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Step 1: Client Initiates Deposit
  1. Client Registration and KYC:
    • The client (depositor) registers on the Chuuma app and completes the KYC process. All KYC data is captured on the Chuuma platform.
    • The KYC information is stored securely in the Chuuma system, accessible only by the relevant financial institution (FI) through the platform.
    • Once the client’s KYC is verified, they are eligible to invest in Chuuma unit trust, participate in stock purchase at LuSE, invest in fixed term deposits with a licensed financial institution.
Step 2: Financial Institution Setup on Chuuma Platform
  1. Financial Institution (FI) Registration:
    • Financial institutions (licensed by BoZ) are onboarded onto the Chuuma platform.
    • Each FI is assigned a unique dashboard with access only to the fixed term deposit-related data (deposits, amounts, term details, etc.).
    • The FI configures the fixed term deposit offerings, including setting the deposit rate, tenor, and target amount (raised through the platform).
Step 3: Fixed Term Deposit Creation by Financial Institution
  1. Deposit Terms Setup:
    • The financial institution submits a formal request to Chuuma Asset Management to create a new fixed term deposit offering on the platform. This request must include:
      • Rate
      • Tenor
      • Target amount to be raised
    • The FI’s board of directors needs to have approved the deposit product before submission to Chuuma.
  2. Chuuma Validation:
    • Chuuma reviews the deposit request from the FI, verifying the details.
    • If everything is in order, Chuuma publishes the deposit on the platform for client access.
    • The deposit becomes available on the app, allowing clients to start making deposits.
Step 4: Client Makes Deposit via Mobile Money
  1. Client Deposit Process:
    • The client selects the desired fixed term deposit on the Chuuma app.
    • The client initiates the deposit by transferring the deposit amount from their mobile money account to the designated wallet account of the financial institution (MNO wallet account).
    • The money moves directly from the client’s mobile money wallet to the FI’s wallet maintained with the Mobile Network Operator (MNO). No third-party intermediary handles the funds, mitigating the risk associated with third-party involvement.
    • The FI confirms receipt of the deposit in real-time, which is automatically updated in the Chuuma platform.
Step 5: Fixed Term Deposit Confirmation and Reporting
  1. Deposit Confirmation and Certificate:
    • Once the deposit is successfully received by the FI, a deposit certificate is issued by the FI to the client email address as well as on the platform. This is tracked and recorded within the Chuuma platform.
    • Chuuma provides a dashboard for both clients and financial institutions to view deposit details and monitor progress in real-time.
  2. Real-Time Updates:
    • The FI can view the status of deposits, the total amount raised, and any other relevant details on their dashboard.
    • Clients can also view their deposit information and track progress, including the maturity date and the interest rate.
Step 6: Target Amount Reached
  1. Deposit Closing:
    • When the target amount for the fixed term deposit is reached, the deposit product is automatically closed for new contributions.
    • The FI informs Chuuma via the platform when the product has been fully subscribed. At this point, no further client deposits will be accepted.
Step 7: Daily Sweep to Bank Accounts
  1. Sweep Process with Mobile Network Providers (MNOs):
    • The FI runs daily inter-day sweeps with the MNO to transfer the total amount of fixed term deposits from the MNO wallet to their account at the Bank.
    • This sweep is automated and done on a daily basis to ensure that client funds are transferred to the FI’s Bank account in a timely manner, ensuring liquidity.
Step 8: Risk Mitigation and Compliance
  1. Risk Management:
  • Funds Handling: Since no third party (like Chuuma) is handling client funds, funds move directly between the client’s mobile wallet and the FI’s wallet. This minimizes third-party risk.
  • Security: All client transactions are secured through encryption and compliant with BoZ’s financial transaction regulations.
  • Real-Time Data: Both the FI and Chuuma Asset Management will have access to real-time transaction data, ensuring transparency.
  1. KYC Data Management:
  • The platform securely stores KYC data for each client in compliance with BoZ and SEC regulations.
  • KYC data is only accessible to the relevant FI for the specific fixed term deposit transactions.
  • The FI can view KYC details via the Chuuma platform for verification purposes, but does not have access to other sensitive client data unless directly relevant to the deposit.
Step 9: Maturity and Withdrawal
  1. Maturity Notification:
  • The client is notified via the app when the fixed term deposit matures.
  • The client can choose to withdraw the principal and interest to their mobile money account or roll over the deposit for another term.
  1. Withdrawal Process:
  • If the client opts to withdraw the deposit, the funds are transferred from the FI’s account to the client’s mobile wallet through the MNO.
Key Points for Risk Management & Compliance
  • Direct Deposit Flow: The funds flow directly from the client’s mobile wallet to the financial institution’s wallet, with no third-party intermediary.
  • KYC Compliance: The Chuuma platform captures and manages full KYC information for all clients. This data is made available to the FI, ensuring compliance with regulatory requirements.
  • Data Security: The platform employs robust data encryption and secure transaction processes to protect both client funds and KYC information.
Banking Integration: The FI is responsible for managing the funds and conducting sweeps to their bank accounts, ensuring liquidity and compliance with Bank of Zambia regulations.