A few months ago, people started tweeting about a new savings app called Jar. They likened it to “finding money in old clothes” or “their grandpa giving them Rs. 2 to buy samosas.” Others talked about the “thrill of owning gold for the first time.”
For a company that did not exist at the beginning of this year, the buzz around Jar has been remarkable. Not only have they closed a funding round of $4.5 million from VC funds and high-profile angels, they have been covered in publications from Tech Crunch to Mint. They already have 1 million+ users and are growing 350% month on month.
While it is early days for Jar, their design and approach to product hold some interesting insights.
How Does Jar Work?
Jar allows you to save small amounts of money and invest the savings into digital gold, which can subsequently be liquidated or converted to physical gold. The app does this by checking your transaction SMS and prompting you to round off spends and invest the delta. There is also an option to invest discrete amounts as and when you want.
Why the Love?
The concept of rounding-off and investing is not new and there are other apps that let you invest small amounts of money. Practically every fintech app will offer you the option of digital gold.
What accounts for Jar’s early traction?
Rahul Chandra, Co-founder, Arkam Ventures and an investor in Jar believes that “Jar has created a product that immediately responds to the momentary urge to save before the user gets pulled back into the humdrum. Hundreds of hours of thinking goes into every button or word on the app so that the user is in and out quickly, has access to all relevant information and feels pleased at completion. This insane attention to detail has resulted in a friction-free product that customers are showing immense love for.”
Spotting the Opportunity
The initial research for Jar saw founders Nishchay Ag and Misbah Ashraf suiting-up and hanging around small cafes to speak with people who were grabbing a coffee. This research uncovered three major barriers to saving:
- The target audience (people earning between Rs.3-Rs 25 lakh per annum) had little or no understanding of financial instruments beyond Fixed Deposits.
- Most people felt that mutual funds or stocks required a large minimum investment of at least Rs.25,000
- Finally, people were worried about liquidity – they wanted their money to be instantly accessible
“The problem,”says Ag, “is that current financial systems are built by the financially literate for the financially literate. The second problem is that it is very hard to change habits – you cannot build some cool product and expect people to start saving. When we started to build Jar, we said we will solve every psychological barrier and address the smallest thing that causes friction or cognitive load.”
The idea to start with gold as an investment instrument was also borne from this thinking. Indians across ages and demographics enjoy investing in gold and they understand that it is a liquid asset.
To overcome the ticket size barrier, the threshold for investing in Jar is as low as Rs. 1.
Growth by Design
Rajan Dube, Jar’s designer, is all of 23 years old. Jar’s underlying design principle is that rewarding behaviour is the best way to create a habit. “Think about credit card loyalty points” explains Dube, “the guilt of spending is somewhat compensated by rewards and as that spending becomes a habit, we stop thinking about it too much.”
Jar presents users with a gamified but familiar scenario. Whenever the user makes an investment, they are allowed to ‘spin a jar’ for rewards. In parallel, they receive a notification congratulating them on their investment. This double-incentive has created an early and effective flywheel that is keeping users investing with Jar so far.
Initial growth for Jar has come through a focus on micro-communities.
“When you invest,” says Ag, “You tend to discuss it with your relatives, your colleagues and your community.” Jar found its early users by evangelising the app in small communities, from women seller groups on Facebook to ‘many many’ Whatsapp groups. Micro-influencers on Instagram have also proved effective.
The Jar team uses these groups to get quick feedback on screens and features – checking if users understand instructions and design intent. For example, they found early on that the concept of ‘rounding-up’ was not clear to users, until they explained it using a gulak* reference. (Hence the name Jar.)
Jar’s friendly, even irreverent, personality is in direct contrast to most fintech apps. For instance, every time they open the app, users will encounter one-liners encouraging them to invest.
Going Beyond Gold
About 50% of Jar’s users are from Tier 1 cities, another 35% from Tier 2 cities and the remaining from smaller towns all over India, from Kashmir to Andaman & Nicobar.
Jar’s founders are clear that gold is only the first step and they will move into any areas that underpin financial freedom, including “saving, avoiding debt traps and having insurance.”
The opportunity is vast, given that India currently has 900 million people with bank accounts, 650 million with Internet access and 450 million with UPI. However, only 30 million invest in the stock market and less than 300 million are insured.
Team Jar is betting on the fact that their approach of nudging users towards financial literacy will scale.
“We never want to be like a bank pushing products at users,” says Ashraf. We believe that financial literacy is best achieved through small nudges that encourage users to embark on and stay on a savings and investment journey. As their corpus grows, so does their confidence and motivation. Even highly educated people are nervous about handling their money. For example, I have doctors in my family and yet the very first financial app they ever installed was Jar.”
*gulak is the Hindi term for a piggy bank, most often made of clay.
Jar is expanding and hiring and they are looking for a UX designer to join their team. Apply here