A millennial entrepreneur raised $2 million to build a financial app that caters to the traditional money-saving method used by Western immigrant communities.

Silicon Valley native Nina Mohanty founded Bloom Money in 2021, a fintech application designed to support UK-based immigrant communities to collaborate in saving money, also known as the “money circle” or the Rotating Savings and Credit Association (ROSCA). The 32-year-old founder has raised £1.5 million ($2 million) in venture capital to raise money.

Mohanty, who has lived in the UK for a decade and worked for banks such as Klarna and Mastercard, said mainstream banks don’t understand how immigrant communities manage their money.

"At some point, I just realized I was very frustrated to know who was building for the immigrant community because I was always building the same product for the same person," Mohanty said in an interview with CNBC.

Mohanty notes that in terms of currency, most of the innovations in the immigrant community are focused on remittances, as many people transfer money to their families in their country. “I’ve been scratching my head and wondering, why send all the innovations of money instead of actually bringing together resources and building wealth here?”

Immigration tends to save money in different ways – rather than relying on mainstream options such as high interest savings accounts or taking loans from banks, but relying on community and collaboration.

“I will “Talking to their cigarette breaks or aunties who are cleaning the office and asking them how they manage their money, I’ve been meeting things that people bring their money together,” she said.

This informal merger system involves a group of people who are committed to saving money together. For example, three friends agreed to pay $100 a month to the savings pot, totaling $300. In the first month, a friend can use all $300 for selling, spending on air tickets home, new shoes for kids, and even investing in businesses, etc. Next month, the second friend will be able to use $300.

The spin continues until everyone has the chance to spend $300. The team can agree to continue the cycle if needed.

"It is academically called a roster or Rosca, but it is very community-led. It is very socially leading," Mohanty said, adding that many ethnic groups have a practical name.

For example, it was called the Chit Fund by the Indians. Jamaican "Padna"; Pakistani "Kameti"; Nigerian "Ajo" or "Esusu"; and Somalis "Hagbad".

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

"For example, in this country (UK), Jamaicans used to do this. When the Windrush generation first came over, because banks did not lend to them, they would effectively build this micro-burden in their own communities."

British ethnic minorities still report facing discrimination. A 2023 report by the nonprofit Fair4all Finance, which includes a survey of 1,005 British adults and 1,182 white British adults from ethnic minorities, found that one in five people from minority groups said they experienced racial discrimination while trading with financial providers.

Most importantly, 28% said they believe the way financial organizations work means ethnic minorities are more likely to be treated unfairly.

Although the savings of spin have become an informal but reliable system within the immigrant community, Mohanty highlights various issues such as the lack of regulations, especially when dealing with cash.

"There is a clear gap here and we have the ability to do it digitally," Mohanty explained.

There are several applications emerging internationally to cater to this traditional savings approach, including Egyptian currency circle App Moneyfellows and Hakbah, an alternative financial savings app based in Saudi Arabia.

The company said Bloom's money is specifically targeted at immigrant communities in the UK. Users can create a circle and invite others to participate in the circle.

“The whole account is about benefiting everyone in the group,” Mohanty said. “You’re unlikely to run home with someone to get the money.”

Mohanty said that while the rotating currency saving system can be managed through mainstream banks, the behavior is often marked as "suspicious" when she works in Monzo.

"They are looking at this and then going, 'What is this? It looks like money laundering.' So if you don't know that this behavior is suspicious, they actually start closing their accounts.

Mohanty said rotating savings “is not suitable for the Western structure”, adding that creating Bloom Money was “a struggle for a more diverse formal financial system.”

Bloom's goal goes beyond the digitalization of digital savings rotation. It hopes to build investment products, as many immigrants focus on sending money home to sacrifice wealth plans for future generations.

"They don't necessarily plan their future or the next generation, so imagine if our parents didn't save or put money into their pension cans or investment clubs, so we want to do that now so people can build their wealth."

Fair4All Finance report shows that savings or investment accounts and workplace pensions are less likely than whites, British people.

"Some experts stress that the characteristics of minority groups may mean that they are more likely to have 'thin documents' with very few credit records, so it is difficult to make credit judgments to generate a reliable credit score," the report said.

“Positive behaviors like regular remittances or attending informal savings circles don’t contribute (credit profile), and we even find concerns that these may go against people.”

Now, Bloom Money is building credit profiles for users to borrow money from them to help them invest in pension pots or gold and “build financial services suitable for diaspora across countries.”

Mohanty said the company wanted to "make it easy, like clicking a button and say 'You've received your expenses from Bloom Circle. Why not invest it in pensions?"