Backup cash is a fintech startup that was launched in 2019. It is a subsidiary of SFS Capital and focuses on helping people develop a savings culture and get paid interests on their savings.
With banks paying an average interest rate of 3.7% per annum, saving money in a savings account does not hold much appeal for Nigerians. If a savings account owner withdraws up to 4 times a month from the account, he or she will lose the interest that should accrue for the month.
This has reduced the appeal of saving with banks for many Nigerians and has increased the need for a savings platform with better returns and some measure of discipline.
Backup cash started by offering users the opportunity to develop a savings culture and earn up to 11% on their savings. Now, it offers up to 16% interest on savings. This way, it solves two of the challenges people have regarding savings in Nigeria.
Backup cash’s services
The startup’s services are divided into 3 sections: The central vault; Backup goals and Locked savings.
The central vault is where the savings happen. By selecting an amount and adding a debit card, money can be saved to the vault. There is the option for saving once and the other option of steadily saving daily, weekly, or monthly.
The locked savings allows the user to remove a sum of money from the central vault and lock it away for a period of time.
Backup Goals can be used to set goals on the app. A user can use it to create a budget for things he/she wants to purchase in the future and then save towards it. The goal can be for one thing or for a group of things and can be saved for, according to the priority of the user.
The money users save on the platform is invested in a fixed income fund. That guarantees that the risk of investment is low and users get their expected interest. The interest is paid daily.
Tech model: How people access Backup cash’s services
To make the savings service available to its target audience, Backup cash uses two tech-based approaches. The first is the mobile app, and the second is a WhatsApp bot named Cassandra.
The mobile app allows people to create accounts and access all the services provided by the company. Once an account has been created, the user can continue to save and manage his or her account from Whatsapp by saving the chatting up the bot.
Because I already have my contact saved on the app, chatting up Cassandra prompted the bot to respond with details of my monetary balance on the app, as well as options to save, withdraw or lock up funds without having to open the app.
The bot model makes it easier for people to access their accounts and save money.
For people who do not have space or desire, the bot eliminates the need to install another app on their phones because almost everyone has Whatsapp installed already.
While the product is relatively new, Backup Cash told TechNext that it already has over 20,000 users, although it has less than 1,000 downloads from the Playstore. It is unclear if the over 19,000 users all save through the bot and web app.
The startup explained that the product and Whatsapp bot were launched before the Android app.
Communications Manager, Oma Ehiri said “We did launch the product as well as the WhatsApp bot long before the app on playstore. Hence, the numbers.”
This means that over 95% of Backup Cash users prefer savings through the web and Whatsapp bot and see no need to have an android app.
Competition: Backup cash vs Piggyvest vs Cowrywise
Two other startups that help people save are Piggyvest and Cowrywise. Both launched before Backup Cash, have more traction and are more well-known.
Cowrywise has a wider array of savings options which include Halal Savings, Saving Circles, Fixed Savings and Save as you Earn. Piggyvest has the Simple Savings plan, Target Savings, and SafeLock among its savings options.
Cowrywise’s Save as you Earn option is similar to the Save once option available on Backup Cash which allows people to save when they have the money. Piggyvest’s Target savings is similar to the Backup Goals option on the Backup Cash app.
In terms of interest rates, Piggyvest offers rates from 10% to 15.5% which means that the interest rates start from 10% per annum but can increase up to 15.5%. Backup cash, on the other hand, offers interest rates from 8% but says users can get up to 16% per annum.
Cowrywise offers a minimum of 10% interest rate, but users can get up to 15% depending on how long the money stays in the savings plan.
All three offer similar rates, but Backup cash has the additional Whatsapp Bot, which makes it easier to save. It also offers savings plans which are similar to those offered by competitors.
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