What Happens To Funds In Nigerian Investment Platforms And Apps When The Customer Dies?
Imagine this: You have some money saved in your bank account while also having some in an investment platform. Many of your friends and family are aware of your account details, but you keep your investment platforms confidential.
Many young Nigerians do not have to imagine it because this is their reality. Young Nigerians are turning to investment apps and platforms to increase their saving culture and make the best use of their funds, especially in the face of falling Naira against the Dollar. These investment platforms offer higher financial returns than traditional banks. This has made these platforms attractive to Nigerians who prefer to invest their long-term savings on these platforms, while banks are used for short-term and periodic expenses. For example, Piggyvest, a savings and investment platform, paid out N242 billion to its customers in 2021, which doubled what it paid out in 2020.
But what happens to funds saved on these platforms when the owner dies?
Before we go into that, let’s first understand how traditional banks work. Banks have a system where account holders must submit comprehensive information about their next of kin at the point of registration. This is to allow the bank to transfer the wealth to them in the event of the account owner’s death. This is usually made possible because, in most cases, the next of kin is typically aware of the bank details of the account holders. Thus when the person dies, the next of kin is likely to reach out to the bank to initiate a transfer of wealth. This would involve the provision of a death certificate alongside documentation to prove identity and relationship. The fund is then transferred to the beneficiary when the verification is done. This can take a couple of months to be completed.
How investment apps and platforms work
Almost all investment apps and platforms in Nigeria allow the users to complete all their registration on the app without physically appearing at their office. All forms of KYC (know your customer), including identification cards, passport photographs and proof of address (e.g. LAWMA, water or electricity bills), are uploaded to the app and verified after a few days. Most fintech and investment platforms maintain a single office with no branch in any other part of the country. Unlike banks, they have to rely on whatever information the customers provide via the apps.
There are different investment platforms in Nigeria. Some invest in agriculture and give periodic returns to investors. There are those who focus on dollar investments, foreign and/or local stocks, mutual funds, bonds, etc. When customers register, they agree to the terms and conditions of the platform, which involves limitations on withdrawals for a specific period. Some investment platforms only allow quarterly, biannual or annual withdrawals and penalise customers that ‘break’ their investment before the due dates. This gives these platforms access to large funds, which they use for business or investment without fear of sporadic liquidation from customers.
What happens to these investments when the fund owners die?
All investment platforms in Nigeria require that customers fill a next of kin section. However, unlike banks, this falls under the optional section and is not a compulsory prerequisite for using investment apps or platforms. Thus, without providing next of kin’s information, customers can still be onboarded and continue to use the platform for as long as possible.
In cases where the next of kin information is provided, the beneficiary can reach out to the investment app.
Bamboo, an investment platform, told Neusroom that if an investor dies, the next of kin is required to provide legal documents, which should be sent to dedicated emails related to compliance and settlement.
In response to Neusroom’s inquiry, a representative of the investment platform wrote: “Upon the demise of a customer, the next of kin or delegated beneficiary can contact us regarding the next steps. He/she would need to produce the appropriate legal documents and the account number attached to the deceased’s account.”
Bamboo added that if the account is inactive for two to five years, they will reach out to the next of kin if they cannot contact the customer directly. If no next of kin is listed, the money remains unclaimed forever as, by law, they cannot hand over the investment to anyone when the owner did not list a beneficiary.
“If you do not provide or fill in the next of kin on the app, then no one would be able to claim your portfolio. This is why it is important to fill in all the information you see on the app. It is exactly the same as not filling your next of kin at your bank or on any of your property. By law, no organisation will be able to hand over a user’s asset without proper documentation and proof.”
Piggyvest, another popular saving and investment platform, told Neusroom that it is crucial for customers to fill their next of kin section. In response to Neusroom’s inquiry, an account manager at Piggyvest, who identified herself simply as Temitope, said customers are urged to also inform their next of kin of their investment to carry out the process of reclaiming their wealth in the event of death.
“Please note that it is important that this Next of Kin information is updated. The event of demise is an unforeseeable situation; therefore, adequate preparations and updates have to be made beforehand,” Temitope said.
“It is also advisable that at least a person (preferably your Next of Kin) is aware of your savings, again, for unforeseeable situations like death. This will enable your Next of Kin to reach out to us in such an event.”
Awa Ekekwe, customer support at Risevest, a dollar-denominated investment platform, also encouraged users to provide information on next of kin. She said they reach out to idle customers periodically to check upon them.
“We reach out to idle accounts every 3-6 months to understand what’s happening. If it’s a case where the user is deceased, then we’ll transfer their holdings to the next of kin after sighting documents.”
