Millennials raised $2 million for a money-saving app for immigrants

One millennial entrepreneur raised $2 million to build a financial app that caters to traditional financial savings methods used by immigrant communities in the western world.

Nina Mohanty, a native of Silicon Valley, founded Bloom Money in 2021. This is a fintech app designed to save joint money, also known as “Money Circle” or Rotating Savings and Credit Association (ROSCA) to support UK-based immigrant communities. The 32-year-old founder raised £1.5 million ($2 million) from venture capital to build bloom money.

Mohanty, who has lived in the UK for 10 years and worked for banks such as Klarna and Mastercard, says mainstream banks don’t understand how the immigrant community manages money.

“At one point, I’ve only just realized that I’m wondering who’s building for the immigrant community because I’ve always been building the same products for the same people,” Mohanty told CNBC in an interview.

Mohanty noted that when it comes to money, much of the innovation in the immigrant community focuses on a lot of remittances to families in their home countries. “I keep scratching my head and wondering why isn’t all the innovations about sending money out actually about pooling resources and building wealth?”

Immigrants tend to save money – they rely on community and collaboration rather than relying on mainstream options such as high-profit savings accounts or receiving loans from banks.

“I talked to the bus driver with my aunt who was cleaning their cigarette breaks and the office, and asked them how they managed their money, and I kept coming across this where people pool their funds together,” she explained.

This informal pooling system includes a group of people who promise to save money together. For example, three friends each agree to pay $100 a month to the savings pot, which totals $300. In the first month, one friend will have access to the full $300. This can be spent on plane ticket homes, new shoes for kids, and even investing in business. The next month, my second friend spends $300.

The rotation continues until each person has the opportunity to spend $300. The group can agree to continue the cycle as long as necessary.

“Academicly, it’s called a roster or a rotating station [ROSCA]but it is very community driven. It’s very socially guided,” Mohanti said, adding that many ethnic groups have a name for the practice.

For example, it is known by the Indians as the Chit Fund. “Pardner” by Jamaicans. “Cameti” by Pakistanis. “ajo” or “esusu” by Nigerians. “Hug Bad” by Somalius.

Mohanty noted that immigrant communities often face discrimination within the financial system.

“In this country [U.K.]for example, Jamaicans were used to do this. When the Windrush generation first arrives, the banks won’t lend to them, so they will effectively build this microcredit within their own community. ”

Ethnic British minorities report still facing discrimination. A 2023 report by nonprofit FAIR4ALL Finance – including a survey of 1,005 UK adults and 1,182 white adults from ethnic minority groups – 1 in 5 people in ethnic minority groups said they experienced racism while dealing with financial providers.

Additionally, 28% say they believe that the working structure in financial institutions means that ethnic minorities are likely to be treated unfairly.

While revolving savings served as an informal but reliable system within the immigrant community, Mohanty highlighted a variety of issues, particularly the lack of regulations when picking up cash.

“There’s a clear gap here and there, there’s a technology that allows us to do this digitally,” Mohanty explained.

Several apps have emerged internationally to accommodate this traditional method of saving, such as the Egyptian money circles app MoneyFellows and the Saudi Arabia-based alternative financial savings app.

Bloom Money is particularly catering to the UK’s immigrant community. Users can create circles and invite others to join the circle.

“That whole account is for the benefit of everyone in the group,” Mohanty said. “It’s unlikely that someone is going to take the money and go home.”

It is also possible to manage a money savings system that spins through mainstream banks, but when she worked at Monzo, her actions were often flagged as “suspectful,” Mohanty said.

“They look at this and say, ‘What is this? This looks like money laundering.'” And they’ll actually start shutting down their accounts.

The spinning of savings “doesn’t fit into Western structures,” Mohanty said, adding that the creation of bloom money is a “fight for a more diverse formal financial system.”

Bloom has a purpose beyond digitizing saving rotation. Many immigrants are focused on sending money home, and they want to build investment products as they will sacrifice plans for future generations of wealth.

“They don’t necessarily plan their future or their next generation, so imagine if their parents weren’t saving or putting their money in the pension pot or investment club.

The Fair4all Finance Report showed that ethnic minorities are less likely to have savings or investment accounts and workplace pensions compared to white British people.

“Some experts stressed that ethnic minority groups’ characteristics could mean that they are likely to have “thin files” with little credit history.

“Positive actions such as regular remittances or participating in informal savings circles will not contribute. [to credit profiles] And we even found fears that these could be counted against people. ”

Now, Bloom Money will build a credit profile for users, invest in pension pots and gold, and lend them money to them to “build financial services suitable for the country’s diaspora.”

“I said I hope it will be as easy as clicking on the button that I received my payment from Bloom Circle,” Mohanty said.