This Nigerian Fintech Startup Helps You Save For Life's Big Moments

Nigerian entrepreneur JR Kanu is the founder of REACH, one of Nigeria’s hottest Fintech startups.

REACH, which is currently in beta, is a group savings tool that allows you save for your big life moments with those closest to you.

An MBA grad from Stanford University, Kanu has previously worked in online retail, private equity and the media. He set up REACH earlier this year to promote a savings culture among Nigerians and help them save meticulously towards their financial goals.

Kanu recently talked to me about REACH’s origins, its model and its ambitions for the future among other issues.

What’s your educational and professional background?

I studied Mechanical Engineering at Calvin College in Grand Rapids, Michigan. After college, I worked for two weeks as a mechanical engineer in Michigan. It wasn’t inspiring work. I didn’t feel my life was making a difference. So, I quit to join New City Kids, a faith-based after-school program in New Jersey as a network engineer and teenage coach/tutor. I was living in a dangerous neighborhood and certifiably below the US poverty line, but that period is one of my fondest memories.

It’s hard not to follow your dreams when you spend your days telling teenagers to dream big. My work with the teenagers inspired me to chase a dream I’d had about learning to write well. That’s how I ended up in NYU’s magazine writing program. I then worked for two-and-a-half years in New York City as a freelance journalist, with my work published in Black Enterprise and Esquire Magazine.

I then spent about six months exploring African cities and blogging about my travels. This led me to the UN Millennium Villages Project, where I spent the next two years or so introducing energy-efficient firewood and charcoal cookstoves to villages in Nigeria, Senegal, Mali and Haiti. My time with the UN led me to explore business as a vehicle for economic development and that’s how I ended up at Stanford University’s MBA program.

Given your background as a journalist, what informed your decision to venture into financial tech?

Fintech was entirely serendipity. I’d just joined Konga at a time when payments was the company’s biggest pain point. My then boss, Sim Shagaya, tasked me with “solving payments”. My background as a journalist taught me to be observant. I also have a background in design thinking thanks to my time at Stanford’s d.School. The first thing I did was go out on deliveries to observe how people paid for their Konga items. It was my interactions with users that led to the creation of KongaPay. My time building KongaPay then forged a love for financial tech and financial products in general.
What is REACH and why is it a necessary service?

REACH is an app that helps individuals and people in groups to set, track, and achieve their financial goals. Think of REACH like a support group or a personal coach for your financial goals.

While most parts of the world are built to enable gradual expenditure, life in Nigeria requires paying up front – a year or more in advance – for houses, cars, school fees. Few people have that kind of money sitting around. Many of us know that we need to save over the course of the year. Some are more disciplined than others. Rather than flagellate yourself for not saving when you should have, REACH takes the burden from you. Just tell REACH how much you need to save up and by when the amount should be complete. REACH will calculate the daily, weekly or monthly amount that needs to be deducted.

Finance is communal in most of the world, and especially in Africa. About 70% of all adult Nigerians have saved in a group at least once. And worldwide, about 800 million people save in some form of a group. All we’re doing is bringing a digital interface to an already existing aspect of our lives.

How exactly does it work? Also, does REACH plan to be a Nigerian tool, or does it have international ambitions?

Let me answer that with an example. Say five of us are planning to visit Dakar in six months. I know this trip will cost each of us ₦100,000. I download the app. Create a savings goal called “Dakar 2017″ with ₦100,000 as my target amount. I invite my four friends to “Dakar 2017″. REACH will debit us weekly until we’ve saved up our target amount. That’s how REACH works.

It’s really important to us at the office to create a product in Nigeria and share it with the rest of the world. So although we’re in Nigeria right now, we’re building our systems with international expansion clearly in mind. In fact, we already have some members in Tunisia, the UK and the US.

How does REACH make money?

Our business model is lead generation. We make money by connecting our customers to vendors that sell the items for which they are saving. For example, wedding planners and venue managers can use us as lead generation to find serious customers. If one of our customers finds herself short of a savings target and needs a small loan to bridge the expense, we can connect her to banks and other lenders for a fee that the bank/lender pays. The service is always free to our customers with the businesses paying us the finder’s fee.

How is REACH currently being funded?

I’d been saving for a startup for quite a while. That’s why REACH to date has been bootstrapped via those savings. Thankfully, we’re now closing an oversubscribed angel round.

You’re currently in Beta. When do you plan to launch properly?

At the office, we picked a number and said we’d stop being in beta once we hit that number. Right now, we’re less than 100 downloads away from that number, so we’ll definitely be out of beta by the end of October.

How will FinTech startups like yours compete with large banks going forward considering that these large African banks are now investing heavily in their own Fintech apps to make it difficult for startups entering the space?

It’s an exciting time in African Fintech. In my experience, banks aren’t making it hard for Fintech startups. If anything they are looking to become the backbone on which Fintech grows.

For instance, REACH is powered by Zenith Bank. They’ve been amazing in giving us the rails on which to build our product. There are other banking partnerships in the works for us. Then take a look at Access Bank with their support for Paystack, Flutterwave, and PayWithCapture. While I can’t speak about what’s happening elsewhere in Africa, Nigeria seems to be setting some exciting precedents for banks partnering with fintech startups.