Chocolate Finance founder Walter de Oude (left) and investor/brand ambassador Henry Golding
Last week saw the launch of spare cash management platform Chocolate Finance, the latest innovation by Walter de Oude, widely known for founding Singapore Life (Singlife) in 2014.
Licensed by the Monetary Authority of Singapore (MAS) to perform fund management activities, Chocolate Finance has garnered support from prominent venture capital firms, including Saison Capital, Peak XV Partners, Prosus, and GFC. Henry Golding, the actor known for his role in Crazy Rich Asians (Warner Bros., 2018), has also joined as a brand ambassador and investor.
The company’s operations are based in Singapore. Its core team consists of about 12 employees, and 17 developers in Vietnam provide additional tech support.
In an email interview with e27, Chocolate Finance founder Walter de Oude explains his vision for the new wealth tech platform and how the company aims to realise it.
This is an edited excerpt of the conversation.
What inspired you to build this solution?
Well, I believe that one of the most fulfilling things in life is to build something really cool, something useful that makes the world a better place. This was my ambition when I built Singlife, and it continues with Chocolate Finance.
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I wanted to take on the challenge to see if I could find a more efficient way to make spare cash work harder without all the complexities that usually go with that. This meant taking the way fixed-income asset management traditionally operates and reengineering it to manage day-to-day cash needs optimally.
If I could pull this off, I could make the lives of many people better (and hopefully happier) just by making their spare cash work that extra bit harder.
What is the specific problem that Chocolate Finance aims to tackle? Why is it better than the alternative?
Pretty much everyone I know has money sitting in a bank account somewhere, earning little interest—young people, old people, everyone. There is also a general dissatisfaction and growing distrust in traditional financial institutions, with only 30 percent of Singaporeans saying they trust financial institutions.
The result is customers’ desire for greater freedom and access to straightforward financial services. The importance of making things simple, understandable and straightforward.
What makes us stand out is that we’ve reengineered how short-term money is managed in the background, as a fund manager and not a bank, to optimise the potential returns that can be delivered. We stand behind these to ensure that we deliver our target 4.2 per cent p.a return on each customer’s first S$20,000 in a market where customers usually need to jump through hoops to unlock higher returns or lock their money in for long periods to get up to 3.5 per cent p.a return.
We see ourselves as the space between traditional financial institutions and fintech providers. We are fully licensed by the MAS for fund management and utilise innovative technology to solve traditional banking woes. We are not competing with asset managers offering high returns with high risk and volatility. Instead, we are a new place for the money you set aside for daily expenses. Whether it is your emergency fund or spare cash, you can now enjoy solid returns without the usual fuss or worry.
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Who are your users? What is your user acquisition strategy?
Chocolate is for everyone. Everyone wants their spare cash to work harder for them, effortlessly. Our users vary from all ages, income groups and backgrounds and we have seen great reception thus far. We believe the product speaks for itself, and hope that our key product offerings and brand sets us apart from traditional financial institutions.
We are happy to see that our customers are responding well to Chocolate Finance thus far, with five-star reviews. We’re so proud of what we have built and how we are helping our customers.
What is your business model?
Account holders’ money is invested in a portfolio of fixed-income funds carefully selected to optimise risk-adjusted returns based on factors such as duration, yield to maturity, credit quality, and currency. This approach allows the portfolio to target an optimal target return/volatility profile on a forward-looking yield-to-maturity basis. This basically means we lock in achievable yields in the market and deliver them in a smoothed, stable predictable way to customers – currently 4.2 per cent for your first S$20,000.
During this process, no fees are taken, and no money is made until the target returns are delivered. Additionally, if the portfolio does not achieve the target 4.2 per cent p.a. for the first S$20,000, the difference will be topped up to ensure the target return during the Qualifying Period.
The Chocolate Finance managed account is a new portfolio of fixed-income securities comprising a collection of funds. The portfolio is currently made up of the Dimensional STIG SG fund, UOBAM United (SGD) fund, Fullerton Short Term interest rate fund (SGD) and the LionGlobal Short Duration Bond fund (SGD).
It is worth noting that the underlying funds of the Chocolate Managed Account are invested globally to optimise returns. Any investments in global currencies are hedged back to SGD to protect against FX risk.
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What are your targets for your first year?
To establish Chocolate Finance as Singapore’s favourite place for spare cash. A happy place for money. So far, we have had such an amazing response we are tracking way ahead of our first-year expectations.
What is your major plan for 2024?
2024 is the year when Chocolate Finance comes to life. We have rolled out our Chocolate Accounts, which are delivering awesomely. For the rest of the year, we will focus on feature improvement, and executing the feedback from customers so far on how to make Chocolate even better.
Things to look out for in the year ahead include Visa debit cards with super FX rates, new ways to move money (e.g., eGIRO), and more!
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Image Credit: Chocolate Finance
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