Chumz, a Kenyan startup, has created a goal-based mobile app that allows users to save and invest money from their mobile money accounts for as little as US$0.05.
Chumz was founded in late-2019 and worked on a prototype in 2020 before approaching the regulator for a license in late-2020 and receiving one a year later.
The platform works by directing funds from a user’s mobile money account to a licensed fund manager, who then provides a return to the fund. The interest earned is then distributed to individual clients.
Chumz’s unique feature is that it encourages users to save based on their behavior. “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.
According to Njuguna, the startup saw an opportunity to serve the retail investment market, which is 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 stated. Users can begin saving as little as US$0.05.
Chumz has participated in a number of support programs, including the GreenHouse Lab accelerator in 2021, but has so far only received angel funding. Despite this, it has over 70,000 registered clients in less than a year since launching 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.”
Chumz makes money through agency fees from the fund managers it works with, a fee on withdrawals, and interest components on funds aggregated. It is currently operating in Kenya, with plans to expand to the rest of East Africa this year.
