I connected a drive today and tried a Time Machine backup and it worked.
Here's what I did...
1. Drive size 1 TB - 2 Partitions....(Partition 1 - 250GB / Partition 2 - 750GB). Both partitions formatted as ex-FAT on the Macbook prior to connecting to the router. Partition 2 was meant for the Time Machine backup.
2. Connected router to the USB 3 port, and enabled Time Machine backup in the router interface, selected Partition 2 for Time Machine.
3. Went to Time Machine preferences on the Macbook and selected "Add or Remove Backup Disk".
4. Selected the backup disk on RTR-AC86U.
5. Selected encrypt backup and put in an appropriate secure password for encryption.
I'm using router firmware version: 3.0.0.4.384_32799