Tech Thursday: New financial app aims to transform stokvels
Stokvels are a long standing practice amongst South Africans and now there’s an app that aims to record payments and claims from members.
South Africans’ relationship with their finances came into question with recent stats of the country’s net loan debt to GDP reaching an all-time high of 48%. The 2016 Old Mutual Savings and Investments monitor shared results on how South Africans save and invest their disposable income.
The monitor noted over 70% of participants surveyed utilise informal savings vehicles such as (unbanked) stokvels as a means to save household income. Stokvels have operated for decades in South Africa and are gaining popularity among more and more households.
Stokvels can take multiple forms:
- Group savings schemes rotating monthly contributions among members,
- Burial societies that provide finance for funeral arrangements
- Investment clubs that focus on acquiring assets
On March 2016, young entrepreneur Tshepo Moloi launcged the StokFella app which acts as a financial management application that enables stokvels to record the payments and claims of all stokvel members under one central point.
Moloi believes his technology can transform this 19th century practice into a modernised fintech industry.
“We built up a user base of more than 400 groups in the space of one year, validating our assumptions about the lack of offering in this market. This traction informed our decision to release the next layer of the application, enabling stokvels to make transactions that offered long term value to its members,” he said.
Earlier this year saw the launch of Stokfella, an updated app which looks to elevate financial inclusion in the rising black middle class, offering financial products to a previously under serviced market. The savings and investments monitor notes that usage of stokvels as an informal savings vehicle is not limited to low income earners. High levels of adoption were noted across income brackets, furthermore noting the higher the household income level, the more stokvels participants belonged to.
Another important feature StokFella 2.0 offers is the ability to bank the unbanked, as the application gathers data at the leaf end of a stokvel group i.e. collecting data on each member’s financial behaviour within the group, giving members without a credit record the opportunity to develop a credit score.
“More can be achieved to turn around the relationship that South African’s have with their finances. We are targeting black households who are interested in building a financial portfolio as the app looks to open the doors to greater market opportunities for those with informal saving vehicles,” said Moloi.
“This is what StokFella 2.0 is all about. By bringing all stokvel groups under one platform together with their funds, it hands the buying power back to the stokvel members by enabling them to grow their own capital to fund their aspirations such as buying a home or starting a business” says Moloi.
To download the app, click here.
