Xhuma (meaning ‘connect’ in isiZulu) is a new fintech just launched in SA that has ambitions of challenging the likes of Revolut and Chime.
Started by 30-year-old former banker and chartered accountant Schalk Burger, Xhuma is part of a banking revolution called ‘neo banking’ that simplifies the process of making and receiving payments using an app linked to your bank account.
It simplifies the clunky online payments processes used by banks and, if experience overseas is anything to go by, has the potential to explode organically as people sign up to participate in financial transactions that are almost as simple as sending WhatsApp messages.
For comparison, Revolut, established in London in 2015, has more than 30 million customers and handles more than 400 million transactions a month. Venmo, based in the US, has more than 80 million customers.
Last year, East African fintech M-Pesa surpassed 50 million customers, though it never gained much traction in SA. Using their cell phones, M-Pesa customers can send and receive money, pay bills, make and receive international money transfers, and access credit.
Chime, which offers a debit, credit and savings account, has more than 13 million customers drawn by the ability to make fee-free banking transactions from their mobile phones.
Solutions-focused
“Our team was frustrated by the fact that traditional banks did not connect people with solutions to their real world money problems – problems like running a stokvel, splitting bills with your friends and family, achieving your financial and savings goals, or sticking to your budget,” says Burger.
“South Africans also have a poor culture of saving, and that’s a consequence of financial illiteracy. It’s one thing to preach about saving, quite another to provide the exact tools you need to achieve your financial goals.
“Xhuma comes with artificial intelligence that tracks your spending, categorises it under headings such as groceries and mortgage payments, and at the end of the week or month gives you a profile of where you spent your money. This would take hours to accomplish with a typical bank statement because you would have to download it, convert it to Excel, and then arrange all the line items under headings. We can do that in seconds.”
Like Revolut and other new banking apps, Xhuma allows users to instantly send and receive money without having to wait a day or two for the funds to clear.
Users can set up ‘pocket accounts’ which are sub-accounts for specific purposes, such as birthdays, Christmas or holidays.
Solving SA-specific financial problems
There are roughly 47 million bank accounts in SA, which is relatively high for a country of 60 million people, but a large percentage of these are used primarily to store and then withdraw cash from ATMs as and when needed.
The Xhuma app has been designed to handle gnarly problems like splitting bills among friends at a restaurant, or keeping track of funds saved in stokvels.
It allows users to send funds instantly, provided the recipient also has the app. This can be done as fast as sending a WhatsApp message, and comes in handy when you find yourself at a supermarket checkout without card or cash. You can request a family member or friend to send you a few hundred rand and it arrives in seconds.
Payments can be once-off or scheduled using Xhuma’s AutoPay, while another function called GroupPay allows users to split bills with family and friends. LoyaltyHub allows users to manage loyalty benefits from their transactional account, and another feature called SpendSense allows users to set and stick to a budget.
Township entrepreneurs are also likely to benefit from Xhuma since they can buy and sell electronically without paying heavy transaction costs for small purchases of R20 or R50.
Stokvels
Group Vaults is aimed at stokvels. It manages all contributions, savings and withdrawals without the burdensome admin traditionally associated with this type of savings club.
TravelGenius is another feature for booking flights, tours and accommodation.
“Most institutions try to get you to spend more. We teach financial literacy by providing tools such as SpendSense to get you to live within your budget and save more,” says Burger.
Organic growth
Even before its launch, Xhuma had 15 000 sign-ups.
Neo banking has been shown to grow exponentially as friends and family members encourage each other to download apps that allow them to interact financially as easily as they do on social media.
“Our primary goal is to help millions of South Africans rise above their socio economic challenges by teaching them financial skills as and when they bank and to facilitate financially sound decisions. This is not mere lip service, but the reason why we embarked on this challenging journey and questioned the status quo,” adds Burger.
“What sets Xhuma apart is its ability to provide high-end services at a price point comparable to the most affordable bank accounts, democratising access to a top-tier digital transactional experience.”
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