Razaq Ahmed (Cowrywise) on revolutionising retail investing in Nigeria, playing the volume game, and using social media as an acquisition strat.
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On this episode Pat sits down with Razaq Ahmed, Co-Founder and CEO of Nigerian Fintech Cowrywise, that is all but revolutionising the retail investment space in the country providing access to investment products to millions of young Nigerians.
Tl, dr
Democratizing Investments: Cowrywise is a fintech platform providing democratized access to investment opportunities for Nigerians focusing on improving financial literacy and simplifying the investment process.
Closing the financial literacy gap: By designing products to enhance financial education nationwide and focusing on simplified investment processes Cowrywise aims at enhancing the financial understanding of the average Nigerian user.
Trust with users is key: Strategic partnerships with e.g. global payment processors bolster credibility and foster user confidence.
Invest if Real Madrid scores: By focusing on strategies such as micro-investing, embedding automation into the investment process and creatively intertwining investing with everyday life, the platform targets tech-savvy millennials and Gen Zs.
Two-Sided Scaling: In order to grow a sustainable user base, Cowrywise’s growth strategy focuses on user acquisition through community building, social integration, product reliability and depths of product usage through product diversification.
Dive into the full episode on:
👉 Spotify
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Democratizing Investments: from Analyst to Fintech Innovator
Razaq's professional journey commenced as an Investment Analyst with an investment management company in Nigeria. He started to grasp the vast untapped potential within Nigeria's investment management space. However, he also recognized that these opportunities remained inaccessible to a large segment of the population, particularly the youth.
"[...] That's probably the dominant driver of why I founded Cowrywise to solve this big problem that practically makes it impossible for a large number of people in Nigeria, especially young people, to have access to investment opportunities in the country."
Razaq's entrepreneurial journey was further shaped by his co-founder's influence. They were no strangers to one another, having partnered during their university days to create community-based projects that positively impacted their surroundings. The relationship continued as they ventured into the professional world, each bringing valuable experience to the table.
"It's a perfect marriage between an investments expert and a technology expert."
This fusion of knowledge and expertise led to the creation of Cowrywise, a fintech platform providing democratized access to investment opportunities for millions of Nigerians.
"This is a common pattern in many emerging markets, existing investment products are built for the 1%. And for the 99%, it's almost impossible to get access to retail investment opportunities."
Navigating Nigeria's Investment Landscape
Razaq provides unique insights into Nigeria's retail investment landscape, emphasizing the country's young demographic structure and the influence of global information, communication, and social media.
"The Nigerian demographic structure is pretty young, like 20 or 21 years on average... There are these mega forces that are shaping the way people live on a daily basis, in terms of access to global information, communication and social media."
Despite lower individual financial power in Nigeria, the vast population offers a huge untapped consumer base compensating for the lower disposable income. Razaq recognizes that Nigeria's incomplete identity infrastructure still presents opportunities with only about 50 million unique bank verification numbers. The advanced payment system on the other hand is a significant resource for fintech companies like Cowrywise to leverage.
However, improving financial literacy remains a substantial challenge. To address this, products need to be designed to enhance financial education more broadly.
Acknowledging the universal nature of investment products, Cowrywise focuses on a user-friendly platform to simplify investment processes and enhance the financial understanding of the average Nigerian user.
Cowrywise's approach helps address the financial literacy gap and provides a sturdy platform for retail investment. Razaq emphasizes the critical role of trust, especially in Nigeria's youthful market. To enhance trust, Cowrywise sought strategic partnerships, including global payment processor Stripe, bolstering its credibility and user confidence.
“More than 80% of our existing user base, we acquired organically through word of mouth referrals from users who have had beautiful experiences in the product."
As a result of their efforts, Cowrywise has seen organic growth.
Transforming Investment: Cowrywise's Millennial Approach
A typical Cowrywise investor is a tech-savvy millennial or Gen Z with a few years of work experience. Interestingly, this group has largely been overlooked by legacy asset managers due to their comparatively lower purchasing power. However, according to Razaq, this underserved demographic is full of potential:
"There are a lot of efficiency plays that can be embedded in a FinTech solution to start this category of users."
Cowrywise attracts its demographic with special tactics such as micro investing, enabling investments as low as $2. This digital approach allows comfortable, low-risk investments, building trust and familiarity. They've automated the investment process by integrating users' bank accounts with their Cowrywise accounts for automatic money movement.
This simplifies investing and maintains user engagement. Also, they intertwine investing with daily life through "triggers" linking savings and investments to popular events like football scores.
"[...] If you are a Real Madrid fan, you can decide to save or invest every time Real Madrid scores a goal."
By making investing feel more like a game than a chore, Cowrywise has been able to capture the attention of a younger, more digitally savvy audience.
Scaling the Investment Ladder: The Volume Game
Razaq acknowledges the challenge of scaling in a market with small average investment size per user. To strike a balance, understanding profitable acquisition is essential, as user acquisition cost differs between developed and developing markets.
"[...] We're scaling in terms of user acquisition, and we're scaling in terms of the depths of product usage."
Cowrywise's growth in Assets Under Management (AUM) is driven by user acquisitions (60%) and product usage intensity (40%). This equation guides resource allocation. This is why it is crucial for Cowrywise to evolve with the user base.
"As they grow older, they need more wealth management products, which we have to offer... So as the user base matures, we need to increase our breadth.”
Their growth strategy therefore focuses on community building, social integration, product reliability and their future plans for product diversification, including global securities and a retirement product lay the groundwork for a sustainable success of the company.
Dive into the full episode on:
👉 Spotify
Other episodes you might enjoy
[Operator Stories] Noureddine Tayebi (Yassir) on closing a $150M Series-B in the Maghreb region, paying it forward and the multiplier effect
Justin Norman (The Flip) underestimated talent, soft power and ecosystem development in Africa
[Investor Journey] Arjuna Costa (Flourish) challenges in achieving true financial inclusion, waves of fintech adoption and embedded finance
[Investor Journey] Bridging Silicon Valley & Africa - Mbwana Alliy (Savannah) on fund structuring, LPs and retaining scale-up talent
If you haven’t yet subscribed, join the 1,400 Enthusiasts via Substack, Medium, or LinkedIn and follow the show wherever you are getting your podcasts. If you enjoy the work we are doing, drop us a review or rating on your preferred podcast app.