applied in the first place. Because it was one of the best experiences, we’ve had at that stage of the company. When we joined, we just had about 2000 users, registered users. And we had the vision, but it wasn’t very concrete.

Razaq [37:12]

What Y Combinator enabled us to do was to dissect the vision and understand how to build a company that scales. And Y Combinator gives you that opportunity to be able to do that. And the network is extremely rich and powerful. Networks of founders, just like you – a founder who has built successful companies and founders who have failed as well.

Razaq [37:41]

You have a balanced experience from people who have done things that work, and from people who have done things that don’t work. So you know what works and what doesn’t work earlier. That rich experience is very rare to get in many places. Are you able to get that NYC and the brand as well is a very powerful tool in the tech ecosystem globally? I think Y Combinator set us on a very, very, very strong footing from day one.

Razaq [38:18]

We were in YC in summer of 2018. We got in around March, April, and we finalised that in August, September, October. Yeah. And since then, most of the learnings from YC still lives on til today, Just one example when we joined YC, as a startup, we were trying to get growth, you’re trying to have growth, and most times you might be forced to focus on vanity metrics, in terms of what might not count when it comes to long term sustainability of the company. One thing that we got from YC is actually to be able to define what we need to focus on, to define key metrics that we need to focus on.

Razaq [39:13]

And to work hard to ensure that we move that metric from zero to one. And that is very important in the early stage of any startup. Because if you focus on the wrong metric from day one, it is very most likely that the vision will be derailed down the line because you might not be building very strong value for your customers.

Razaq [39:35]

But if you face the brutal truths, focus on the right metric, then you are able to iterate quickly and focus on value creation for customers. The metrics we defined, the four metrics we defined, right from our YC days are the same metrics we focus on tips today.

Razaq [39:55]

We were able to build a very strong foundation from which to build those metrics on. And those metrics are aligned with our vision. And also, we have a vision, but we’re not focusing on what we should. We didn’t know what to focus on, and there are so many things. Are you focusing on registered users or focus on the transaction flows into your accounts and out, or are you going to focus on users active and how to define being active? There are just so many things. So being able to pick out the most important things from the noise, earlier on, I think is an important superpower that you can get from an accelerator program like YC.

Phil [40:36]

Can you tell us what your four-core metrics are? Is it a secret?

Razaq [40:40]

Yeah, well, for us being an investment management firm, we focus first on AUM assets under management. There is that tendency to focus on transaction volume. As a payment company, for example, you can focus on transaction volume because that is what you are monetising. But in our case, we are not monetising transaction volume.

Razaq [41:05]

Our monetisation strategy is premised on our assets under management. That is very important for us. We will have like $10 million in terms of volume, but what is it that we’re able to retain, can retain just 1 million or 2 million, and that is very key. Otherwise, we’ll just be having a lot of activities without actually moving towards the objective of the company.

Razaq [41:29]

Then the second part is defining active users like you have registered users. Yeah, you can have 1 million registered users, but how many of them are active? And that is very important. And how do you define being active? Is this someone that logs in into your hub once a week, or someone that puts money in the hub? So if you have a social platform logging into your platform might be an important metric, but for an investment management company, logging into the hub is just a secondary metric probably just to measure engagement, but not the actual metric you should focus on. Those are just some of the examples of some of the metrics we defined earlier on how we’re focusing on optimising.

Phil [42:17]

Cool. Okay, next question we don’t have much time, we’re ticking on. The next question is, what would you say was the best thing you did to assist with your growth and build trust with users?

Razaq [42:33]

Design. One, design, second, under-promising. Yeah, under-promising and over-delivering to customers. What we are seeing is that for investment management companies, especially when you’re taking money from people for management. Users always focused on two things. Depending on the type of users, one can take more priority over the other preservation of capital and the returns.

Razaq [43:12]

And given the level of education in Nigerian investment management industry, especially among the young population, people don’t understand why they need to lose money when they make an investment, they don’t understand that. So if a user wants to invest in an equity mutual fund, for example, the user only understands that it’s an equity mutual fund, we can potentially get 10- 15% per annum, but they need to understand that you can lose 10-15% per annum.

Razaq [43:43]

So being able to segment users into different levels of education and being able to recommend different investment classes for them to meet their return on capital expectations, is something very important when it comes to trust-building. Because we are able to meet the expectations, and when users use the products, they will invest it for six months or three months, and their return expectations are met, then we are bound to come back, and they sing your praises.

Razaq [44:19]

But if you promise very high returns and if you do not disclose the information transparently as much as you should, then down the line, three months down the line, six months down the line, something extraordinary happens that is extremely different from the expectation, then you’ve lost trust. What we try to do at every point in time is to try under promise so that users can actually transparently see what they’ve invested in. They can transparently monitor what they’ve invested in on a daily basis, and they can see how the end returns or how they do not have returns. That transparency is very key.

Razaq [45:00]

Communication with the user is very, very key. Doing that enables us to build trust. We didn’t get trust from day one. Frankly, we started in Nigeria at the point where a Ponzi scheme was at the peak in the country, that Ponzi scheme was called MMM. And the number of Nigerians that participated in that was unimaginable, both educated and uneducated, and it was a Ponzi scheme that promised 80% for months, using Mr A’s money to pay Mr B. So, people who were used to that kind of high returns, only marginal returns and we came in to say, okay, you get 10% per annum. So you’re saying when I can get 30% per month you promise 10% per annum. At every point in time, we align the interest rates on our savings product with market realities.

Razaq [46:01]

If the interest rate goes down, we communicate this to users when interest rates have gone down. And these are the reasons why interest rates have gone down. People will try and reason with you. So we build that trust process over time. But it wasn’t that easy from the beginning, frankly. But we had to weather the storm, communicate a lot, and show that the whole process of moving money from customers bank accounts to Cowrywise accounts is seamless.

Razaq [46:30]

Whenever there is an issue with respect to credit or debit, we’re able to resolve that as quickly as possible. Traditionally, Nigerian banks will take about a week or two to reverse your money. We’re able to do that like instantly whenever you make a complaint, we resolve it. So resolution of customers’ issues is actually an important element when it comes to trust-building, resolving the issue, over communicating with them and on the promise so that when it comes to expectations, you don’t fall flat.

Razaq [47:07]

So when you do that, you’re able to build that trust over time. But it wasn’t something that happened at a point, and it was a process. It has been a process, and we continuously build on that.

Phil [47:20]

The Ponzi scheme collapsed? MMM.

Razaq [47:22]

Yes, it collapsed, it collapsed.

Phil [47:24]

Must have been a great day for you. And that happened there. You must have been, yes! Yeah!

Razaq [47:28]

Yeah. So we told you. What we do right now is to write a lot of content on how to identify a Ponzi scheme, one of our key strengths right now is content, content marketing. We write a lot of content, educational content, to educate people and have viewed ourselves as thought leaders when it comes to investment management.

Razaq [47:52]

So that is an important element in trust-building. So if you’re able to educate users on how to identify Ponzi schemes, what to look forward to whenever you see an investment opportunity to be able to identify if an investment is a Ponzi scheme or investment B is not a Ponzi scheme, then you’ll naturally build trust because it will begin to trust you as a thought leader in that space. Content is a very key educational context that empowers people.

Phil [48:22]

Fantastic. Next one. Knowing what you know now, what startup advice would you give to your younger self?

Razaq [48:36]

Wow. Maybe I should have started earlier, but probably focusing on a different problem because I felt the timing for us when we started Cowrywise – modern payments was just coming up that provided us with the leverage to be able to build financial services on top of that. If I’d started out earlier probably wouldn’t have been Cowrywise, probably something else. But maybe, but frankly, I think if I had to do it again, there are certain things, I’ll do the same thing.

Razaq [49:26]

Like having a technical Co-founder. It’s very, very important, very, very important for building a tech company that you want to scale. There are two things that are very important. One is the domain expertise in the industry you want to build a solution for. If you don’t have a very good understanding of that industry, it might take a while to figure out many things.

Razaq [49:58]

Then second, to have Co-founders with a skill that will compliment yours. So if you are an investment management professional like myself, it wouldn’t do me much good to have another investment management professional trying to establish a FinTech company because the two skills are not complementary. They’re largely the same. So having a technical Co-founder is very, very important because, from day one, you can avoid a lot of technical debts.

Razaq [50:30]

And many things that ordinarily you outsource you can build internally. And there was one thing we did, which I will not do again, which is outsourcing design. We did that earlier, which we stopped. And from experience we have seen is that when you outsource some of your tech development earlier on, there is no fit for purpose technology that can help you build solutions that users continuously use if you are not an established entity already because the tech you’re building is an evergreen process, you build, you’re continuously in a building mode every single day.

Razaq [51:15]

Every single day our developers are building, every single day our designers are designing, every single day the content developers are building content. It’s a continuous building process. So if you outsource that exercise, to be a one-off exercise, there is no way you will achieve the kind of traction you want to achieve quickly.

Razaq [51:39]

So being able to do miscellaneous talents, the tech talent, tech resources earlier on, I think is something I will do over and over and over again. Again, it’s something that is very, very important because it gives you flexibility. It gives you the freedom to be able to respond quickly, and it makes you agile as a company, which actually attributes as a startup to be able to survive in a very tough environment.

Phil [52:12]

Yeah, definitely, I think, for a startup to outsource development and design is expensive and dangerous. I’ve seen it work though a couple of times, but yeah, it’s a scary thing to do. Okay, I think this is probably the last one. We’ll see how we go. Dan wants to know if you have any plans to pivot beyond investment to, for example, insurance.

Razaq [52:41]

Yeah, interesting question. The way we look at it is not just investments alone. The way we look at it is wealth management, and it’s a very broad concept, because in wealth management it starts from the basic savings, then investments with different asset classes, from equities to fixed income instruments, currency and so on and so forth.

Razaq [53:13]

Then you have insurance, an important element of wealth management, you have estate planning, insurance savings, investments and so on and so forth. And one thing that is happening across the world right now as well is that because of the digital life that we all live today, there is a continued consolidation of banking and investment management experience. Traditionally, for a bank, what a bank will do is, enable people to make recent payments using current accounts. Enable people to save using your service accounts, and they grant credits as well.

Razaq [54:07]

But we’ve seen a trend globally, which is impressive because of what technology has enabled us to do, to be able to use payments as a complimentary service for savings and investment products. Because when you save and invest, you need to make payments either you transfer money. So, Mr E or Mr B, and so on and so forth.

Razaq [54:32]

So payment, which is an important element of banking, is being bonded with investment management practice, because of what technology is enabling us to do. So the way I see us evolving, is actually that will be the meeting points between the traditional wealth management products, and some elements of banking, not the core banking like credit, but payment is being commoditised now, because we have APIs everywhere, so you can build a payment infrastructure.

Razaq [55:05]

So if you can build the payment infrastructure as complementary products for all your wealth management solutions, why do you need to outsource that to a bank? So I see most of the traditional functions that banks perform, from savings to credits, we have a lot of FinTechs doing credit, even though they’re not skilled as we had hoped. But I think there’s been some remarkable growth in East Africa.

Razaq [55:31]

And that is also happening in parts of West Africa here. Payment is getting commoditised; saving is also getting commoditised. And more importantly, for payments, blockchain will commoditise that more especially when it comes to cross border payments, transport, money movement, and so on and so forth.

Razaq [55:55]

So yeah, we will have insurance definitely and maybe not plain vanilla insurance, but insurance as part of a bundled experience that allows us to deliver wealth management solutions. Yeah, so it can be that we’re selling car insurance, we’re selling this insurance, but some of our products already in the works will have insurance elements.

Phil [56:23]

So yes because wealth management to you can’t do it properly without an insurance component. Fantastic. Okay, we are out of time for the audience questions. Time flies. I am just going to hand back to Anthea, but I’d just like to say thanks very much, Razaq. It was super interesting. Lots of fun to chat. And also, thanks to the audience. And let’s go back to Anthea.

Razaq [56:51]

Thank you, Phil.

Anthea [56:55]

Thanks, Razaq and Phil for joining us this evening. Before we wrap up, we want to give away some swag this evening. And for those of you who have shared the event link tonight, you could have won a swag pack from OfferZen Tonight’s winner is Kabelo, who’s walking away with an OfferZen swag pack simply for referring a friend. And we will be shipping that to you very soon! Thank you very much.

Anthea [57:24]

Another big thank you to our sponsor Investec for making this event happen and a reality. Investec and OfferZen have partnered to bring programmable banking to the tech community in South Africa.

Anthea [57:39]

If you want to learn a bit more about that, then head on over to OfferZen.com or simply click on the link, which will be on your screen when you exit the webinar this evening. Thanks again to Razaq for joining us this evening, and all of you in the audience for your questions, and we look forward to seeing you at our next event. Bye, everyone. Thank you.

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