Finance Focus - May 2020

THE BUSINESS MAGAZINE FOR FINANCE LEADERS

FINANCEFOCUS www.finance-focus.net

Issue 22

GRAY SWAN INVESTMENTS

Far Away Places For Far-sighted Funds?

ALSO IN THIS ISSUE:

Experian / Marsh / Sureswipe / Cavmont Bank

EDITOR’S LETTER THE BUSINESS MAGAZINE FOR FINANCE LEADERS

FINANCEFOCUS EDITOR Joe Forshaw  joe@finance-focus.net SENIOR PROJECT MANAGER Sam Hendricks  sam@finance-focus.net SENIOR PROJECT MANAGER Tommy Atkinson  tommy@finance-focus.net SENIOR PROJECT MANAGER Lewis Hammond  lewis@finance-focus.net PROJECT MANAGER James Davey  jamesd@finance-focus.net PROJECT MANAGER Chris Wright  chrisw@finance-focus.net FINANCE MANAGER Chloe Manning  Chloe@finance-focus.net SENIOR DESIGNER Liam Woodbine  liam@finance-focus.net CONTRIBUTOR Manelesi Dumasi CONTRIBUTOR Karl Pietersen CONTRIBUTOR David Napier CONTRIBUTOR Timothy Reeder CONTRIBUTOR Colin Chinery CONTRIBUTOR Benjamin Southwold CONTRIBUTOR William Denstone

Published by Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Rouen House, Rouen Road, Norwich NR1 1RB +44 (0) 1603 855 161

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Unlike others, the financial industry has proven itself to be resilient during the pandemic.

But while it is resilient, it is not immune to the impacts of what has been an absolutely devastating period for many businesses. Some smaller advisory firms and credit businesses have closed doors around the EMEA region, but big financial institutions are for the most part continuing to support their clients as best they can.

The big banks in Europe all posted decent results earlier in the year, but as we get through Q3, the impact of lockdown and the lack of spending that occurred during various lockdowns is starting to bite.

Global, European, Middle Eastern and African growth predictions are all down and spending in commercial sectors has been bombed. You just have to look at tourism, air travel and entertainment businesses – devasted by lockdowns and cross-border issues.

But S&P is, currently, predicting a 5.9% rebound in global GDP in 2021 following a decline this year of 2.4%. And major banks, insurance and finance companies have technology as their ally. While all were undertaking digitisation strategies in some form previously, tech is now being stretched to its limits to help companies to work smarter.

Because of this, there are many companies that are in fact seeing opportunity during these bleak times and investing internally to capture whatever chances are available.

Another key focus for big financial businesses is collaboration. Working together to solve problems is much quicker, easier and efficient, and even the biggest businesses are now seeing the necessity of partnerships to aid growth and development while Covid-19 still pummels our economies.

Joe Forshaw EDITOR

E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher.

Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Media Group Ltd 2020

GET IN TOUCH  +44 (0) 1603 855 161  joe@finance-focus.net www.finance-focus.net

www.finance-focus.net / 3

6/GRAY SWAN INVESTMENTS More and more of South Africa’s middle-class investors are looking to move money offshore. They want to live in the sun but invest in the shade. “Private clients who had 15 tor 20% of assets, now suddenly want to put as much overseas as possible,” says Duncan Theron, CEO of high-performing GraySwan Investments

© Gray Swan

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THIS MONTHS FEATURES

© Cavmont

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CAVMONT BANK Helping to solve the problem of financial inclusion in Zambia EXPERIAN SA Acquisition of Compuscan enabling hige growth across Africa HELLO GROUP Leading the way by using technology to make banking more accessible MARSH Relied on by clients for nearly 150 years RAND MUTUAL ASSURANCE Changes at the top for RMA STANDARD LESOTHO BANK Pursuing a digital strategy in order to boost growth SURESWIPE Quality service delivery sets them apart www.finance-focus.net / 5

GRAYSWAN INVESTMENTS

Gray Swans

and Blue Waters PRODUCTION: Colin Chinery & GraySwan Investments

More and more of South Africa’s middle-class investors are looking to move money offshore. They want to live in the sun but invest in the shade. “Private clients who had 15 tor 20% of assets, now suddenly want to put as much overseas as possible,” says Duncan Theron, CEO of high-performing GraySwan Investments.

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Far away places for farsighted funds? Offshore assets have always been part of the investment armoury of the super-wealthy.

But now South Africa is seeing a boom in middle-class investors looking to move money offshore for wealth diversification and a more secure retirement.

“Taking money overseas is an ongoing activity, but over the last year or two it has really multiplied,” says Duncan Theron, CEO of GraySwan Investments.

“Clients are continuously asking us what they should do with their offshore assets, how do they get them offshore cost effectively, and which jurisdictions and offshore platforms should they use and asset classes and funds should they invest in?”

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Johannesburg and Cape Townbased GraySwan Investments delivers wealth management solutions to private and family office investors, along with investment consulting to institutional and corporate investors, currently advising to more than R20 billion in assets.

ROBUST AND SUCCESSFUL Among the most highly experienced independent advisory businesses in the South African financial sector, GraySwan’s track record is proof of a remarkably successful and robust investment process developed since the company’s founding nearly 10 years ago.

“Our clients are top performers since the inception of our business and are the ambassadors of our business.

Our business has always grown by word of mouth. The differentiator for us is that we are truly independent and we are investment advisors with previous offshore investment management backgrounds.

“We are passionate about investments and passionate about doing the right things for the right reasons always.

“Whatever we set ourselves out to do, we do with integrity and do it whole-heartedly. We always go that extra mile. We focus on investments – and we do it well. Our clients see us as their trusted long-term investment thinking partners,” says Theron.

The brand title is a benchmark of prudence; a gray swan being a potentially very significant event; unlikely but still possible.

INDUSTRY FOCUS: INVESTMENTS

// TAKING MONEY OVERSEAS IS AN ONGOING ACTIVITY, BUT OVER THE LAST YEAR OR TWO IT HAS REALLY MULTIPLIED // Translated into GraySwan’s advisory model it means risks that can be identified and should then either be avoided for their unintended consequences on investors’ portfolios, or otherwise managed to maximise expected returns at predefined levels of risk.

GraySwan has two divisions GraySwan Investments and GraySwan Wealth – with the first providing investment consulting services to institutional investors such as pension funds, medical aid funds, short-term insurers as well as corporate clients, while the latter offers parallel services to private clients and family offices seeking investment advice.

INSTITUTIONAL FOCUS The launch of GraySwan Investments in 2010 saw an initial focus on investment advisory to institutional investors. For the founders it was a natural progression as they previously consulted to and managed many of the largest institutional clients in South Africa’s assets. The core team all came from big corporate backgrounds in the investment management or institutional asset advisory spaces.

As a former senior investment consultant at Alexander Forbes and thereafter Riscura and finally Chief Investment Officer for Sanlam’s offshore alternative asset management business, Duncan Theron boasts more than 23 years in the industry. Together with his senior team they have more than 110 years of investment experience and the team is also one of the most stable amongst its peers.

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“We set out to provide an independent, non-conflicted, institutional investment advisory business such as we were providing 15 to 25 years back before we headed into offshore asset management.”

History had given them a lesson and an opening.

Whilst working in the offshore asset management business, Theron and his partners, had to deal with local investment advisory businesses and during such time witnessed how conflicted and reactive these advisory business models had become.

“Once independent, boutiquefocussed businesses, these advisors had mostly become ‘One Stop Shops’, offering all the different services with all the conflicts of interest. They were consultants, administrators, actuaries; employ benefit consultant and asset managers - just about everything.

The investment advisory offering had become the low-cost service to attract assets to their other business offerings.

As a result, the investment advisory offering as provided by the industry was seldomly a high-quality high offering as it had to be provided at a low cost just to win the client over.

“We saw there was a gap in the market as some clients required a more sophisticated and pro-active service and better returns and decided we would come back, and again start an independent, unconflicted but a highquality investment advisory business.

We knew there were institutional investors that were desperate for a better solution.

“Offering a boutique, ownermanaged, focused and tailor-made premium and world-class service, we were very fortunate in immediately attracting a few large pension funds.

That gave us the dream start. Today our focus has moved more to smaller and medium-sized pension funds as these clients are typically very entrepreneurial and are desperate for a more dynamic and personalised and high conviction offering.”

More followed, and with success and acclaim came calls for diversification.

“Starting purely as a nondiscretionary institutional investment advisor, we only provided advice. The pension fund, medical aid fund or short-term insurer would make the decision and we would thereafter implement such. We had no discretion.

During the past two years some of our larger institutional clients has changed our mandates where we no longer provide advice but rather we now actively manage their entire investment program as per our best discretion within a well-defined and agreed investment framework. We call this service ‘Outsourced Chief Investment Officer’ or OCIO in short. Such discretion is testimony to our institutional clients trusting that our advice works and that we can implement such faster and more timeously if we manage their investment programs.”

GOING PRIVATE Then, in Theron’s words, “Something happened. Trustees of our pension funds and other institutional clients we were working with began saying that if the superior performance was what we could achieve for their funds, what

// FOR US IT’S NOT ABOUT BEING THE BIGGEST BUT BEING THE BEST. OUR PROPRIETY ANALYSIS AND HIGH CONVICTION AND SOMETIMES CONTRARIAN RESEARCH IS THOROUGH AND DETAILED //

Get the best of both worlds.

Glacier offers a range of local and international investment solutions that meets a diverse set of client needs.

Our solution set encompasses both local and international platform investments as well as traditional life investment solutions (guaranteed return and income products). This allows us to meet the needs of investors seeking certainty amid the current market volatility while still growing their wealth.

Visit www.glacier.co.za or speak to your financial adviser about Glacier’s wide range of solutions.

GLACIER FINANCIAL SOLUTIONS (PTY) LTD AND SANLAM LIFE INSURANCE LTD ARE LICENSED FINANCIAL SERVICES PROVIDERS.

INDUSTRY FOCUS: INVESTMENTS

could we do for them as individuals?

“We had never been in private client advising, but always been institutional advisers and investment managers, so our initial response was that we couldn’t really help. This was unchartered territory for us.

“Until one day, the Chairman of one of our biggest institutional clients told me, ‘you’ve got no choice, you are going to help me!’”

This was the kick-start of the private client business, GraySwan Wealth. And with it came a deja vu moment.

“We discovered the same lack of service, poor returns and independence in the private client advisory segment.

“There are only a handful of independent advisory businesses with an institutional pedigree in the private client advisory business; the large majority are all product and commission-driven.

“We are not commission driven and we don’t sell investment products. We have no ties to any stockbroker, bank or asset manager or life insurer. Nothing.

“That was four years back, and since then our business has morphed strongly into the private client space, and now about 20% to 25% of our income is from private clients.

“That doesn’t mean we are picking the stocks, that’s the asset manager’s job.

It means we are still picking the best of breed asset managers and the funds in which we invest.

“Most of our private clients have also started giving us discretion rather than simply asking for advice, and

// WHATEVER WE SET OURSELVES OUT TO DO, WE DO WITH INTEGRITY AND DO IT WHOLE-HEARTEDLY. WE ALWAYS GO THAT EXTRA MILE // 10 / www.finance-focus.net

with more leeway we can change and re-balance things more dynamically, and manage our best view investment strategy for our clients.”

LEEWAY AND LEVERAGE And private clients are benefiting from GraySwan’s big institutional base and proprietary research, with the leeway and leverage it gives to negotiate fees and access to unique opportunities.

“With the lower investment manager cost structures which we can access, we have basically passed over all these cost savings through to our private clients. It also gives us a better chance of performing better, especially in the low return investment environment where every half a per cent counts.”

With markets notably choppy and very unpredictable you can’t solely take a long-term buy and hold view anymore, says Theron. “You have to make ongoing tactical changes.

And with our offshore alternative investment management backgrounds we can ensure our clients are constantly protected by utilising smart and costeffective hedging strategies. That’s why our institutional clients have performed so well over the past nine years and because our private clients are now also top performers since we started their offering. Everyone insures their house, their cars and their lives – investors should also protect their investments.”

Experienced in servicing big institutional investors, GraySwan applies the same thoroughness, proprietary research, methodology and quality service offering to a private client individual and family offices.

“And these private clients and family offices are not used to it. They are mostly used to an advisor tied to a big bank or life insurer or asset manager trying to sell them a product. At GraySwan we have a dedicated research team with more than 110 years of investment experience and which have been together for more than 10 years, an institutionalised investment committee and we travel the world finding investment opportunities

for our clients. This institutionalised proprietary research and advisory approach which we now offer to a high net worth individual or family office is very uncommon and we believe therein lies the difference. In a space of a few years we now advise to more than R650 million of private client and family office assets. Such is testimony to the need for a more sophisticated and high conviction advisory service which produces better returns.”

The last two years in the wealth management business has opened a further window of opportunity.

INTO WEALTH MANAGEMENT PRODUCTS “Realising we were attracting more and more private clients not wealthy enough for us to deliver tailor-made advisory solutions, we started three core wealth management products; a low equity, medium equity and high equity fund of fund unit trust. These unit trusts now have more than a two-year track record and is already outperforming its peers and such at lower costs than the peers. The collective size of the unit trusts is already in excess of R350 million in size and as they continue to grow we will be able to reduce costs further for our clients.

“We had never thought we were going to construct wealth management products, but the need for the more middle ground individual was clearly there. They need better performing and lower cost products to help them save for retirement.”

Another new service that GraySwan has started offering to its corporate clients is Treasury solutions. With South African listed companies sitting with more than R850 billion in cash on their balance sheets, there is a need to invest such monies in enhanced cash-type solutions which offer higher returns but with little volatility. “We not only advise them how to manage the cash better but also assist them with their foreign exchange hedging programs,” says Theron.

IT’S TIME TO

RETHINK INVESTMENTS

Investment Consulting Wealth Management Treasury Solutions

GraySwan is an award winning independent investment advisory and wealth management company.

We provide investment advice & wealth management solutions to institutional, corporates, family office & private client investors.

www.grayswan.co.za | info@grayswan.co.za | (JHB) 011 431 0141 | (CPT) 021 852 9092 Gray Swan Financial Services (Pty) Ltd (Reg No: 2010/009813/07) is an authorised Financial Services Provider (FSP No: 42290).

INDUSTRY FOCUS: INVESTMENTS

FINDING A PARTNER Originally a family-orientated business, GraySwan enhanced its shareholding structure two years ago when it sold 50% of the business to Mettle Investments, the Cape Townheadquartered holding company of a group of specialised lending businesses operating in South Africa and the UK. “Mettle is a very dynamic and entrepreneurial company with great aspirations,” says Theron, “and our DNA and culture are a perfect and an easy match. I have known some of the Mettle guys for longer than 20 years, so it was an easy decision. They play in the private debt space – the fastest growing asset class in the world. We’ve learnt a lot about private debt as an unexplored and undiscovered asset class for investors and we’re already invested in such unique under-the-radar opportunities for some of our more sophisticated clients.”

He believes Mettle is the ideal strategic partner to continue to catapult GraySwan to the next level where the company has now started to compete

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more aggressively in the institutional investment advisory and wealth management industry.

“For us it’s not about being the biggest but being the best. Our propriety analysis and high conviction and sometimes contrarian research is thorough and detailed. We follow a very disciplined processes, which we have refined over the past two decades of working together at GraySwan and other companies. Our superior institutional as well as private client track records are proof that our investment process works.”

POINTS OF SUCCESS If the success of GraySwan can be seen as a triangle with independence, a proven investment process and costeffective advice structures as its three points, there is also what its CEO calls “a softer ingredient.”

GraySwan is a signatory to the United Nations Principles of Responsible Investing, has previously been named Responsible Investment Consultant of the Year by industry body BATSETA and

also participates on a global reporting committee which focus on responsible investment practices.

“All our clients are investing in responsible investment products.

We’ve been industry leaders in South Africa to introduce our clients to such products. Locally, the market is only now waking up, and everybody’s getting on the bandwagon. We’ve always been investing in such products and such track records have outperformed traditional products and such at lower fees.

“And this is going to be a major theme of a range of new very innovative offshore products which we are building for our private clients as well. It’s a core ingredient.”

Offshore is on a roll. “Private clients who had 15 tor 20% of assets, now suddenly want to put as much overseas as possible. To assist them with such we now also provide foreign exchange services to move their Rands offshore seamlessly and cost effectively in additional to our standard advice to move assets

GRAYSWAN INVESTMENTS

CEO Duncan Theron

tax effectively to the most suitable offshore investment jurisdictions, platforms and range of funds.”

Recently, Theron has been in London and Malta for two weeks.

“A lot of South Africans are looking at Malta as a jurisdiction, and also a place to potentially get a second passport.”

He was on the George Cross island setting up unique offshore funds and creating alternative investment products for GraySwan’s private clients.

“This is the next phase of the business.

South African private client investors and wealth advisors are looking for something different offshore and that’s the gap which our products are going to fill.”

The London visit saw Theron securing a 50/50 partnership with Absolute Return Partners - “an owner managed business very much like us, focussing on tailor-made institutional advice. We’ve been working together for more than two years and now we have formalised our collective offering. They also think very differently and that’s what we like!

“They have also realised that their clients do not always require a sophisticated tailormade solution but sometimes simply want an offshore cost-effective product that works, so we have teamed up. We are now collectively building a range of very unique and alternative offshore products via the Malta jurisdiction for both our client bases.”

LAST CHANCE SALOON? Theron’s views on South Africa’s political and economic situation are not short on candour.

“We have a new President in place, and I think the general consensus is that if this President and his team doesn’t change things around in the next year or two, then what real hope is there for the country?

“This is the mind-set of most South Africans. And they are already starting to look at parachute Plan B, and all these residency and passport programmes.

“This is what has catapulted a lot of people taking more money overseas.

It’s been ongoing, but over the last year

or two it has really multiplied. With so many jurisdictions, platforms and more than 50,000 offshore funds it’s not an easy decision to make. This is where we come in.”

While South Africa’s economic growth outlook is clouded by a lack of clarity and progress on reforms, Theron sees some positive signs that the tide has turned.

“But now it must turn much faster.

I believe we have seen the worst, but if these positives do not manifest in material economic growth for at least the next year or two, then I think people will say; ‘Well, this was the last chance.’

And I would find it hard to disagree with that view.”

WWW.GRAYSWAN.CO.ZA

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CAVMONT BANK

Cavmont’s Customer Service

to the Core PRODUCTION: Manelesi Dumasi

Zambia’s Cavmont Bank is one of the country’s leading financial institutions and is helping to solve the problem of financial inclusion which has been a crippling factor in economic development for some time. With new branches, new products and a ceaseless focus on customer service excellence, the bank continues to grow every year. www.finance-focus.net / 15

INDUSTRY FOCUS: BANKING

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On Monday October 1, international customer service week kicked off.

Started in 1984 in the US by the International Customer Service Association (ICSA), the week-long celebration takes place annually during the first full week in October when customer-oriented organisations and institutions around the world recognise the importance of customer service excellence to their success.

In Zambia, one organisation that fully embraced customer service week was Cavmont Bank. The commercial bank with a national presence, owned

by Capricorn Investment Holdings and listed on the Lusaka Stock Exchange (LuSE), announced that it was ready to do more to ensure its clients receive excellence every time they connect with the bank.

// ANY SERIOUS BUSINESS OWNER, AND ANY SERIOUS ORGANISATION, MUST INVEST IN CUSTOMER SERVICE // Back in July 2017, Finance Focus spoke to Cavmont Bank and former-CEO, Charles Carey about how the company was building on its already quality reputation. He said that by investing in new people, new infrastructure, and new services the company would grow to deliver the same level of service that would expect to receive when walking into a bank branch anywhere in the world.

Today, that focus on customer service remains, and Cavmont Bank continues to invest time, effort and money into ensuring its customers receive all the help and support they need so that they can become promoters for the brand.

CUSTOMER SERVICE IS KEY Ackim Thole, Branch Administrator at Cavmont’s Makumbi Branch recently shared his idea of service excellence: “For me, excellence means meeting the customer’s expectation more efficiently and effectively.

My customers should expect from me the best service, meeting their expectations in a timely manner.”

Ingrid Mwansa, Cavmont’s Customer Service Manager reiterated the importance of the company’s customer service strategy: “Sometimes people think that customer service seems to be an easy thing and people sometimes look down on it. They find that people

ATMs essential as 9 out of 10 payments are still in cash There are only 10.9 ATMs for every 100 000 adults in Zambia* – a relatively low number in comparison to some of the country’s neighbours. In addition, recent research** shows that more than 90% of payments in emerging markets are still cash-based. This means that the machines have to work hard and offer real reliability.

“Consumers are comfortable with cash – it’s universally trusted and accepted; it’s anonymous and quick to handover,” says Wayne Abramson, CEO of ATM Solutions, the proud and reliable ATM partner of Cavmont Bank.

“This is why the ATM remains an important tool for financial empowerment across Zambia, and the rest of Africa.”

ATM Solutions was founded in 2000 to provide consumers with easier access to their cash, and now owns and operates a network of over 5 600 ATMs across sub-Saharan Africa and Eastern Europe. The company understands the markets in which it operates and provides solutions to match needs.

“Our main business objective is to connect people to their money, and businesses to their customers,” says Abramson. “ATMs don’t just benefit consumers, there is substantial benefit for retailers too,” he says. Research shows that up to 40% of cash withdrawn in-store is spent in-store. In addition, retailers can cash their machines from their tills, saving on cash deposit fees, and merchants earn transaction fees on all transactions.

ATM Solutions is proud to partner with Cavmont Bank in Zambia to extend their ATM footprint – both in their branches and in retail locations, making it easier for their customers and consumers in general, to have access to safe, convenient ATMs at which to transact. *Flux trends report: The end of cash, 2017 ** World Bank 2015 figures

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CAVMONT BANK

working in the corridors of power think that what a customer service advisor does is not that important.

But I do believe that the most important people in any organisation are the front-line colleagues.

“They are the first touch point for any customer and their interaction determines whether the customer will turn into a loyal customer and become an advocate, talking about us positively to other potential customers, and

GIVE CUSTOMERS EASIER ACCESS TO CASH INSTALL AN ATM IN YOUR STORE • Increase foot traffic and revenue by attracting customers to your store • Research shows that up to 40% of cash withdrawn in-store is spent in-store • Save money on card fees by offering customers the ability to pay with cash

CONTACT US

sales@atmsolutions.co.za | www.atmsolutions.co.za | +260 211 295 612

EnterpriseAfrica_2018_70mmx100mm.indd 1

27/09/2018 12:38:07 PM

improving my profitability.

“Any serious business owner, and any serious organisation, must invest in customer service. If you want your business to grow you must invest in customer service and you must invest in your people.

You must have a strategy from the top to bottom where everyone is customer-oriented. Everybody in the organisation must know about the product you are selling.

“At Cavmont, we train our agents to take accountability for their clients and then to recognise issues that can be solved very quickly. If any issue cannot be solved, we must explain to the customer the problem and ensure the enquiry is passed to someone who can deal with it. Just passing to someone else with the hope that they will be able to deal with it is not acceptable.”

This approached was recognised in 2106 and 2017 when the company claimed two Global Banking and Finance Review Magazine awards for Best Retail Bank in Zambia and Best Customer Service Bank in Zambia.

Last year, the company was underway with a strategy to open six new branches to ensure its reach was felt in all corners of the country, whether high-street Lusaka or in rural southern and eastern regions.

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INDUSTRY FOCUS: BANKING

NEW PRODUCTS Quality customer service has also been shining through as the bank has listened to its community and introduced new products including unsecured personal loans with a higher value than ever before, and a special mobile banking system, Touch and Go (TAG), that allows Cavmont customers to pay bills, transfer money and check a balance.

“At Cavmont Bank, you can now borrow up to K150,000 unsecured, no more K50,000 limit. We have increased our limits and that means, as long as you bank with Cavmont Bank and you have steady income to your account every month, you can apply for up to K150,000. Of course, there are terms and conditions. It doesn’t mean you have to borrow

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// INVESTMENT IN CUSTOMER SERVICE REALLY IS CRUCIAL. THE RETURNS ARE VERY BIG BUT THE LOSSES ARE EVEN BIGGER //

the whole K150,000, you can borrow somewhere in between. All you have to do is visit one of our branches or call us,” said Head Communications and Customer Service, Chilunga Puta.

All of these strategies are aimed at bringing quality products, that have been well-researched and perfectly designed for the Zambian market, to a wider audience and continuing to

CAVMONT BANK

grow the reach of the bank.

And now is an important period for any Zambian company pushing for meaningful growth. The government is looking to diversify the economy and move away from reliance on copper mining and include more agriculture, tourism and mining of other minerals.

“Our main objective is to sell the country as the best investment destination,” Zambia’s Secretary to the Treasury in the Ministry of Finance, Fredson Yamba told African Law & Business. “We strongly believe that there are a lot of opportunities, especially in mines and also in agriculture and tourism, where potentially people can invest and get

a return on their investment.

“We don’t want to just rely on mining as a major source of economic activities,” he added. “We are aware in Zambia that we rely too much on copper as a source of foreign exchange earnings, because currently 70% of our foreign exchange is derived from copper mining activities and 30% comes from non-copper activities.”

With a strong financial industry, which includes banking, pension and insurance, and a stock exchange which is one of the continent’s most prominent, financial services is an industry that could certainly add to the country’s economic mix, creating jobs and driving value for all Zambians.

And with the backing of the

USA, which in September announced formal backing for the Zambian economy, now is a perfect time for those that can grow to push forward and make a real difference.

By focussing on its customers and by creating more jobs, Cavmont Bank is a Zambian business that will continue to grow and will attract investment.

“Investment in customer service really is crucial. The returns are very big but the losses are even bigger and we do not want to a part of that,” said Mwansa.

WWW.CAVMONT.COM.ZM

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EXPERIAN SA

Acquisition to Improve

Financial Inclusion

Across sub-Saharan Africa PRODUCTION: Karl Pietersen

Following its acquisition of Compuscan, Experian is targeting growth across southern Africa, with a target of improving financial inclusion by helping financial institutions to understand more about their markets, and end-consumers to understand more about credit. “It’s the largest acquisition for Experian this financial year and that shows that we are growing rapidly and giving a significant contribution to our Experian shareholders,” Experian SA CCO Mark Wells tells Finance Focus.

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INDUSTRY FOCUS: FINTECH

//

“We’re in a world where technology can disrupt businesses,” said Experian Group CFO, Lloyd Pitchford at the company’s results presentation in May. And he meant it in a truly global sense. All markets around the world are being disrupted by new technologies, whether it’s developed markets like the USA, or growing economies like South Africa.

In SA, Experian’s appetite for growth through technological innovation is just as fierce as in any other global market.

Ultimately, the goal of this financial data analytics and credit bureau business is to help people and organisations to assess, predict, plan and protect themselves. Technology has become an integral part of this offering, and its influence is only set to increase.

By investing in major acquisitions, and growing its product portfolio, Experian is fixed firmly on the growth path, and is helping more and more people and organisations to improve their understanding of, and access to, financial services, while at the same time helping lenders to understand market opportunities.

In May, Experian SA completed the acquisition of Compuscan and

// COMPUSCAN HAS A FOOTPRINT WITH LOCAL RELATIONSHIPS, KNOWLEDGE AND DATA, AND EXPERIAN HAD A DESIRE TO BEGIN TO PROVIDE MORE FINANCIAL SERVICES AND CREDIT OFFERINGS ON THE CONTINENT // 22 / www.finance-focus.net

Scoresharp to create an African powerhouse with industry-leading technology and unrivalled reach.

Experian SA Chief Customer Officer, Mark Wells talks to Finance Focus about how the deal is boosting financial inclusion and helping to bring more people into the credit economy.

“The acquisition was seen as a strategic opportunity for growth globally,” he says. “While it happened on our continent and in our market, it was something that had a lot of attention from the Group CEO and investment board – it was a big deal for Experian as a global entity. The reason for that is the reason we chose to buy Compuscan – our ambition to expand into subSaharan Africa.

“Previously, Experian had done quite a lot of narrow scope work in Africa – assisting certain financial institutions in the likes of Malawi and Botswana with regulatory analytics work – but that was an on-demand, reactive thing. If you look at the footprint of Experian across the globe, other than South Africa, the African continent is relatively untouched. Enter Compuscan which was a SA-born start-up business that had grown into a medium-sized business with the mission of expanding across sub-Saharan Africa.

“Compuscan had put down a footprint as a credit bureau and analytics services business across five other African countries and had begun to make great inroads in those markets.

What they didn’t have was the capital investments and the ability to grow at scale, so it seemed like a perfect marriage and that is exactly what is has turned out to be. Compuscan has a footprint with local relationships, knowledge and data, and Experian had a desire to begin to provide more financial services and credit offerings on the continent.”

Compuscan’s footprint spans South Africa, Namibia, Botswana, Uganda, Ethiopia, Mozambique and Lesotho.

Scoresharp has been a wholly owned subsidiary of Compuscan since 2007 but

// ON THE AFRICAN CONTINENT, WE UNDERSTAND THAT THE COMPUSCAN ACQUISITION IS MOST DEFINITELY THE START OF A GROWTH STRATEGY // has always been branded as an analytics organisation that was independent of a specific bureau. Its expertise comes in the form of a unique ability to take the best of data and interpret it in credit risk decisions to give the best possible outcome for a credit lender.

The result of the acquisition was a doubling of the employee base, an expansion of the product and service portfolio, and access to knowledge and data across important new markets, furthering Experian’s global footprint.

The success of the merge has been down to blending the two organisations strengths and weaknesses.

“It’s been an incredibly positive thing,” says Wells. “The businesses are very complimentary. We’ve had very little overlap in terms of customer penetration and customer services.

Compuscan had traditionally built its business on the microlending sector and their main source of income and service provision is to approximately 3000 microlenders in South Africa, extending across its other markets.

Experian has always been very focused on providing services to financial institutions - tier one banking, telcos, retail etc. We also had quite a different array of services so while there is an overlap in terms of the consumer credit bureau, Compuscan had a more mature analytics offering and Experian had a more mature commercial credit bureau as well as enterprise-class software and fraud offerings.

“Each of the individual business had

EXPERIAN SA

areas that we were strong in and areas that we were less strong in but in this acquisition, the reason that Compuscan was such a good target for us is that we were strong where the other was weak and vice versa. By putting the two organisations together, the value proposition on both sides has improved.”

R120 MILLION INVESTMENT A prerequisite of the acquisition, instilled by the Competition Commission, was that Experian must invest in South Africa. Happy to oblige, Experian announced it would invest R120 million into new technological enhancements, establishing South Africa as an investment hub.

The two key focus areas for this investment are moving the business onto a global cloud-based reference architecture, in line with international best-in-class, and adopting a new service model to remain compliant with the various legislations active across different territories.

“We took two parallel and separate running credit bureaus and we wanted to move to a much more agile architecture as we merged the data assets with the technology that serves customers. The first part of the investment is around moving to best-of-breed technology – a reference architecture based on cloud that would allow a much more agile service. It’s the reference architecture that Experian is using globally and is starting to roll out in other parts of the world. It’s beneficial for the African continent as, when products are developed on top of the credit bureau, if we are using the same reference architecture and structure in a cloud environment, our time to market bringing new products to African customers will be that much quicker,” says Wells.

The second part of the investment is what Experian terms ‘the hub and spoke services model’. “Legislation in each country is different with regards to data protection, data privacy and

storing data in country or allowing data to be stored in a central place. While we’re looking to remain absolutely compliant with those laws, where we can get economies of scale using a shared services model in this cloud infrastructure, we are looking to be able to service African countries from a central place where it is possible. Where data has to be stored in country, we would look to make those investments into reference architecture in those countries,” details Wells.

GELEZAR Another technological advancement, which looks set to have a real tangible impact on South African consumers and businesses, comes with the launch of Experian’s GeleZAR app. The company describes the app as a continuation in the fight against financial exclusion.

GeleZAR, which will be available from the app store once pilot testing is complete, is an educational tool which is aimed at the unbanked population, outside of the formal credit economy.

This is a large market, and one which many companies have tried to exploit over the years.

Wells insists that by helping consumers to understand more about credit, credit bureaus, financial services, and credit profiles, they can make better use of the data that is held about them and, potentially, unlock new opportunities in the formal credit sector.

“Firstly, we want to provide financial education to consumers as well as small and medium enterprises,” he says. “The app is targeted towards the unbanked sector of society and allows them to educate themselves on basic principles such as budgeting and how to handle

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INDUSTRY FOCUS: FINTECH

money. It then takes those consumers on a journey to help them understand about credit and what a credit score is. It helps previously unbanked consumers from the credit economy to start understanding how they could unlock access to financing and build a credit profile that will create opportunities for them in their daily life.”

The app will also offer benefits to the country’s lenders. By using the app, consumers will offer up information about themselves as the technology will pull relevant data from the cell phone. This information can be used

by Experian to create an alternative profile of a person – extremely useful in a market where only around 52% of people have access to credit. Banks and other lenders are keen on gaining this type of information so that they can understand more about the market and its potential.

24 / www.finance-focus.net

“We ask consumers for consent to provide us with certain data that they store on their smart phones,” says Wells.

“We have found that if we are able to gain access to smart phone data, specifically for people that do not have a credit profile, that data provides us with an ability to build an alternative credit score which we have found to be quite predictive. We have piloted this is Brazil and in parts of Indonesia and we are using some of the algorithms they have developed. We have proven a correlation between traditional data and mobile scraping data, and it allows us to accelerate consumers ability to access credit. If we are given consent by consumers, with the intent to build an alternative credit profile, we can go to financial institutions looking to lend to that segment and give them a view of those consumers where they may not have had data before.”

This idea holds potential for the wider sub-Saharan African region.

Sub-Saharan Africa is projected to have 500 million smartphone subscribers by 2020 and a large portion of society remains unbanked and outside of the transitional credit economy.

“We are in a pilot phase right now, we have partnered with a number of financial institutions and one of the largest low-cost mobile phone retailers in Africa, and they have preloaded the app on phones. We are testing the algorithms and tweaking them specifically for the South African market,” says Wells.

“We’re in the early stages but it’s something we are very excited about because we’ve seen success in other parts of the world in developing alternative credit scores. In the rest of the sub-Saharan African market, 80-90% of the market isn’t part of the credit

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INDUSTRY FOCUS: FINTECH

economy and doesn’t have a data set that services a traditional credit bureau,” he adds.

Constantly adding to, and improving, the data available – and aggregating that data in a speedy and discernible manner – is a core capability for Experian, which is why it continues to develop new tools to access more data, even from mature credit markets.

In the USA, a new tool that encourages consumers to offer up extra data – data that might not be included in a traditional credit report – has helped to improve credit scores almost instantly. Experian Boost has seen such success, the company is already planning roll out in the UK and other mature markets.

“It’s a consumer service that has been launched, calling on consumers to contribute their data that isn’t

traditionally stored with the intent of immediately boosting their credit score,” says Wells. “It’s at the other end of the spectrum from the GeleZAR app but it’s part of the same story – consumers have data that is valuable and they can make that data work for them, continuing to enhance their ability to access financial services and credit.

“In a live environment, as they submit data, in an open banking way, they will see their credit score improve so they have benefits from the lenders they use.

“We’ve had a massive uptake in the US with Experian Boost and so the company is now looking to roll out globally. It is a product which is aimed more at people who understand their credit score. Again, it’s about how do they own their own data and make it work for them,” he adds.

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INVESTING IN GROWTH The growth of the product portfolio and the delivery of new services coming out of Experian make for an extremely exciting international business, and the fact that the end goal is improved financial inclusion helps to list this business among one of the most important in the region.

But, even with a fantastic reputation, Experian remains hungry for further growth. Wells says that further acquisitions, mergers, partnerships and joint ventures are already being considered.

He says that there is certainly a feeling that local is best and, taking from the Compuscan lead, developing local knowledge is the way to go.

“This idea lends itself to M&A activity,” he adds. “We don’t have any specific targets at this stage as we are still looking to bed this acquisition down and enhance our services to those countries where we already have a presence.

In the very near future, we will start to identify opportunities in other markets that would be able to benefit from the same types of services that an ExperianCompuscan merger has already brought to markets where it is active.”

Of course, one of the major hurdles to any investment or growth strategy is the strength of the local and global economy.

South Africa has faced a weak economic climate for some time and the global economy is characterised by unpredictable choices.

But, in difficult times, Experian provides data insights to assist with the best possible decisions.

Its knowledge, data, and analytical ability give lenders a much clearer picture of the market, and this can help reduce risk.

“Our industry specifically is not immune to local economy pressure

EXPERIAN SA

// ULTIMATELY, THE SERVICES WE ARE LOOKING TO PROVIDE SURROUND HOW WE CAN GAIN MORE APPROVALS FOR FINANCIAL SERVICES CREDIT GRANTING THAN WE HAVE TODAY` // but what we have found, especially in South Africa, is that as pressure comes on to our client base, around credit provision, they become more risk averse. As they become more

risk averse in their practices, they have an increased hunger for data and interpretation of that data so they can glean insights out of that data. This is where our value proposition sits,” Wells explains.

“While our customers are always very cost-conscious and looking to drive pricing down, we have seen an increased demand for closer relationships and they are asking us for additional insights that can assist them in unlocking new markets in a relatively risk averse way. That spawns new opportunities for us so I wouldn’t say we operate without impact from the economy but it does drive customers to expand their relationships with us as they look to minimise pressure and reduce losses by not taking too many risky decisions.”

RISKY FUTURE? With the Compuscan acquisition now complete, and Experian in a position to provide more data insights than ever before, the future looks bright.

But there is one unknown hanging over the financial services industry – the looming National Credit Amendment Bill. Informally known as the ‘debt relief bill’, this piece of national legislation is designed to help those with serious debt problems. Specifically, individuals could be allowed to apply for relief and their debt could be suspended, partially or in full, for up to 24 months. Ultimately, if circumstances do not improve, debt could be terminated.

The bill has been signed into law by President Ramaphosa and the big banks are concerned. Experian is

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INDUSTRY FOCUS: FINTECH

// WE HAVE FOUND THAT IF WE ARE ABLE TO GAIN ACCESS TO SMART PHONE DATA, SPECIFICALLY FOR PEOPLE THAT DO NOT HAVE A CREDIT PROFILE, THAT DATA PROVIDES US WITH AN ABILITY TO BUILD AN ALTERNATIVE CREDIT SCORE WHICH WE HAVE FOUND TO BE QUITE PREDICTIVE //

28 / www.finance-focus.net

waiting to realise the full impact.

“From an Experian perspective, it provides us with a certain amount of work to do but also with opportunities,” says Wells. “We are obligated, once the debt relief bill is legislated, to create an identifier in the bureau that can recognise individuals that have applied for debt relief. The opportunity comes as each and every one of our banking and lending customers are interested in the exposure that they have to consumers that may apply for debt relief. They are coming to us and asking if we can assist them with making sure they understand their exposure and they understand the potential losses that they may experience based on people applying for debt relief.

“What we are not yet clear on

is how our customers will respond,” he adds. “Will they become more risk averse and cut down on lending to consumers who have applied for debt relief or will they see it is an opportunity to service the market as others withdraw?

It will be interesting, and our perception is that it doesn’t affect Experian’s business other than the development that we need to do on the bureau.”

South Africa’s Banking Association has made it clear that it does not support striking off debt in any form. Various analysts have suggested that SA banks could suffer losses of up to R25 billion.

But Experian would not be directly impacted – the company does not lend money and is purely a custodian of data.

EXPERIAN SA

“It enables us to provide an additional service by identifying individuals that may qualify for debt relief, and that information is valuable for our customers as they can gain an enriched story about who they are lending to.”

For Experian, locally and globally, it is important for financial institutions to seek data insights in order to grow their businesses.

Experian’s large amount of expertly aggregated data is invaluable in situations like this. The company has cleverly positioned itself as an organisation that financial institutions can truly partner with and derive benefit from.

With an ever-growing middle class around southern Africa, and a desire within financial institutions to lend to more people and grow

presence, now is the perfect time for Experian to go out and stake its claim as the African partner of choice – backed by international expertise – for both businesses and endconsumers looking to improve their access to the formal credit economy.

“Ultimately, the services we are looking to provide surround how we can gain more approvals for financial services credit granting than we have today. The organisations that are our customers have exactly the same objective. In order for them to do that, they need to be able to assess the risk, and in order for them to do that, they need insights to make informed decisions,” says Wells.

“We need to provide as much data as we possibly can both in traditional credit form as well as in alternative data form so that we can inform those

organisations whether someone is credit risk or not,” he concludes.

Technology is changing the landscape for this important sector and this vital company. Fortunately, Experian is an industry-leader and its position is secured by an ongoing enthusiasm for innovation and improvement.

WWW.EXPERIAN.CO.ZA

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HELLO GROUP

Hello Paisa

The Journey Continues PRODUCTION: Manelesi Dumasi

Leading South African Fintech player, Hello Paisa (part of the Hello Group), is launching a new digital banking service in partnership with Sasfin Bank, that has the potential to bring a large group of the country’s unbanked or underbanked population in the formal financial space. By using technology to make banking more accessible, Hello Paisa is leading the way in the industry and CEO Moosa Manjra believes the company can grow internationally. www.finance-focus.net / 31

INDUSTRY FOCUS: TECHNOLOGY

//

In 2015, South Africa’s Hello Group was labelled as the country’s next big Fintech player. Founded in 2005 by brothers Nadir and Shaazim Khamissa, Hello Group recognised a gap in the industry for a mass market player, specifically in the migrant worker community.

People were moving across the border into South Africa for work and calling home to relatives in neighbouring sub-Saharan African countries at huge expense. The pair took note and started working on a solution where the growing cell phone market could be utilised to provide a cheaper means for the migrant diaspora to stay connected. In partnership with Cell C, Hello Mobile was born; a product which provided a Sim card product to give migrant workers the mobile operator’s local call rates combined with Hello Group’s low-cost international calls – Hello Group, perhaps lesser known at the top end of the market, was becoming a disruptor.

The Hello Group has always been an innovator, using technology to deliver products that solve problems for customers. After the launch of Hello Mobile, the ambitious Khamissa brothers looked at what other solutions could be offered to the market – numbering in the millions - that they quickly grew to dominate. In 2015, the Group again went out to their customers to see what other problems could they solve and it was evident that sending money home was a huge problem.

Today, the Hello Group has its own division dedicated money transfer operation, Hello Paisa, which is growing its presence in the market by adding complementary services to help solve problems for its clients. By sticking to this mantra, the company has become a leading Money Transfer Operator (MTO), and now has goals to expand globally.

Hello Paisa CEO Moosa Manjra tells Finance Focus more about the company’s ongoing growth strategy.

DIGI BANK “At the very heart of it, if we are not solving a problem then we are wasting time. We are always looking to come up with solutions to problems by using technology as that helps to drive down cost,” he says.

“We have just launched our digital bank which is powered by Sasfin Bank and that is a huge initiative for us. It has been operating for three months and every single thing you could do with a regular bank account is available

32 / www.finance-focus.net

// WE LIKE OUR CUSTOMERS TO GUIDE US INTO NEW CHANNELS. WE ARE OUT THERE IN THE STREETS LISTENING TO CUSTOMERS AND ENGAGING THEM ABOUT WHAT THEY WANT // through our digital bank. There are no branches but one of our sales agents will come out to your home and FICA you and register you for a bank account right where you are. They hand over your VISA card and when they leave after 10 minutes, you will have a fully functioning bank account with a card and app. That is one of our biggest projects to date and the team at Sasfin Bank have been very supportive and we are learning a lot. It came about because our customers have asked for it.”

In the banking sector globally, digitisation is now seen as a must for those looking to survive. It allows for easier, more efficient, quicker, and cheaper interaction with clients. Ultimately, digitising banking services makes life easier for customers, and that fits perfectly with the mission of Hello Paisa and the wider Hello Group.

“People say ‘we send our money with you, we make our calls with you, and we want to save our money with you as we don’t get access to traditional bank accounts’. Not only are we giving them access, we are making it so easy as we are coming to them – now, everyone has access to a private banker.

“For some digital banks in South Africa, you would have to go into a location to set up your account. We will come to you; we will not make people spend money on transportation to go and open an account,” says Manjra.

HELLO GROUP

In the long-term, this product will help development of the wider South African economy by bringing unbanked or underbanked – estimates suggest there are as many as 11 million – into the formal banking sector which is much safer and much more secure.

“That is exactly the plan,” confirms Manjra, “the same way we have brought a lot of informal remittance into the formal space. We want to get that cash market at the base of the pyramid – the unbanked – into the formal space. We won’t solve the problem tomorrow, but we are trying to do our part.”

The most recent disruptions in the SA banking sector came when Capitec Bank introduced its Global One Account and started using a centralised technology platform to remove menial tasks, freeing up branch staff to effectively deal with customers. More recently, TymeBank has entered the market as a fully digital bank, signing up more than 250,000 customers since November 2018. One thing is for certain, the banking sector is changing and the infamous ‘Big 4’ are seeing their

market shares eaten away.

“I’m sure they are watching but we need to keep our heads down and concentrate on what we do,” says Manjra.

“If we can’t back it up with customers, then it won’t mean much.

“Largely, feedback has been positive.

We haven’t been signing up at full capacity yet and that has been deliberate.

We have signed up 1000 customers per month just to get everyone used to the product and make sure everything on our end is stable. Next we will move out of this soft launch and really go out and acquire the way we know we can,” he adds.

MALAICHA A key market for the Hello Group is Zimbabwe. In the past 20 years, estimates suggest that millions of Zimbabweans have crossed the border for different reasons. Remittance from South Africa to Zimbabwe is a strong corridor for Hello Paisa and for the industry in general. But, with the country’s currency crisis and political instability, sending money is often not

the most effective use of resources.

“You can’t do much with a $100 note in Zimbabwe – purchasing basic commodities has become challenging,” says Manjra.

The situation has become dire for some. So, instead of sending money from South Africa back to friends and family in Zimbabwe, some people have resorted to buying groceries and sending a bag full of goods on buses or through other informal channels. Hello Paisa again saw an opportunity to help.

“We thought that we could surely do this smarter, cheaper, safer and better,” details Manjra.

“We have recently launched a new product called Malaicha.com and that is an android app where you can shop for groceries such as oil, sugar, wheat or cereal – there is around 400 products on the app – and you can pay in the same way you would when you complete a Hello Paisa transaction. The groceries are then available instantly in Zimbabwe.

There are serious issues in Zimbabwe with food shortages and money value,

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INDUSTRY FOCUS: TECHNOLOGY

and Malaicha.com allows Zimbabweans in South Africa to send groceries to family in Zimbabwe instantly – we even deliver the groceries for free. It’s only been running for a few months and the orders have gone through the roof. We are very excited.”

Malaicha, a Ndebele word meaning ‘to transport goods’, will take away the pain and the problem by using technology. Because of the success already realised in Zimbabwe, Hello Paisa has received requests from other channels for a similar service. “We will open up across other corridors very soon. We also think we can grow a lot in Zimbabwe; currently we have four collection sites in Zimbabwe and we think we can expand that so that many more who really need it can benefit,” says Manjra.

For Hello Paisa, and the Hello Group, this type of initiative – where having a positive impact is a core value – helps to solidify the company’s industry-leading position.

“Being a leader is not about sitting back and relaxing; we are constantly looking to innovate. This is a company where we never just sit in the boardroom, we are always out on the street and talking to people about what they want. Of course we fail, but we fail fast and learn faster – that is what we are all about here. We listen to where the issues are and then we try and solve them. Ultimately, we are helping people and that is our drive. Malaicha.com is a godsend for some people in Zimbabwe.

This innovation ensures people are getting food. We feel it is something we should be proud of.”

// OF COURSE WE FAIL, BUT WE FAIL FAST AND LEARN FASTER – THAT IS WHAT WE ARE ALL ABOUT HERE // 34 / www.finance-focus.net

LEVERAGING THE GROUP Hello Paisa was founded in 2015.

Fortunately, because of the Group’s position in the market, a large number of potential clients was already laid out in front of Hello Paisa as soon as it got up and running.

“With Hello Mobile, we offered the ability to make international calls at a much cheaper cost and we leveraged off a lot off those relationships, making a lot of Hello Mobile customers Hello Paisa customers. They were using our network to make cheap calls home, so we brought them Hello Paisa to send money home at a fraction of the cost.

Unlike our competitors, we already had a beachhead market.”

This allowed Hello Paisa to become the first recipient of an independent money transfer license in South Africa.

Today, the company remits to more than 30 countries and makes use of iOS and android apps, as well as USSD technology, a multilingual call centre and instore pay points.

“Our call centre will call you back as we understand the cost a customer takes by making a cell phone call in a market where every penny counts,” says Manjra.

“Right from the beginning, everything has been focussed around the customer – we take into account

what they like, what they don’t like, their choice of language, and we go to great lengths to not only provide a solution but find out how much more we can do for a customer.

“We have our own operations in Malawi and Zimbabwe. What that means is that today you can send money from South Africa to Mozambique and we will use a partner in Mozambique to disburse funds. In Malawi, you can send your funds from South Africa and collect it at a Hello Paisa point in Malawi. We employ more than 100 people in Malawi, more than 100 people in Zimbabwe. The customer can choose the collection method and it could be cash, bank account or mobile wallet. Whatever the sender feels is suitable is the method we will use and it differs between each corridor. We have partnered with the biggest banks and networks around the region and that takes a lot of effort to set up,” he adds.

This approached has allowed Hello Paisa, just like Hello Group, to move across sub-Saharan Africa, engaging with various migrant communities, and looking at new solutions to unique problems. It also drives brand recognition and brand loyalty – important in a crowded marketplace.

“We understand that the customer

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needs all the help they can get and by giving this type of service, customers stick by us. That is how we are growing and how we are opening up new corridors. We like our customers to guide us into new channels. We are out there listening to customers and engaging them about what they want,” says Manjra.

HELLO WORLDWIDE? Currently, Hello Paisa accommodates payments into several nations outside of the African continent, including the sub-continent. The company is always looking to grow its reach and has started to build a presence in the Middle East where Manjra says that the market is competitive but enormous.

36 / www.finance-focus.net

“We have started to grow in the Middle East and we have been there for seven months. It’s very competitive but we are doing our thing and trying to use technology more than the other players in the UAE. I’m sure that very soon we will publish some strong results and we can continue growing from strength to strength.

“Europe and the Middle East are thriving outbound remittance regions where up to 60-70% of the population can be migrants. It is a growing market but you do have to be in the right geographies.”

With global expansion firmly on the agenda of both Hello Paisa and Hello Group, management will be hoping for a quick resolution to economic distress

at home in South Africa. For many reasons combined, the economy has been very unpredictable over the past several quarters and even contracted by 3.2% in Q1 of 2019. This type of swing effects spending power of customers on the front line and, significantly, impacts the stability of exchange rates.

“When it gets weak, remittances slow down,” admits Manjra. “The

// WE THOUGHT THAT WE COULD SURELY DO THIS SMARTER, CHEAPER, SAFER AND BETTER //

HELLO GROUP

Moosa Manjra - CEO

// AT THE VERY HEART OF IT, IF WE ARE NOT SOLVING A PROBLEM THEN WE ARE WASTING TIME // customers certainly shy away from sending when we have such volatility and that does hurt. It’s unpredictable but we’ve learned to adapt and live with it.”

The CEO, who has been with the Group since 2011 – watching it grow from 30 people to more than 700 in South Africa – tries to avoid becoming entangled in issues out of the

company’s control.

“I am a South African and I am an optimist,” he says. “I believe in the opportunities we have here. We have been in similar positions before and everyone is doing their level best to get the economy back to where it needs to be.”

So far, in its relatively short life, Hello Paisa has certainly started to achieve its founder’s expectation of providing significant growth opportunities, and it has realised industry expectations by becoming a leading Fintech organisation. Ultimately, the business is achieving on the expectations of its customers by using technology to solve problems, and that is the most important thing.

Manjra concludes by explaining that the fantastic work going on at Hello Paisa, and the growth story that the company is on, is all down to a hardworking group of people who follow a culture of continuous improvement.

“We have some decent products but we also have really really good people. There are a lot of guys putting in a lot of hard graft and that is why we are doing so well. Our people play a huge part in making this a success.”

WWW.HELLOGROUP.CO.ZA

www.finance-focus.net / 37

MARSH AFRICA

Bringing Order

to Chaos PRODUCTION: Timothy Reeder

Marsh needs no introduction - it is universally renowned as the global leader in insurance broking and innovative risk management solutions, delivering across 130 countries worldwide. For nearly 150 years Marsh has grown by helping clients anticipate and meet the challenges of changing times and technologies, and in Africa, specialises in providing clients with the intellectual capital and industry experience to unlock the opportunity in risk.

//

Since 1871, clients have relied on Marsh for its unique brand of trusted advice, as they seek to have their interests represented in the marketplace, to make sense of the increasingly complex world of today, and, perhaps most crucially, to help them turn the risks they face into new opportunities for growth.

In today’s increasingly uncertain global business environment, Marsh is on hand to help clients to thrive by enabling them to anticipate, quantify and more fully understand the range of risks they face. On offer are the full spectrum of services, spanning risk management, risk consulting, insurance broking, alternative risk financing and insurance programme management.

“Our more than 35,000 colleagues work on behalf of our clients,” Marsh elaborates, “who are enterprises of all sizes in every industry, and include businesses, government entities, multinational organisations, and

individuals around the world.” Marsh has some 40 local offices across the Middle East and Africa, from which it leads the industry through its highly valued insight and advice which have benefitted many of the region’s leading companies, family businesses, international organisations and government/private institutions.

“Together, we are creating a benchmark of excellence in the risk and insurance industry by harnessing our global and domestic expertise drawing from over 40 years of experience and insight from our continuously expanding operations in the Middle East and Africa,” Marsh sums up.

COMBINED EXPERTISE Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (MMC), the leading global professional services firm in the areas of risk, strategy and people that brings together the unique

capabilities of Marsh, Guy Carpenter, Mercer and the Oliver Wyman Group, and the association equates to the combined expertise of some 75,000 people worldwide, and annual revenue exceeding $15 billion.

“The MMC Advantage is our unique approach to harnessing the collective strength of our businesses to deliver the full value of Marsh & McLennan to clients,” Marsh explains. “We empower our colleagues to collaborate across businesses and borders to help organisations navigate their greatest risk, strategy and people challenges and seize new opportunities.

“We work with clients of all sizes to define, design, and deliver innovative solutions to better quantify and manage risk,” continues Marsh of its core activity. “To every client interaction we bring a powerful combination of deep intellectual capital, industry specific expertise, global experience, and collaboration.”

www.finance-focus.net / 39

INDUSTRY FOCUS: INSURANCE

// IN UNCERTAIN TIMES, VIGILANCE AND BROAD, SYSTEMIC RISK ANALYSIS COUPLED WITH POLITICAL AND TRADE CREDIT INSURANCE WILL BE VITAL TO MINIMISING THREATS // This word collaboration comes up time and again when examining the root of Marsh’s success, and bleeds right through the whole organisation. “Our greatest assets in our business,” summed up Marsh Africa CEO Jurie Erwee in conversation with leadershiponline.co.za, “are our client relationships, which have been built around our clients’ needs.” Marsh

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SA’s CEO, Spiros Fatouros, meanwhile, underlined the importance of expertise in building up the necessary trust to allow Marsh to dominate the industry.

“Marsh’s global footprint has taken over 25 years to build and allows us to service clients locally around the globe,” he stated. “People don’t often care if you’re the biggest, it’s always about the service you provide. The real benefit of working with Marsh is the tailored local delivery that is leveraged off a global network of experts.”

Jurie Erwee explained how the combination of innovation, collaboration and forward, global thinking will people Marsh forth in its next phase. “The spirit of innovation is firmly entrenched in our DNA. Marsh has pioneered a great number of concepts including the birth of insurance broking in the 19th century.

Africa offers a lot of promise long term and we are here to continue to invest. We will see a return on those investments as long as we continue to work through the challenges we face as a country and business collectively.”

POLITICAL RISK Insurance is an organic business, and one of Marsh’s most important attributes is the ability to identify and adapt to the types of risk likely to become increasingly prevalent. When we took a look at Marsh last year, it was the findings from a report by TheCityUK and Marsh which pointed to cybercrime as the number one risk for financial and related professional services firms.

Marcus Scott, Chief Operating Officer of TheCityUK, explained that, “cyber security is now a major risk demanding board-level oversight as companies find themselves under siege from cyber-attacks. In fact, for many of our members it may well be the biggest single risk. It’s essential for all boards to have robust governance systems in place to manage these risks.”

The passing of another year has brought with it a new focus, however, and rising geopolitical tensions and protectionist sentiments, coupled with ongoing trade disputes, are leading to increased uncertainty and risk for

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multinationals with direct foreign investments, Marsh finds.

Based on data from Fitch Solutions, a leading source of independent political, macroeconomic, financial, and industry risk analysis, Marsh’s Political Risk Map 2019 rates more than 200 countries and territories on the basis of short- and long-term political,

// OUR MORE THAN 35,000 COLLEAGUES WORK ON BEHALF OF OUR CLIENTS, WHO ARE ENTERPRISES OF ALL SIZES IN EVERY INDUSTRY //

economic and operational stability and gives insight into where risks are most likely to emerge.

Some of the key findings include the possibility of escalating trade tariffs and geopolitical disputes between the US and China, increasing the risk of further Chinese retaliation and US counterretaliation. Export heavy economies, like Germany, are likely to be impacted, while the UK’s negotiations to exit the European Union continue to loom large over the political risk landscape.

Encouragingly, the African region once again saw some of the biggest improvements in political risk, but also some of the most notable deteriorations. South Africa, Mozambique, and South Sudan all fared better, while uncertainty around elections and deteriorating economic

and humanitarian conditions are causing concern in Zambia, Mali, Algeria, Tunisia, Cameroon, and the Central African Republic.

“Businesses with direct foreign investments are facing an unprecedented breadth of challenges today from emerging economies to so-called developed economies,” said Evan Freely, Global Practice Leader, Credit Specialties, Marsh. “In uncertain times, vigilance and broad, systemic risk analysis coupled with political and trade credit insurance, will be vital to minimising these threats.”

WWW.MARSH.COM

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RAND MUTUAL ASSURANCE

Changes at the Top for 125-year-old RMA PRODUCTION: Karl Pietersen

With a new head office in Johannesburg set to welcome a new CEO in June, things are looking bright for Rand Mutual Assurance. The business, which has served generations of workers, is growing with new technology and a renewed focus on collaboration. www.finance-focus.net / 43

INDUSTRY FOCUS: INSURANCE

//

2020 looks set to be a big year for one of South Africa’s leading financial services businesses, Rand Mutual Assurance (RMA). The company - which was formed in 1894 by three mining houses to administer workmen’s compensation benefits for those injured in the course and scope of their employment – celebrated its 125th anniversary last year and is ramping up activity as it searches out further growth.

For RMA, all policyholders are shareholders. Over the years, the company has evolved to meet the needs of a changing person and a changing marketplace. Today, the core business for RMA is the receipt, adjudication and administration of workers’ compensation benefits and claims, including the payment of medical costs, once-off disability payments and the ongoing payment of pensions in the case of severe disability and fatalities.

It is also invested in other activities and operates subsidiary businesses which handle various other activities on behalf of the group.

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Fortunately, after much economic and political uncertainty – which has been harmful for Africa’s financial services industry – the expectation is that the future is bright for the sector.

According to PwC, Africa’s insurance market remains largely underdeveloped when compared to global standards.

Disruptions resulting from the 2008 global financial crisis have impacted the growth of companies in the industry.

And, competitors from other sectors, such as banking and mobile operators, have started to enter the market placing further pressure on quality and pricing.

But, global economic conditions have improved over the past three years and, in sub-Saharan Africa, GDP figures are expected to continue to improve (2.6% for 2017, 2.4% for 2018, 3.2% for 2019, 3.6% projected for 2020). “Growth is projected to remain strong in nonresource-intensive countries, averaging about 6%. As a result, 24 countries, home to about 500 million people, will see their per capita income rise faster than the rest of the world,” states the IMF. Clearly, RMA has picked up on

the positive feeling and is actively searching out opportunities for future growth. The first step in the process came in the busy month of December when RMA announced the appointment of a new CEO. CHANGES AT THE TOP Following the appointment of Thabo Dloti as RMA Board Chairperson just a few years ago, the company announced in December more changes of senior staff as current CEO, Jay Singh, announced he would retire from the business at the end of June 2020. He will be replaced by Mandla Shezi (now CEO designate). Shezi joins from Hollard where he also held the position of CEO of the international business. Previously, he was Managing Director of Hollard Affinities and Direct for more than a decade and brings an supreme academic background holding a Master of Business Administration (MBA) from the University of Cape Town and a Bachelor of Science Degree from the Massachusetts Institute of Technology (MIT).

“I am pleased to announce that we

RAND MUTUAL ASSURANCE

// MANDLA HAS EXCELLENT BUSINESS EXPERIENCE AND THE DRIVE TO WORK WITH ALL OF US TO TAKE RMA TO THE NEXT LEVEL OF GROWTH AND DEVELOPMENT // have appointed Mandla Shezi as RMA’s new Chief Executive Officer. Mandla will take over from Jay Singh, who is retiring from RMA at the end of June 2020. Mandla will be CEO designate from the 1st of February 2020 and fully assume office as CEO on the 1st of July 2020. Both Jay and Mandla will

work closely, hand in hand to ensure a smooth transition during this period,” said Thabo Dloti.

RMA was particularly attracted to the problem-solving nature of Shezi – developed through an engineering background. His international exposure is also important, helping to bring further global best practice into the business.

“He is an engineer turned businessman,” said Dloti. “He studied chemical engineering and worked as a process engineer and an economist early on in his career. His passion for business management and decisionmaking inspired him to move from engineering to business management where he worked as a management consultant at Bain and Company from 2000 to 2002. He moved to SAB as an executive assistant to the CEO where he was responsible for strategic

projects across the group and was also manufacturing manager for two of SAB’s plant operations.

“In 2007, he joined Hollard as MD and led different divisions for the group.

He has both long-term and short-term insurance experience and has been MD of a division at Hollard that was focused on SA for 12 years and led a division that had Africa and Asia focus with country CEOs reporting to him.”

RMA holds the vision of ‘being the leading insurance provider and administrator of employment injuryand health-related benefits and niche insurance solutions through a worldclass integrated IT system’. Shezi will take up the position with the view of improving strategic and managerial leadership while executing strategy.

“His wealth of experience in the Insurance and Financial Services arena

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INDUSTRY FOCUS: INSURANCE

will contribute to the growth strategy of our Non-COID (Compensation for Occupational Injuries and Diseases) business and his extensive knowledge of emerging markets into the rest of Africa will drive our new Africa Growth strategy. His vast experience in stakeholder management with multiple strategic partners will be beneficial to driving our growth strategy and in utilising our state-of-the-art IT software,” said Dloti.

Key risks for Shezi to consider when it comes to strategic implementation are the implementation of the National Health Insurance Bill, proposed amendments to COIDA, and political risk. But Dloti remains convinced RMA has got the right man.

“Mandla has excellent business experience and the drive to work with all of us to take RMA to the next level of growth and development. I am personally very pleased that we have been able to attract someone of his calibre, track record and further

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potential. He is a strong, dynamic and values-driven leader with an impressive track record of delivering consistent high-quality performance,” enthused Dloti.

ON THE MOVE When Shezi arrives, he will be welcomed to the new RMA head office in Parktown, Johannesburg. Currently, the company

is headquartered on Wellington Road, RMA will make the short move across the district to St Andrews Road. The drive behind the move is to bring staff under one roof to improve teamworking and make cost savings.

“This is a great milestone in our growth journey,” the company says.

“People are the core of what makes us successful, as part of our efforts to continue enhancing our capabilities to deliver on our strategy, we decided to acquire a building that will house all head office staff into one building. This decision is a move towards increasing collaboration, improving operations and staff relationships.

“We believe that the new office space will offer us an opportunity to work closely together in pursuit of reaching our strategic goals. We are confident that this move will positively affect our staff and improve service delivery to our clients, enabling us to: foster creativity and collaboration across RMA departments, save on costs by joining two RMA offices into one, increase client centricity and service, and create a sense of one RMA.” All of this is vital when it comes to delivering a truly human service for people that really need it.

Following the organisation’s 125-year anniversary, outgoing CEO Singh was keen to reiterate the importance of continuation of quality service delivery to ensure sustainability.

RAND MUTUAL ASSURANCE

“Reaching our 125th year milestone, has made me proud of the successes that we have achieved as a group. Through our diversification strategy we have successfully created the foundation for longer-term sustainability so that RMA may continue to offer Caring Compassionate Compensation well into the future,” he said.

// WE BELIEVE THAT THE NEW OFFICE SPACE WILL OFFER US AN OPPORTUNITY TO WORK CLOSELY TOGETHER IN PURSUIT OF REACHING OUR STRATEGIC GOALS //

“[In 2019] we launched our Straight Through Processing and Single Queue Claims Management systems using innovative automation and artificial intelligence to offer first class claims administration. Our successes in 2019 were also attributed to our staff who were dedicated and committed to delivering Caring, Compassionate, Compensation throughout 2019.”

Now with offices in Johannesburg and regional walk-in branches located in Carletonville, Cape Town, Durban, eMalahleni, Klerksdorp, Pretoria, Rustenburg and Welkom, and satellite offices in Lesotho, Mthatha and Mozambique, RMA is a Level 1 B-BBEE contributor that is furthering the country’s reputation as a financial services leader.

With Africa’s insurance industry accounting for just 1.2% of premiums

written globally, there is major room for advancement on the continent – home to more than 17% of the world’s people. South Africa’s industry is well-regulated and has a sound framework which, although the market is competitive, allows for innovation and growth potential.

If RMA can sidestep negativity in the economy through product and geographic diversification, there is no reason why this established South African institution can’t achieve its ambitious growth plans and deliver reliable and sustainable services that have helped make it both popular and powerful.

WWW.RANDMUTUAL.CO.ZA

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STANDARD LESOTHO BANK

Lesotho’s Leading Bank Takes

Digital Strategy PRODUCTION: Karl Pietersen

Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla tells Finance Focus that the bank will be pursuing a digital strategy in order to boost growth.

“One thing that all banks are looking at is the ability of mobile devices,” he says.

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INDUSTRY FOCUS: BANKING

//

Standard Lesotho Bank is going through something of a transformation. The largest bank in the small African nation is targeting growth as a digital provider, something which the dispersed and often rural population will surely benefit from.

The opportunities for digital banking providers are big. Of the country’s 2.2 million people, just 20% are active internet users. However, around two million active mobile subscriptions exist and servicing clients through mobile channels is where Standard Lesotho sees potential.

“There is no longer a question on whether we partner with MNOs

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(mobile network operators), the question is how do we partner with MNOs and think tanks,” says Chief Information Officer, Samuel Koatla.

His vision is clear – move the bank’s business online, but ensure it remains in reach of everyone who needs it; create partnerships with the country’s leading tech businesses and pull in market share, while all the time delivering the first-class service that you would expect of the country’s leading financial organisation.

“The uptake is ok. It is not where we want it to be,” Koatla says of the company’s digital strategy.

His idea is to have an industry leading online banking system paired

with a speedy and efficient app, supported by a network of traditional branches with digital capabilities. But, ensuring no one is neglected, all of this will be underpinned by a basic service provision delivered through USSD (Unstructured Supplementary Service Data) channels.

“We have to make sure we align ourselves to our customers in terms of what access they have to technology,” he says. “One thing that all banks are looking at is the ability of mobile devices. That is the direction that we are taking, and we are developing for both feature phones and smart phones.

We are available on both phone types and we have USSD, internet banking

STANDARD LESOTHO BANK

// WE ARE THE BIGGEST BANK IN THE COUNTRY AND OUR CLOSEST COMPETITOR ONLY HAS HALF OF THE ATMS THAT WE HAVE // and a smart app. That covers all phones and all devices.”

Koatla wants unanimous quality across all platforms. Any services that are not available on certain devices will soon be made available so that access is as universal as possible.

“On USSD, a platform that does not require internet access, the uptake has been great as its possible to reach all of our customer segments very easily. Whether you’re in an urban area or rural location, as long as you have a phone, you can access our services,

so the uptake through USSD has been very good.”

However, the adoption of internet banking has not been as impressive.

“For whatever reason, we are still struggling in terms of internet banking.

We thought that of the thousands of people with internet access, at least 80% would use our internet banking service but we are hovering at just 30-40%. This means we still have a long way to go,” says Koatla.

He puts this down to the infancy of digital services in the country,

where usage increased by 78% between 2016 and 2017 and just 9% of that growth coming from laptops and desktop computers.

DIGITAL BRANCH NETWORK Across Lesotho’s almost 12,000 square miles, Standard Lesotho Bank has 17 branches. Strategically positioned to offer country-wide coverage, the branch network is one of the strongest in the industry.

Koatla says that no more physical branches will be opened at this stage;

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INDUSTRY FOCUS: BANKING

// WE WANT A MIXTURE OF OLD BANKING SERVICES AND CONTEMPORARY DIGITAL SERVICE IN BRANCH // instead, the company will invest in its existing network and add more ATMs to its portfolio. Currently, there are 93 Standard Lesotho ATMs available and more will be added before the end of the year.

“We are the biggest bank in the country and our closest competitor only has half of the ATMs that we have,” explains the CIO. “What is now and issue, and something that is being pushed by the government, is that we must create financial inclusion. This means we must put ATMs in places where we are not going to make much money.

“In places where banking services are not readily accessible, we will place ATMs so that we can bring service to the people. We are looking at adding four or five ATMs this year

and those will be in much more rural areas of the country.”

Investing in the branch network to bring the buildings in line with company expectations is already underway and has given Koatla the opportunity to install digital services in branch for increased efficiency.

“In terms of the branch network, we are moving towards digital branches. We have recently opened a new digital branch close to the National University of Lesotho and people are very happy as they can access services that were previously unavailable. That is the first digital branch and the idea is that we put it close to the students,” he says. “We are also looking at the prospect of mobile branches as the Lesotho economy is driven by construction, diamond

mining, and natural resources, so there are new start-ups focussing on these industries and we want to provide services to these enterprises. We want to have a mobile digital branch that we can put close to our customers and serve people there. In terms of old brick and mortar branches, we are renovating and making sure our network is able to offer a 24/7 digital service as well. We want a mixture of old banking services and contemporary digital service in branch.”

Investment of this type is all intended to feed into the digital strategy.

This strategy has been developed to bring as many people as possible into the financial sector, benefitting the individual and the business.

“Around 40-60% of our population use banking services,” admits Koatla.

// ECONET Telecom Lesotho (ETL) ECONET Telecom Lesotho (ETL) is at the core of Lesotho’s economy. Econet has the longest fibre optic network in the Mountain Kingdom and is the supplier of choice for most business customers.

Lebohang Ramaisa, General Manager Enterprise Business, says over and above ETL’s and fiber network in the country, it is the diverse range of business solutions it offers, that has positioned it as the partner of choice to businesses and government.

“The financial services providers, like our partner, Standard Lesotho Bank, have special demands for availability, security and speed. Econet supplies all of Standard Bank’s in-country connectivity and has helped Standard Lesotho Bank maintain the highest level of availability compared to all other Standard Bank group companies in Africa.”

Ramaisa adds. Econet also provides secure connectivity to the bank’s point of sale (POS) terminals across the country using its 3G and LTE network.

Further, Standard Bank’s internal voice communication depend on a VoIP platform that is designed, installed and supported by Econet Telecom Lesotho. Econet has further partnered with Standard Lesotho Bank in their digital transformation journey by providing Internet services for their banking websites, their Office operations and WIFI in their branches. Our innovative collaboration as includes mobile banking where our common customers are able to send money from their bank accounts to thier Ecocash mobile money wallets.

Econet’s extensive fibre network reach has helped, not only Standard Lesotho Bank and the government but it has helped the growth of local economies in the deep valleys and mountains of Lesotho. Econet is a proud partner of Standard Lesotho and is inspired to change the lives of the citizens of this beautiful mountain kingdom.

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T’s & C’s apply

www.etl.co.ls

INDUSTRY FOCUS: BANKING

“Looking at those who are not active with banking, it’s not that they don’t have access to funds – they are still spending – it’s just that they are using cash and not going to the bank.

There is a thought that banks can be more expensive, but our central bank has said all banks must offer services to everyone, no matter of their circumstance.

“This presents a major opportunity,” he adds. Currently, there is more than 800,000 people who are ‘unbanked’. Bringing these groups into the market would increase the size of the market significantly.

“For years, there were no banks coming from South Africa, but we are

hearing that many more banks now want to enter the Lesotho financial market. They see the opportunity as we do. We have around 60% market share and for the past two to three years we have seen the younger generation moving to banks with a strong digital offering and that is why we are investing heavily in our digital presence.”

ROOM FOR IMPROVEMENT At the end of 2017, Standard Lesotho Bank released a mix set of results.

The company’s headline earnings sat at M240 million, but this was down from M310 million in 2016 – a drop of 23%. Declines like this are obviously unsustainable and Koatla says that

// WE HAVE SEEN THE YOUNGER GENERATION MOVING TO BANKS WITH A STRONG DIGITAL OFFERING AND THAT IS WHY WE ARE INVESTING HEAVILY IN OUR DIGITAL PRESENCE // 54 / www.finance-focus.net

the dip forced difficult board room discussions.

“We recently talked in the boardroom about how this could potentially be a reality check for the business and the country. We used to register big profits. Our ROE was 36-39% and we never asked whether that was sustainable. Now, our ROE sits at around 26% while other banks in Lesotho and other countries around Africa hover around 19%. We do not accept that, and this is why we are investing in a digital strategy to boost growth.”

The cause of the dip? According to Koatla, an economic landscape influenced by political factors.

“We moved from a oneparty government to a coalition government and that was new concept in the country,” he says. “The first coalition only ran for two years and we had elections again, then another government ran for two years

STANDARD LESOTHO BANK

before further elections. During that period, the government did not inject any spending into the economy and the circulation of money slowed. This is why we suffered, but it was not only Standard Lesotho Bank that was hit.

All commercial banks suffered.”

Standard Lesotho’s overall performance was not bad. Fees and commission revenue was exceptionally strong and resilient, recording 8% year-on-year growth.

This was despite ongoing investment into a new Finacle Core Banking system – another step towards improved digital functionality.

“We finished that project in March 2017 and we are now actively running on Finacle. The project was closed in December and we still face challenges, but it is a fantastic platform which gives our customers great service and great opportunities. It also gives us a competitive edge as it is better than what is available elsewhere in the market.”

BUILDING SMES A key focus area for Standard Lesotho in terms of building its customer base will be with SMEs. Big creators of jobs and important builders of GDP, Lesotho’s SMEs are a vital part of the economy but often need support.

“We noted that most of our deposits come from SMEs and if we really want to create employment (our unemployment rate is very high in Lesotho), we must partner with the private and public sector to create opportunities.

“We have opened our business banking suite for SMEs to use for free, there’s internet and a boardroom for free, there’s office space for free, and you can meet your prospective clients while using our services.

“We are also investing heavily in training; we have spent several millions on training to help SMEs run their businesses. We started this year and the applications have been huge. We will start with 10 and expand as we get used to the programme.”

SMEs developed, grown and run by young people is also a focus for both the government and the bank.

“We have started Bacha Enterprises, the Sotho word for youth.

This has been running for four years now and we are partnering with the Lesotho Revenue Authority and the Basotho Enterprises Development Corporation. Through this, we are funding ideas from youth which are most likely to flourish. We have given around 12 start-ups funding, and we think that is an important story to tell,” says Koatla.

Bacha Enterprises intends to breed a crop of entrepreneurs who can inspire change and prosperity by becoming the creators of jobs and not job seekers. This project sets the stage for the youth to shape and determine the economic agenda of their country.

The project is targeted at graduates who have completed their first degree qualification or higher and have never had any opportunity of any type of formal employment after attaining

their qualifications.

While building prosperity externally, Standard Lesotho does not lose focus of building capabilities within. Employing some 800 people, this is one of the strongest employee bases in the country. But it requires constant input. Internationally respected skills are hard to come by, especially in the field of app development.

“We are forced to look into South Africa for these skills,” admits Koatla. “We are advanced with website development but with app development, we look abroad to South Africa or India or the tech countries of the world. Unfortunately, the skills are not there in Lesotho.”

It’s a constant and ongoing battle, but one which is comes expected for all organisations looking to lead in their chosen industry. “We look to the universities to develop these types of skill but many are running old curriculum and that does not help. We have to invest heavily and build people from scratch and then it becomes a tough fit to keep those skills.”

In the future, ambitions are big and optimism is high. However, the building of sustainable relationships is key. “The biggest challenge is MNOs with mobile money systems,” says Koatla. “They are entering the banking space and we are looking at our next step. Do we try and do everything ourselves which is unsustainable?

Or do we create partnerships? MNOs need liquidity and a banking partner and we can provide that. We are in a stage saying what do we give out and what do we keep to ourselves, so it is a challenging situation.”

Asked for his feelings on the future for Standard Lesotho Bank and the for the country: “There are big, exciting opportunities” Koatla concludes.

WWW.STANDARDLESOTHOBANK.CO.LS

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SURESWIPE

Quality Service Delivery Sets Sureswipe Apart PRODUCTION: David Napier

Helping independent retailers and other clients to accept payments for their goods and services but doing so with a touch of quality and excellent service delivery has resulted in Sureswipe becoming known as the industry leader in South Africa’s payment service industry. MD Paul Kent talks to Finance Focus about the company’s ongoing success and his plans for the future.

//

The way people pay for the products and services they consume is in a constant state of shift. Before we get settled with whatever the latest trend is, payment systems will likely change again – it’s just the nature of technology, forever adapting. Today, the two most prominent payment methods globally are cash and card. Bartering is almost gone, cheques have become extinct, coins are bulky and inconvenient, and paper cash is unsafe and inconvenient to carry. This, along with the rise of online shopping, has fuelled the growth of card payments and digital money transfer. So, what happens when customers want to use their cards?

Banks are issuing are issuing new cards all the time, but retailers are finding it

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difficult and expensive to accept plastic?

Whether it’s contactless or chip and pin, South Africa’s Sureswipe has the answer.

Founded in 2008 in Johannesburg, Sureswipe has grown steadily over the past 11 years and is now the industry leader in a highly competitive market. The company offers traditional standalone card machine; Integrated payments for larger retail franchise stores looking for faster transactions to reduce queues; mobile MOVE card machines for businesses on the go with a POS LITE APP based point of sale software for start-ups and smaller retailers; Gift and Loyalty card programmes for business owners looking to retain, attract customers and grow their business, and much more.

Managing Director, Paul Kent tells Finance Focus about the idea behind Sureswipe.

“We have around 55 million people in the country and there’s over 70 million bank cards in circulation,” he says. “We have good distribution on the issuance of cards but what we don’t have is good distribution of card acceptance points.

We want to make card acceptance easy and accessible to retailers across the country. That means we have to bring options to merchants and retailers of all size. Even to get a traditional standalone or portable card machine, it is still quite expensive for a smaller retailer.

We have introduced a mobile card machine solution to the market which, from a monthly fixed cost perspective,

INDUSTRY FOCUS: TECHNOLOGY

// ONLY 2-3% OF TOTAL RETAIL SALES ARE THROUGH E-COMMERCE SITES AND THAT IS SUCH A SMALL PORTION THAT WE ARE STILL WAITING TO SEE A STRONG SHIFT IN CONSUMER PATTERNS // is roughly about 20% of the cost of a standalone device. These improvements will propel us into an environment where more people can accept card payments.

The estimates however still suggest that just two or three out of ten retailers in South Africa have a card reader in their store and eight out of ten transactions are still cash so there is a lot of scope for growth in South Africa.”

In the UK in 2017 – a market where card transactions are the leading type of payment – more than £900 billion is moved through cards - more than a third of the country’s GDP. Chip and pin, contactless and remote payments are all popular, and mobile and wearable tech device payments are now starting to gain traction as consumers look for easy, fast and convenient payment options.

In South Africa, around ZAR 140 billion now travels through digital payment channels, and that volume is forecasted to increase by more than 16% up until 2021.

For Paul Kent, the opportunities in this ever-changing landscape remain attractive.

He is confident that the key to unlocking further market share is service delivery. The products are based on technology which is already widespread in other international markets and they have been developed to very high standards. Focus on quality service is what helped the company to start, and Kent says that is what will differentiate Sureswipe in the future.

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FIVE YEAR STRATEGY “When we started out more than 10 years ago, the average waiting time for an independent retailer to get up and running took about 30 days before a bank would send someone out. It took another couple of weeks before you would get your card machine installed and if the card machine stopped working, it would take another week to get a technician out – all of this with very high fees,” he remembers. “Since then, the banks have caught up with our offering, but we’ve upped our game since then too. We came in saying we could get customers set-up within seven days and we would send technicians out to fix machines within two days – that was our commitment upfront. We are now getting card machines installed in just two days and our service levels are same day or next day at worst. We asked ourselves ‘if we started the business today with all the knowledge we have now, what would we do differently’ - We are looking at fundamentally changing our operational model at the heart of what we do. We are looking at how we scale the business but still provide the right level of service consistently to the target market that we have identified.”

Fostering strong relationships with customers based on quality service is the key for growth in all service-based industries. Where South Africa’s banks had failed to meet the service requirements of the small retailer, Sureswipe was bringing refreshing focus with excellent service and affordable rate for clients. Actively choosing to concentrate on independent retailers rather than major retail chains, Kent and Sureswipe had found the perfect recipe for success.

“Most transactions in the country are still cash-based, card is moving but cash is still preferred. 10 years ago, there were four major banks and they had an

oligopoly. Barriers to entry were very high and in that environment, with big complacent corporates, they get lazy. That is when the opportunity for competition comes through and we have seen that with the growth of Capitec Bank. I still think there is an opportunity for us to take more market share,” he says.

The use of digital tools will help with Sureswipe’s growth in the same way it has helped the entire card industry to thrive.

The banking sector landscape has shifted to a heavy digital focus and is becoming increasingly popular with many new banks now emerging around the world, with no physical branches and all client interaction and service managed through apps, websites and over the phone. First Direct and Monzo in the UK, GoBank and BankMobile in the USA, Xinja in Australia and many more are new types of bank that are completely app based, 100% mobile, but still issue cards for secure transacting. In South Africa, TymeBank has received attention for becoming the country’s first fully digital bank.

Kent sees the opportunities that stem from the digital approach when it is combined with quality service delivery.

“We take great learnings from the likes of TymeBank with our sign-up process. I believe, if we have the correct documentation, we could get someone up and running with a card machine in 30-60 minutes. We have a network of sales people on the ground and that is where the majority of our sales come from, so if we have people on the ground deploying devices in 30-60 minutes, that will be a real achievement.”

He identifies new start-up businesses as those which could benefit from an efficient digital sign-up process.

“I think newer businesses are looking to do more online sign-up, so we need to work on that. There’s a lot of growth potential there, particularly

// WE STARTED OUT OF ANOTHER COMPANY SO IT WAS MORE INTRAPRENEURSHIP NOT ENTREPRENEURSHIP //

SURESWIPE

with businesses that are opening up for the first time. For the more established businesses in physical stores or in the mall, personal selling is still the best way to target them. There is a lot of growth in our wider distribution network across more regions in South Africa.”

PROUDLY SOUTH AFRICAN Sureswipe has achieved double-digit year-on-year growth and continues to innovate its model to best serve its clients. This is proof that quality of service and competitive pricing is everything in this industry considering that none of the tech is novel. Key in understanding the level of quality needed for the market comes from Sureswipe’s team – people who understand the South African retail environment. With 140 people working countrywide to onboard and service as many clients as possible, Sureswipe remains a growing South African fintech company.

“We have decentralised decision

making and that is the reason we have onboarded experienced people from other markets – we want to distribute decision making and constantly learn.

We like to promote and develop from within and we are looking at developing management so that we can disperse decision making and operate business units separately. That mentality gets people looking at the right things and making the right decisions,” explains Kent, who founded the business in 2008 and has been actively involved every day since.

The idea for the company’s model came about when the South African medical insurance sector experienced changes in the medical benefits. “At the time, I was working at Healthbridge, (an electronic switch between medical practitioners and insurers), we realised that with the industry changing to copayments or reduced medical benefits, the way health professionals were collecting money was changing and that existing technology could help,” says Kent.

“Doctors, who had been so used to just sending claims to a medical insurer, now had to start requesting money from their patients and they were looking for alternative payment mechanisms. Card transactions were the obvious solution and that was at the same time that Capitec Bank was getting into merchant acquiring and looking for a distribution partner. Timing in business is everything and we got the timing right. There was a need in the market for a customer that Healthbridge already had, and there was a bank that could help with distribution around merchant acquiring,” he adds.

“We started off operating out of another company so it was more intrapreneurship not entrepreneurship.”

After starting out as a product within Healthbridge, it became clear to Kent and the rest of the team that this product could work, not just for doctors, but also for independent retailers across the country.

“There were two key things that retailers were struggling with,” details Kent,

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INDUSTRY FOCUS: TECHNOLOGY

“service from the banks – the primary providers at the time – was exceptionally poor, and fees were high. Poor service and high fees is the perfect recipe for disruption. We started the business with a small sales team and had about 200 customers, a few transactions, and we outsourced most of the business operations. We outsourced the call-centre and the technicians, but we quickly started looking at the focus areas that we needed to be competitive in our chosen target markets. It was about access to service and access to product for retailers. We quickly started bringing the service element, that we had historically outsourced, back in-house.”

And, over the last decade, the recipe has been perfected. “We now have more than 8,500 customers and 10,000 point of sale devices in the market,” enthuses

Kent. In that time, the business has been named as a National Business Awards finalist, a Deloitte Top 10 company to work for, a preferred supplier by the Restaurant Association of South Africa, Paul Kent has been named as the NSBC National Entrepreneur Champion, and the company has concluded a number of successful acquisitions.

STAYING RELEVANT In 2016, Sureswipe acquired fintech business Concorde Solutions to provide merchants with a more streamlined process and make the payment method far simpler for consumers by allowing integration between the card payment device and the point-of-sale software. In 2018, Sureswipe acquired a majority stake in point of sale software company Humble Till. Both acquisitions are driven by the

desire to deliver quality service for clients and a seamless experience for end-users, becoming not just a payments provider but a solutions provider.

This growth has been key in keeping the business at the sharp end of the market. “We work in a very competitive environment and when we started 10 years ago there were only the banks and one other non-bank player, but today there are so many. They open and close all the time as it is a very competitive market. Sureswipe is well-positioned to consolidate the market and create growth through acquisition,” says Kent.

As for development of new technologies and preparation for the next generation of retail outlet, Kent remains confident that Sureswipe has the product portfolio to remain relevant and will be able to adapt as and when new concepts

ACS - Proud Product Partner with Sureswipe In a world where at least 40% of CEOs globally consider information security one of the greatest risks to business, ACS a division of Altron was the first company in South Africa to offer retailers a PCI-validated Point-to-Point Encryption (P2PE) solution to protect consumer card data at point-of-sale.

“When searching for a payment solution, the most important factor is the level of security ensuring that sensitive data is not compromised. While criminals are becoming more experienced and ‘find new ways of stealing personal and financial data, it is crucial to have a payment security plan for your business, regardless of the industry or size” says Charl Van Rensburg, Manager for Integrated Transactions at ACS. As with any good sunny day, there’s a dark cloud bound to ruin it. As your customers transact both online and offline daily, there is a chance for criminals to gain exposure, which is why it is becoming more crucial for businesses to protect customers data, ensuring peace of mind. Businesses are now required to have the necessary organisational and technical processes ready to prevent confidential information from being compromised, or they could face hefty financial penalties.

That is why the Payment Card Industry Data Security Standard (PCI DSS) has been implemented to ensure policies and procedures are intended to optimize the security of card transactions and protect cardholders against the misuse of their personal information.

ACS provides its customers like Sureswipe with increasingly-enhanced security at a time where we can see more consumers bank accounts being emptied through fraud. “We want to ensure that we are able to accept any valid payment token presented to a terminal and switch that token securely to the relevant acquiring partner” says Van Rensburg.

He adds “We value our relationship with Sureswipe as their trusted partner for their customers transactions. We understand the importance of providing Sureswipe’s customers with ease, convenience and safety as they transact.”

Protecting the privacy and security of customer’s data has never been more important. Implementing the right procedures and staying ahead of malicious entities that could compromise your business allows you to mitigate the risks in time as well as protect your brand reputation and promise to your customers

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INDUSTRY FOCUS: TECHNOLOGY

arrive in South Africa.

“With unattended check outs and Amazon Go-type stores, there are lots of different payment options that are becoming available,” says Kent. “The first thing that will change is the different customer experience at the point of interaction. If you think about making a card payment in a Quick Service Restaurant or boutique store or highstreet chain, the experience is the same in every store. Now, there are many more

options available – QR codes are popular, contactless is more popular with low value items, mobile point-of-sale devices are being used as queue busters; all of these payment options change the experience.

However, we have a very long way to go before we start seeing widespread tech like that in South Africa.”

Could the company look beyond SA’s borders for further growth opportunity?

According to Kent, that has long been an ambition. When interviewed in 2016, Kent

// I BELIEVE, IF WE HAVE THE CORRECT DOCUMENTATION, WE COULD GET SOMEONE UP AND RUNNING WITH A CARD MACHINE IN 30-60 MINUTES //

MD Paul Kent - Image © Devin Lester

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said that Sureswipe should be present across southern Africa by the end of 2018.

To date, the company has only had small success across border through its Humble Software partnership, and the reason for the slow progress is the rate of card issuance by banks.

“We have a philosophy around focussing on the right things and we believe there is a lot of opportunity still here,” he says. “We can do a lot more learning in South Africa before we look elsewhere. There’s a lot of regulatory requirements which differ in most countries. It’s not as easy as just picking up our model and just moving it to another country. More than that, we want to follow the card issuing. We have to consider whether there are enough cards being issued to make electronic payments and card transactions viable at the point of retail. The number of cards in circulation across Africa is still relatively small and until that increases, I’m not sure we want to go and be the bleeding edge in other developing markets.”

BOOMING IN TOUGH TIMES The success that Sureswipe has managed to achieve through its life is a perfect example to follow for companies aiming for the top of their sector. In the 11 years that Sureswipe has been operational, there has been a number of serious recessions in the country, and the 2008 global financial crisis provided little stability for the company in its early years.

“The independents are at the cutting edge of that. They are the first to feel any pinch in the economy and the last to feel any upswing. We really see the sharp end of these slowdowns,” admits Kent.

“What we’ve seen over the last couple of years is many companies closing their doors, much more than in previous years.

Businesses are not even surviving and that is very worrying. The economy is not growing and prices are going up on muchneeded services such as electricity and fuel.

VAT has increased and this has impacted on the ability of people to spend - we see that more and more,” he adds.

In 2018, South Africa’s growth was

SURESWIPE

// IT’S NOT AS EASY AS JUST PICKING UP OUR MODEL AND JUST MOVING IT TO ANOTHER COUNTRY // just 0.8% and figures are not expected to gain much momentum through 2019. However, the ever-optimistic Kent is hopeful.

“I believe the tough times will soon be behind us and I think we are looking towards an uptick in the economy. All the businesses that survive through the slow times are usually those that go lean and invest in running a tight ship. Having been lean and running a diligent operating model usually lets companies thrive when there is an upswing, so I am very positive about our own business and also about our customers.”

With the growth of internet penetration, roll out of strong Wi-Fi,

ongoing growth of the number of banked individuals, smartphone uptake, continued focus on ‘going digital’ in business, there will undoubtedly be opportunities for further growth at Sureswipe.

“The online ecommerce market in South Africa still needs to mature. It has had good growth over the past few years and sales like Black Friday drove people online, but those kind of deals are also in stores. Only 2-3% of total retail sales are through e-commerce sites and that is such a small portion that we are still waiting to see a strong shift in consumer patterns.

“Contactless has not taken off in a big way here yet as a lot of the acquirers, including us, have not done a good job of promoting it in store. Many small value transactions are still cash as its easy, but as contactless grows, it is going to become a lot easier and safer to use cards instead of cash.”

For this award-winning entrepreneur and highly accoladed

company, success has been sweet but there remains a lot more to be done.

An unrelenting and unerring drive for quality service delivery sets Sureswipe apart, and that focus is something which will not change anytime soon.

“Personally, I believe we are still at the start of our journey. I am still very much involved with the business and we have built a great team. In the early days I was very lucky to have a very good COO who ensured the sales operation was like a well-oiled machine.

We have had some great people on the service and technology side, and I think we can do so much more in South Africa, increasing our market share to SMME’s and independent retailers before expanding across our borders,” he concludes.

WWW.SURESWIPE.CO.ZA

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