Franc, the acclaimed investment app, is making waves in the financial industry as it spearheads a mission to democratise savings and investments for South Africans. Among its new accolades, it has been announced as one of the ten finalists in the 2023 Innovation City Tech Startup of the Year Awards.
The business was started in 2017 by varsity mates, actuary Sebastian Patel and engineer Thomas Brennan, who were frustrated by the complexity and high barrier to entry of existing investment offerings, and concerned by the poor rate of investment among South Africans (less than 8%) outside of retirement products.
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“Franc was born out of our shared passion for financial freedom and a desire to make it more accessible to ordinary South Africans,” says Patel. “We were tired of seeing people miss out on opportunities to build wealth because they didn’t have access to the right information or products. We wanted to create something that was simple, user-friendly, and affordable for everyone.”
Matching passion with purpose is inherent within Franc’s DNA and is attributed to the business’s success which has grown 407% in the last two years alone.
User experience is integral to Franc’s purpose. “One of the reasons South Africans don’t invest as much as they could is due to lack of financial literacy training in education as well as the complexity of existing investment products,” says Brennan. “Simple and easy-to-use UX is critical to addressing this.”
“The easier we make the UX, the more incentivised users are to save,” Brennan adds.
“We are constantly testing our platform with them, asking why they chose this page or engaged with a particular piece of content. Their responses further inform our decision architecture. With Franc, consumers can start investing within minutes of downloading the app, and can, if needed, extract their funds within a few days of requesting a withdrawal through the app.”
Franc’s simplicity is enhanced by limiting investment choices to just two funds – the Allan Gray Money Market and the Satrix Top 40 ETF – both proven and reliable in the market.
“We chose these funds because they are simple, transparent, and offer good returns,” Patel explains. “The Allan Gray Money Market Fund provided a return of around 4.5% over the last 12 months. The Satrix 40 ETF has returned 12% a year on average over the past three years and 10% on average per year over the past five years.”
Franc also encourages its users to become more informed about investments and sends out a weekly blog article. It has a free academy for people who want to learn more.
Another important aspect to usability and ease is the brand. Franc’s logo is orange because it represents simplicity, warmth, and relatability, which again goes back to the business’s ethos.
“We settled with ‘the everyman’ as our brand archetype to inform the simplicity of our language with our community – also bearing in mind that many of our investors are young and new to investing and savings,” says Brennan.
“We also share a lot of user stories to encourage relatability. Our blog posts, for example, are often written by members of the team who share their own investment insights to enhance credibility,” he adds.
Brennan cautions that the efforts to make the Franc app simple and accessible have to be balanced against building trust and retaining the business’s integrity as a credible financial services player.
“Financial freedom is a big deal to this generation of consumers. Allied to that is investment freedom,” he says. “As in the healthcare sector, ordinary citizens are increasingly taking control of their own finances. This is how we have set up Franc – giving our investor community the opportunity to choose where they place their savings and for how long.”
Users’ money behaviours are encouraged to set specific investment and savings goals, such as a monthly contribution amount or target amount and date. Each goal needs its own investment strategy.
For example, an emergency fund should be a 100% investment in the money market fund, whereas investing for wealth growth or retirement should allow for more investment risk (investing in shares) and potentially higher returns. These goals include the selection of the equity and/or the cash fund.
Apart from recognition by Cape Town’s Innovation City, Franc has won MTN’s Best Financial Solution in 2022 and Best South African Solution in 2019. It was awarded Financial App of the Year by Stuff magazine in 2020 and was named by Heavychef as “one of the top five most exciting start-ups” of 2022, among other industry accolades.
“With Franc, we believe that we are shifting perceptions of savings and investments through our efforts. Investing and wealth creation are core to people’s lives. Africa’s particularly low penetration in investments and the impact that has on ongoing poverty levels is a source of concern for us and our principal motivation to encourage people to save,” concludes Brennan.
As the app continues to evolve and expand its offerings, it aims to create a community of informed and empowered investors who can achieve financial freedom. Through their innovative approach to UI/UX design and their commitment to making investing accessible to all, there can be no doubt that Patel and Brennan are making a significant impact on the investment landscape in South Africa, one user at a time.