Kenyans can now save as little as five shillings on their mobile phones thanks to a new platform developed by Moneto Ventures in partnership with Nabo Capital.
Chumz is an app that enables anyone with a mobile money account to create financial goals as an individual or as a group and invest their money towards the goals, track progress and earn interest.
Moneto chief executive Samuel Njuguna says the app will be available for download from Google Play and Apple App Stores. Once a user is registered, they can create saving goals.
Authorised under the Capital Markets Authority fintech sandbox, the app will then send prompts to the user to invest towards their goal and offer advice on investing based on spending habits.
Mr Njuguna said research carried out by the firm indicates that Kenyans have a “self- imposed” limitation that they can only save Sh1,000 and above.
“Our journey in Chumz began when we observed that Kenya has numerous lending apps which are fueling a consumerism culture and limited investment solutions," he said.
Setting out to find why customers were not taking up investment options in Kenya's developing market, he learnt some lessons.
"Most people are unbanked or under-banked. This means they have to spend more time and effort to invest their money. There is also heavy investment jargon by the financial sector that makes potential clients shy away from investing,” Mr Njuguna noted.
"Also, the current solutions lack methods to keep the people engaged in saving such as feedback mechanisms, social nudges and reminders on when to save and invest."
He said the research also highlighted that Kenyans lack awareness on investment channels they could easily access and track their investment with minimal friction in terms of time and financial cost in making the investment.
“With most people transacting on mobile money it would be easier to have a comprehensive saving and investment solution on their phone, the reason we got inspired to develop Chumz.”
Mr Njuguna noted that while a lot of Kenyans expressed the desire to invest, most were experiencing psychological barriers to investing including lack of commitment to a saving plan, being overwhelmed by expenses and forgoing saving for instant gratification.
“The platform will allow users to invest as low as Sh5 to enable individuals to build a savings culture. This concept is in line with the tradition of using piggy banks to save and nurturing the habit of saving,” he noted.
For people who had been struggling with bringing themselves to save and invest, the Chumz app hopes it will use its AI algorithms and data analytics to guide them on how much to invest based on their spending habits.
For instance, if you spend in a restaurant the app will suggest how much you need to save. Users can also invest with family and friends as well as make use of behavioral psychology practices such as social nudges, default bias, and self-commitment to bridge the gap between intention and action.
Nabo Capital managing director Pius Muchiri noted that there are about 200,000 active investment accounts in the capital markets compared to over 34 million active bank accounts.
He highlighted that bridging this gap is the most important key to accelerating our economic growth.
“Through Chumz, we will enable Kenyans to achieve any aspiration including education, travel, home-ownership and so on. Our partnership is grounded on one desire: to democratise investment by giving people access to opportunities with competitive returns.”