How Hagbad Is Digitising a Global Savings Tradition

So, Hagbad, the name originally means, in the Somali language, to take turns. And essentially it's a way for communities to save together, and to build trust and financial resilience. So the way it would work: imagine the three of us pooled in together £1,000. We would have £3,000 in total. Then one month I would take my turn, receiving the £3,000 payout. The next month Ian would take his turn, and then the month after, Tibebe. So it's a faster way to access savings, without interest.

Okay. So, essentially I wanted to open up a restaurant at first, but it wasn't your typical restaurant, I was very creative. Essentially it would be a rotating restaurant, where every month the cuisine would change. You would get to wear all of the traditional clothing, have the music, have the whole experience, like you're literally transported to a different country, but in central London. However, I didn't have any capital. I didn't have any business experience at the time, and I didn't know where to start. And then I'm scrolling through TikTok and Instagram, as you do, I was a university student at the time, and I saw Simon Squibb, and he was quite new at the time. He was starting off with the whole doorbell that he placed in Twickenham. So I decided to travel there and pitch that idea to him at the doorbell. And I did get posted on his Instagram. So my digital footprint is always going to be stuck on there, but I love the fact that I have this clip that I can look back on and see, "Okay, this is one thing that I originally wanted to do."

Yeah. So, globally, it's quite a large number, I don't want to say the wrong number. However, in terms of roscas in the UK, it's quite a hidden market, right? So we had to collect a lot of research, look at diaspora groups, look at ethnicities, but we're estimating 2 million within the UK, and then globally this is like a billion-dollar market.

Yeah. And one of the things is that, initially, for me, I'm from Ethiopia, and I'd known it as one name, and then when I met Shahmad, she told me about it in Somalia, where they name it something else. And it's actually so many different countries that have it. So all over Asia, in the Caribbean, all over Africa, and even within Africa, for example, Egypt has a really big company that does this.

We forgot to mention, yeah, there's a company called Money Fellows in Egypt, and they essentially have digitised roscas as well, and in Egypt alone they have 8.5 million users. So it's a huge market, for sure.

Yeah, I think, in the West, one of the things we were discussing with some of the bankers at Finovate was: how do we translate that trust-based aspect of roscas? Roscas essentially require you to trust within your family, and within your friendships, and that's what lets it operate. Whereas in the Western world, it's very independent, it's one person for themselves, and all of these risks and whatnot are assessed against each other, which makes everything so much harder to really approve. Whereas when you look at African countries, our societies themselves are really tightly coupled, really trust-based. So it kind of shows you there are concepts that we need to understand from other countries, and take from that, and integrate into the West, definitely try to bring them into the West.

Yeah, I think a lot of banks want another person to pilot it for them, and we're kind of positioned there where it's like, we can show you that it is going to work. Coming here as an international student, I would not have thought it would be a thing here, but then my roommates were on it, a few other friends were on it, and I know Shahmad's family around here are also still doing it, even though they've been here for a longer time. So there are a lot of diaspora communities, not just within Africa, everywhere, that are still doing it.

I think we should take turns in answering. So, essentially, when we first met and spoke further, I realised that he was a computer science student at the time, and then I had my eyes locked in on him from then, because I was searching for someone who would be part of the founding team, who would be dedicated, and also ambitious. And the more I got to learn about his personality, there were times I was thinking, "Wow, you're really, really dedicated", because we would speak, and then he'd just be like, "Oh yeah, I've just been coding for 10 hours," just in his room, blinds closed, and he's like, "Yeah, there was just this one problem I had to solve, and it was really bothering me, so I didn't want to stop working on it." And just talking further about his future goals, and both of our ambitions, made me realise he would be a great fit to join Hagbad.

No, they do. I'm actually the president of the society now.

It's been really fun. But same for me, from my side. I was trying out, as a computer scientist, I was building personal projects and whatnot, but I kind of left it as just a personal project, I never let it go further. But then, seeing how Shahmad was taking her idea, pitching it to people, she had that business sense to her, in terms of getting it out there, talking to customers, talking to people, trying to get funding for it, and I thought it was a part where I'm lacking. I know the technical side, but I really appreciate that business knowledge and sense as well.

So, essentially, I personally like to be involved in every aspect, including the technical aspect. I fully trust him, but I'm so invested, I want to see what's going on. And sometimes he uses all this jargon to explain things to me, and I'm just like, "Hey, can you just break it down for me?" I just like a full picture of what's going on, where we're at. So I'd say I'm quite heavily invested in the tech side, and I'm learning a couple of things as well. But I also have that trust in Tibebe to carry the vision of the product that we're building. So that's how you can see I'm invested in the tech side.

I think the application itself is made to support how they traditionally do it currently. So we're not trying to force them to get back into banking, they can still use manual methods of managing their own roscas, so they don't exactly have to go back. But then, once we build that trust, you know what, we're helping you manage your roscas, we're helping you manage your groups, everything is ledgered, you can see who's coming in, who's coming out, payments, they can build that trust back again to use us, and potentially connect the bank account to the app, and then use the more automated ways of managing their funds. So it's just step by step, meeting them where they are, and then helping them see the benefits of the digital side of things.

And just to add on to that, not only do we have the manual feature for them to still continue using cash, but we're also very integrated into a lot of different communities, where we can directly speak with users, not just online but actually in person, and figure out what exactly they've experienced, what their pain points are. And sometimes I have beta users voice-noting me on WhatsApp, telling me stories about their previous experiences. I guess I don't expect it, but they feel really comfortable speaking with me, because I feel like I can represent them.

So, one of the things I was told recently was that someone's mother actually encouraged them to join a group savings. However, his problem was that he was just giving his mom money, he didn't know who was in the group, he didn't know when he was going to receive his payout, he was just cut off the loop. And it's typically women in these communities who manage the funds and distribute them, it's not typically the men. So, hence why some mothers feel the need to get their children roped into roscas. They're like, "Here, save for this, save for that, give me £300 every month." But then, for him, it was just that lack of transparency, and essentially just confusion.

I would say so, yes, in cases like that. But in other cases, where people are using WhatsApp slightly less, still, it could be that two members are not comfortable with each other, they're added to the same group, and things are just hidden, essentially.

So we also have a dedicated UX researcher who takes the time to sit on calls and meetings with users, scheduled in for 45 minutes, just talking through the application, talking about their previous experiences. So that's when we get a more detailed breakdown. And she specialised in psychology, they really have quite a lot of expertise. When she took me through a session, she was just like, "Did you know, if a button is placed here…", just things that were really interesting, that I wouldn't have realised would define the user experience, basically, and just the psychology behind everything.

I think if they don't have Hagbad, one of the problems they're facing is probably the disorganisation of roscas. It's just WhatsApp messages, right now there's nothing cleaner and nicer to organise things. You're joining people who maybe you're not comfortable with. So we want to make it very central: you know exactly who's paying in, who's paying out. In a normal WhatsApp group chat, you can't see the money being transferred, you don't know if the other guy is sending the money but you're not. So here we make everything transparent, we make the communication much easier to do. And then, also, in the future, bringing these contributions to valid credit activity, so they can actually build their own credit. They're not just doing some informal thing that gets wasted away, they actually now have a valid financial identity to work on.

Yeah, because if you think about it, people are paying on time every month, the same amount every month. So we believe there should be a reward in that, that is not currently recognised in the UK, and we aim to create that. Another issue that I know we'd be solving for users is their bank accounts being shut down, or reported for fraud, or anything like that. We want to provide enough security and data for users to actually have the whole process automated for them, without having any fear of anything happening to their bank accounts.

It's more so, how do roscas currently operate? We know, for example, that in a neighbourhood, some of the children are just being told, "Hey, go take this money and go to the neighbour right there, knock on the door, give it to the lady." That's how it's currently working. And if we're trying to meet users where they are right now, we don't need to change how they're doing it. We're just giving them a better way of organising it, a better way of tracking who's paid, who's not paid. Whenever they're getting these payments, it's the trust on the group owners, and letting them manage it, and then later on we can onboard them into more automated and other flows.

And I do believe that older generations are more inclined to use the cash method. So it would be a great way to get them into the application, without fully onboarding them and having everything facilitated for them, so they could still have that transparency and that group management being solved for them. Whereas the first generation, or young adults, who are within their families and familiar with this concept, are probably going to be more receptive to using the application.

So it does restrict us, in the sense that, if we are holding funds, we can't take interest on that, or give them interest on it. So, essentially, if they take any amount of credit risk, we can't reward them for that credit risk they're taking. But the thing is, that's not a bug, that's a feature, in a sense, whereas banks would say, "Okay, this customer is taking credit risk, they need to be rewarded for it," they can't, because the religion simply doesn't allow for it. So it does restrict us in that way. But the ways that we do monetise are through helping out with the transaction, access to the platform, and also turning those payments into a financial identity, that's going to be under a kind of subscription, to gain access to that.

Yeah, I think there are a lot of things we didn't account for. When you build products, there are always going to be small things that you miss. For example, with the sign-ups, currently you can sign in with an account, but users wanted, "Can you just make it available to also just use Google to sign in?" So, some small, simple things that I should have thought of, but them giving us that feedback helps. And then people asking for messaging features within the app itself, instead of using WhatsApp, they'd really want per-group messaging channels. And improving some of the UI, they found some of the numbers to be a bit too repetitive; they'd see "Oh, they're contributing 200 pounds per month," and then again on the lower screen, so, "Okay, maybe just get rid of some of that stuff, make the UI more served." So we're still working through quite a big backlog that we've got.

I think it's the level of interest, and also onboarding, because, obviously, our infrastructure needs to be able to slowly scale, because we're still seeing how everything is working. We've built the app to scale, but we also want to see where there are going to be things that pop up when you see that many people, some inefficiencies that we might have built that we need to change. But I think it's better to slowly onboard into it.

Yeah. So I think, when I was first starting off, I was very highly optimistic, and I didn't realise how many regulations there were, and what we would need to do. I thought I could just get the app made in a month and then launch it straight away, right? However, from receiving support from UnLtd, they're a social enterprise that gives grants to social enterprises, and mentoring and workshops, through them and their support, I was able to learn a lot more. And during our journey, I've also had a lot of different mentors, and one that stuck through the whole thing, and advisers, and being able to access the right lawyers too. And a lot of the time, I've also had to take a lot of initiative, to do a lot of research and explore the information that's already out there. The FCA, on their website, post quite a lot, and banks also post quite a lot of relevant information and policies and documents on their websites, which you can read through, and it helps you create a really secure and regulated application.

I'm actually 30.

I think, for me, my mentoring is more technically guided, in terms of thinking about architecture, thinking about scaling, thinking about how people are going to use the product, and also not thinking as an engineer, thinking about it from a customer's perspective. But then, also, sometimes having to do the business talks, because, for example, I demoed at Finovate, and that was a very big public-speaking kind of thing for me. I've not had that much experience with it. So a lot of the mentoring sessions I've had are about how to present, from technical to then meeting the customers.

I would say I just strike up conversations, and have those real and raw conversations with people. And I'm really straightforward, and when I would like something, I just ask, because there's no harm in asking.

I am quite confident that we can achieve that, because, as we've seen in other markets, in Egypt, they currently have 8.5 million users, I think there's a lot of untapped potential across the world. Starting with the UK, and delving into what there is to offer to current diaspora communities, and then taking it to countries where they actively take part in this, but they don't have the right applications or software available for it. And I can imagine they also don't have the right payment providers and services to actually provide them with roscas in general. So I think there's a very big untapped market across the world.

So, essentially, when I say I would like to hear people talk about it, that's how we'd know that we've made it. Because some brands and some companies that exist within the UK, across the world, everyone already knows about them, right? You don't have to have a million ads out, it's all organic word of mouth. And for people to be their own case studies, on the impact this has had on them financially, from being maybe in a low socioeconomic state, to then being more financially responsible, by learning the right financial literacy tailored to them, and then being able to invest in themselves, in all the right products, to grow their wealth so they reach their financial goals. And I would say, essentially, what I want to hear people saying is, "I just opened up a restaurant because I joined a Hagbad, and I joined it with like-minded individuals, and they came together in a supportive community." So I would say we're definitely a mission-driven social enterprise. We want to see those figures, we want to see how we could make that impact, and we definitely want to document it and release it to everyone as well.

Yeah. And I think it'd be really nice, with all of the space in terms of roscas, with all the different names from different countries, there's not one that everybody agrees on. So being the one that unites them all, that would really make sense.

I would say, don't set any limits on yourself. Be as ambitious as you want to be, because only you are holding your own self back. Be as delusional as you can, because you can create your own opportunity, you just need to try hard enough. If you could write luck into an equation, right? You think, "Oh wow, this person's lucky, they've achieved this, that and that," but you also have to see that behind that person could be a million nos and one yes. So, to increase your chances of luck and achieving what you want to achieve, I would say be as resilient as possible. Don't give up, don't limit yourself, never talk down on yourself, and you'll be able to achieve anything you set your mind to. And also, read *Think and Grow Rich* by Napoleon Hill.

Yeah, for me, it's kind of similar. There have been ideas I've always wanted to do, things I've wanted to build, which I had to sit down in the background. But then, looking at other people with the same ideas, execute them, and seeing the success they got from it, it kind of made me think, "Okay, actually, it was never that the problem was too complicated, it was never that I didn't have time or anything, it's just that I didn't execute. I didn't start it." It's just building in public, just starting it, just making sure you take that first step. If you're building it behind closed doors, you still never really are building it. I feel like it's better to just let people know about it, talk to people about it. Finovate was huge for me, in terms of talking to people about Hagbad, it cemented a lot of it into me, seeing the interest from all these banks, and it builds that excitement into you to then keep going. So, yeah, build in public, speak to people about it, share the idea, and start as soon as possible.