P.E.I. entrepreneurs creating app for friends to save money together
CBC News | Posted: September 7, 2020 7:28 PM | Last Updated: September 7, 2020
App will allow for peer-to-peer lending
A group of P.E.I. entrepreneurs is developing a new app they hope will make it easier for people to save money together.
The app, called MICC Financial, relies on a concept known as "rotating savings." It's a scenario in which a group of individuals, such as close friends, pools money into a common fund.
"These funds are now distributed to each individual on a rotational basis," Jonah Chininga, business development officer with MICC Financial, told CBC Island Morning host Mitch Cormier.
The app is in the beta testing stage. People will be able to download the app, create an account, link their bank and invite friends and family to pool money, Chininga said.
He said the idea came from his lived experience.
Personal Challenges
Chininga moved to P.E.I. in 2014 from Zimbabwe to study for his business degree at UPEI.
"I faced a lot of financial challenges in terms of accessing affordable credit as well as building a credit history," he said, adding the challenges he faced convinced him and a group of friends to look for a solution.
MICC Financial allows peer-to-peer lending and helps connect students and newcomers seeking to borrow money with investors who want to lend it, Chininga said.
He said when he came to Canada he didn't know what he would need in terms of credit, saving and banking.
"I lacked financial education in terms of the credit product, in terms of the credit system," he said. "That kind of put me into debt which was an expensive lesson to learn."
Chininga said he has used the rotational saving concept before to pay off credit card debt.
"I realized that I relied more on my community, more on friends and family," he said.
The goal there is to help each other as a community be accountable to one another and build really healthy financial habits. - Jonah Chininga
Many transactions already happen between friends and family, but are not recorded, Chininga said.
"We are now looking for a way to take this from an informal system to make it formal," he said.
Chininga said people can build credit through rotational savings. When people withdraw money it works like a bank. The sum is recorded when it is taken out and put back. Chininga said the information is available for credit bureaus to see how quickly people repay funds.
"The goal there is to help each other as a community be accountable to one another and build really healthy financial habits," Chininga said.
He said the default rate with these types of savings plans tends to be low because people are borrowing from people they have pre-existing social ties with.
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