Kenyan startup Chumz has built a goal-based mobile app that helps users save and invest money from their mobile money accounts, with as little as US$0.05.
Formed in late-2019, Chumz worked on a prototype in 2020, reaching out to the regulator for a license in late-2020 and receiving one a year later.
The platform works by channeling funds collected from a user’s mobile money account to a licensed fund manager, who then offers a return to the fund. Earned interest is then redistributed to individual clients.
One of the unique features of Chumz is that it encourages users to save based on their behaviour.
“For instance, if a user spends money at a pub, the app suggests investing some of that money instead of spending it all. Similarly, if a user receives mobile money, the app prompts them to save some of the money. Our app offers an easy, convenient and accessible way for users to save and invest, helping them to reach their financial goals,” said Chumz co-founder Samuel Njuguna, who is also behind Kenyan mobile money startup Chura.
Njuguna said the startup had identified an opportunity to serve the retail investment market, which was underserved by most fund managers, who primarily cater to institutional investors or high-net-worth individuals.
“Additionally, we noticed that many potential clients recognised the value of savings and investment but lacked a tool to help them develop this habit. That’s why we developed the Chumz app, which is an easily accessible online platform that utilises behavioural psychology to guide users on when and how to save, based on their lifestyle around money,” he said. Users can start saving with as little as US$0.05.
Chumz has taken part in a handful of support programmes, including the GreenHouse Lab accelerator in 2021, but has only secured angel funding so far. Nonetheless, it has over 70,000 registered clients in the less than a year since it rolled out its app.
“We have seen segments such as parents using the app to educate their kids about financial literacy and at the same time create goals for them on the app,” Njuguna said. “A majority of the savers and investors are women.”
Currently operational in Kenya, with plans to expand to the rest of East Africa this year, Chumz makes money through agency fees from the fund managers it works with, a fee on withdrawals, and interest components on funds aggregated.