Kenyan fintech startup Chumz, which provides users with an innovative mobile platform for goal-based saving and investment, is poised for regional expansion as it prepares to launch in Rwanda. This move comes after reaching a significant milestone in its home market, with over 200,000 registered users utilizing the app to set and achieve financial goals through behavior-based prompts and mobile money deposits.

Founded in late 2019 by Samuel Njuguna, who also co-founded the mobile money service Chura, Chumz was developed with a mission to empower individuals to save and invest money effortlessly. The app allows users to save small amounts—starting from as little as $0.05—by linking with their mobile money accounts, a widely accessible financial tool across Kenya. The funds saved are then invested through licensed fund managers who provide returns on investments, which are redistributed to users. This platform not only provides a simplified way to save but also bridges the gap between underserved retail investors and the broader financial market.

An Innovative Approach to Behavior-Based Saving

One of the unique aspects of Chumz is its use of behavior-based prompts that encourage users to save based on their spending habits. For example, if a user spends money at a social outing or receives a mobile money transfer, the app prompts them to consider setting aside a portion for savings or investment. This behavioral nudge encourages more mindful spending and saving, fostering long-term financial discipline.

“Chumz is about encouraging our users to think twice about their spending habits. If you’re out with friends at a pub, the app might suggest that instead of spending the entire amount, you invest a small portion of it instead,” explained Njuguna. “It’s all about finding an accessible and convenient way to help people meet their financial goals.”

This innovative approach has resonated strongly with Kenyan users, particularly in an environment where access to traditional savings and investment vehicles is often limited. The app’s ease of use, affordability, and accessibility have contributed to its rapid adoption, allowing it to gain significant traction in Kenya’s fintech landscape.

Rwanda Expansion and Future Growth Plans

Following its success in Kenya, Chumz is now preparing to enter Rwanda, where it aims to replicate its goal-based savings and investment model. Rwanda’s expanding digital finance infrastructure, supported by a robust regulatory environment and an increasingly tech-savvy population, presents an ideal market for Chumz’s services. In recent years, Rwanda has been proactive in encouraging fintech innovation to drive financial inclusion and economic growth, making it a favorable destination for fintech startups like Chumz.

Chumz plans to partner with local fund managers and financial institutions in Rwanda to adapt its platform to the local financial landscape. The company hopes to leverage these partnerships to build trust with Rwandan users while providing them with reliable and regulated investment options. Njuguna expressed optimism about the expansion, stating, “Our next big leap is to hit one million users in Kenya by 2026 and to be operational in Uganda, Tanzania, and Botswana by then as well.”

The decision to expand across East Africa is aligned with Chumz’s vision to provide affordable and accessible financial solutions to underserved populations throughout the region. By 2026, Chumz aims to become a pan-African fintech company, providing digital financial solutions that empower individuals to save and invest, contributing to broader financial inclusion across the continent.

Leveraging Fintech for Financial Literacy

In addition to providing a platform for savings and investments, Chumz has also proven to be an effective tool for promoting financial literacy, especially among younger users and families. Parents, for instance, are increasingly using Chumz to teach their children about money management. Through the app, parents can create savings goals for their children, helping them learn the basics of budgeting, saving, and investing. This initiative aligns with Chumz’s mission to foster a culture of financial responsibility and empowerment within communities.

The app’s user base has also shown interesting demographic patterns, with women accounting for the majority of users. This trend highlights Chumz’s appeal among women, who often face greater barriers to accessing formal financial services in Kenya and across Africa. The platform’s focus on micro-savings and ease of use has provided women with an accessible entry point to begin their investment journeys, which may help narrow the gender gap in financial inclusion over time.

The Superfan Challenge: Connecting Savings with Sports

In a bid to further engage users, Chumz recently introduced the “Superfan Challenge,” a gamified feature that ties savings habits to the performance of users’ favorite sports teams. With this feature, users can save or invest a set amount of money every time their favorite football team wins a match. This creative approach leverages the popularity of sports to promote saving, tapping into users’ passions to encourage financial discipline.

As Njuguna explains, “For example, if your team wins, the app prompts you to save a set amount. It’s a fun way to turn people’s love for sports into a tool for saving.” This feature has been particularly popular, as it brings an element of excitement to the saving process, making financial management a more engaging experience.

Chumz’s Role in Filling a Market Gap

The success of Chumz can be attributed to its understanding of the Kenyan financial landscape, where the majority of fund managers primarily serve high-net-worth individuals and institutional investors. Retail investors often lack access to these services, with minimum investment thresholds and limited financial education posing significant barriers. Chumz has filled this gap by providing a platform that caters to the retail investment market, enabling individuals from all income levels to save and invest according to their financial capacity.

With Kenya’s high mobile penetration rate and established mobile money ecosystem, Chumz’s model of connecting mobile money with investment opportunities has proven to be highly effective. The platform’s integration with popular mobile money services like M-Pesa has been instrumental in its widespread adoption, as users can deposit, save, and invest funds directly from their phones. This model of low-cost, convenient access to financial services aligns with the Kenyan government’s objectives to increase financial inclusion and reduce poverty by empowering citizens to build wealth.

Challenges and Competitive Landscape

Despite its rapid growth, Chumz faces challenges common to the fintech sector, including navigating regulatory requirements, ensuring data security, and competing with other digital finance platforms. As Chumz expands into Rwanda, it will need to work closely with local regulators to meet compliance standards and obtain the necessary licenses. Additionally, as data security concerns grow in the digital finance industry, Chumz is investing in robust cybersecurity measures to protect users’ information and build trust among its customers.

The fintech sector in Africa is highly competitive, with startups like M-Kopa, Tala, and Branch also providing financial solutions to underserved populations. However, Chumz differentiates itself with its goal-based savings model and behavior-based prompts, which set it apart in the crowded market. By focusing on long-term financial goals and educating users on financial responsibility, Chumz offers a value proposition that resonates with users looking for more than just access to credit or loans.

The Broader Fintech Ecosystem in Africa

Chumz’s expansion is indicative of the broader growth of Africa’s fintech ecosystem, which has seen significant investment and innovation over recent years. According to a report by Disrupt Africa, fintech continues to be the most-funded sector in Africa, accounting for over 60% of all tech investments in 2023. With millions of Africans still unbanked or underbanked, fintech startups like Chumz are stepping in to bridge the financial inclusion gap through accessible and affordable digital solutions.

In Kenya, fintech has been a driving force in the economy, accounting for a substantial share of GDP and employment. As more fintech solutions become available, the competitive landscape pushes companies to innovate and address specific pain points in the market. For Chumz, this means continuously improving its platform, introducing new features, and adapting its offerings to meet the evolving needs of its users.

The Future of Chumz and Financial Inclusion in Africa

Chumz’s ambitious goal to reach one million users and expand into additional African markets by 2026 reflects its commitment to driving financial inclusion across the continent. With plans to enter Uganda, Tanzania, and Botswana, Chumz is positioning itself as a leader in the African fintech space. By providing individuals with tools for saving and investing, Chumz is empowering users to take control of their finances and build a foundation for economic stability.

As African economies continue to grow and digital financial services become more widespread, Chumz and similar fintech companies have the potential to transform how individuals manage their money. Through its commitment to innovation, accessibility, and financial education, Chumz is set to play a significant role in shaping the future of finance in Africa, helping to unlock the economic potential of millions across the continent.

In summary, Chumz’s journey from a promising Kenyan startup to a regionally expanding fintech company highlights the potential for mobile-based financial solutions to drive financial inclusion and economic empowerment. As it scales, Chumz’s impact on the retail investment market and its ability to adapt to different African contexts will be crucial in achieving its vision of a financially inclusive Africa.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

7th November, 2024