Hello Group / Finance Focus Q2 2020

HELLO GROUP

HELLO GROUP

HELLO PAISA THE JOURNEY CONTINUES

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.

PRODUCTION: Manelesi Dumasi

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

t 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

“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 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.

In the long-term, this product will

“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”

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, and Malaicha.com allows Zimbabweans

INDUSTRY FOCUS: TECHNOLOGY

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.”

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

“OF COURSE WE FAIL, BUT WE FAIL FAST AND LEARN FASTER – THAT IS WHAT WE ARE ALL ABOUT HERE”

INDUSTRY FOCUS: TECHNOLOGY

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.

“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.

“E urope 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”

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

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.

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.”

“AT THE VERY HEART OF IT, IF WE ARE NOT SOLVING A PROBLEM THEN WE ARE WASTING TIME”

Moosa Manjra - CEO

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