How Kenya’s Chumz helps consumers use their mobile money accounts to save and invest

Chumz, a startup from Kenya, has developed a mobile application that focuses on helping users save and invest money from their mobile money accounts.

The unique aspect of Chumz is that it allows users to start with as little as US$0.05. The company was formed in late 2019 and spent 2020 working on a prototype. In late 2020, they reached out to regulators for a license, which they received a year later.

The app works by collecting funds from users’ mobile money accounts and channeling them to licensed fund managers. These fund managers then offer a return on the funds, and the earned interest is redistributed to individual clients. One of the notable features of Chumz is its focus on encouraging users to save based on their behavior.

For example, if a user spends money at a pub, the app suggests investing a portion of that money instead of spending it all. Similarly, when a user receives mobile money, the app prompts them to save some of it. Chumz provides an easy and convenient way for users to save and invest, helping them reach their financial goals. Samuel Njuguna, co-founder of Chumz and also involved with Kenyan mobile money startup Chura, explained the motivation behind the app.

Chumz identified an opportunity to serve the retail investment market, which is often overlooked by most fund managers that mainly cater to institutional investors or high-net-worth individuals. Additionally, many potential clients recognized the importance of savings and investment but lacked a tool to develop the habit. This led to the development of the Chumz app, an accessible online platform that leverages behavioral psychology to guide users on when and how to save based on their money-related lifestyle. Users can start saving with as little as US$0.05.

While Chumz has participated in support programs like the GreenHouse Lab accelerator in 2021, it has so far secured funding from angel investors only. Nevertheless, the company has attracted over 70,000 registered clients within a year of launching its app. Njuguna mentioned that various segments, including parents, use the app to educate their kids about financial literacy and create goals for them. The majority of Chumz’s savers and investors are women.

Currently operating in Kenya, Chumz plans to expand its services to the rest of East Africa in the current year. The company generates revenue through agency fees from fund managers, withdrawal fees, and interest components on aggregated funds.