If global FinTech trends are anything to go by, South African consumers should be preparing themselves for a lot of financial management innovation, and new money saving options…
There are more than 12 000 FinTech companies operating across the world, and Goldman Sachs estimates the global FinTech market to be worth $4.7 trillion. With so much innovation taking place globally, one might think that South Africa is lagging. But while the media profile of local FinTechs has been low, the sector has been very active.
FinTechs are challenger brands that use technologies to either change the way traditional financial services are offered, or to offer completely new products and services.
‘There has been a lot of FinTech activity within the industry for a while, and consumers are increasingly being offered a wide range of innovative products – as well as new ways of thinking about the money they spend on insurance,’ says Mutoda Mahamba, CEO and founder of Solvency, an innovative new insurance product of GENRIC Insurance Company Limited (FSP 43638), a registered Short-term insurer.
‘Sometimes FinTech brands are consumer-facing, but often they are buried within the financial services value chain,’ explains Mahamba. ‘While consumers may not have noticed their presence, they may already be using and enjoying FinTech services.’
Internationally, FinTech brands have revolutionised cross-continental travel by giving consumers easy-to-use options that slash exchange rate fees and transaction costs. Similarly, new banks have changed the banking sector with fast, dynamic digital offerings and low-cost internet banking.
‘These brands are just the tip of the consumer iceberg,’ says Mahamba. ‘FinTechs are changing how financial services work everywhere, from EFT payment methods when you’re shopping online to concepts like insurance that rewards good driver-behaviour. As this innovation becomes more visible and familiar, consumers are more likely to actively seek out best-in-class brands and experiences.’
The Solvency solution offers crucial short-term insurance cover, combined with the ability to save and invest seamlessly. It’s a unique product that helps South Africans deal with two crucial challenges: protecting themselves and their families against key life risks and saving for the future.
A former insurance executive with over a decade of actuarial experience, Mahamba founded Solvency after working at a range of prominent South African insurance companies for over a decade. Through his work, he saw the opportunity to create a financial product that empowers consumers financially while also equipping them to manage the risk of negative life events, from burglaries to a car being written-off.
‘The response from the market has been strong and positive, even though the Solvency brand is new,’ says Mahamba. ‘I think this shows that consumers are actively looking for new ways to manage their hard-earned money and are becoming attracted to what FinTechs are offering.’
Mahamba goes on to explain that financial savings are only one-half of the FinTech picture. Equally important to consumers are innovative tools that allow them to change how they think about, and manage, their financial lives.
Solvency clients, for example, can choose how much of their monthly car and household insurance premium (up to an average of 45%) is allocated to an Insurance Savings Account (ISA) in their name. This innovation operates in a similar fashion to a medical aid savings account. The decision on how much to allocate to the ISA is guided by how much excess the client chooses to pay in the event of a claim.
Given that on average a short-term insurance consumer claims once every four years, and that the Solvency ISA is expected to earn money-market rates, the client soon achieves a position where the savings portion of their policy offers effective risk cover.
‘Consumers often pay premiums for years on end without claiming or receiving anything in return for their purchase,’ says Mahamba. ‘Solvency turns this on its head and converts a grudge purchase into a savings opportunity. As the FinTech sector in South Africa matures, I think we can definitely expect more brands seeking to turn a previously negative customer experience into something that is exciting and financially empowering to emerge.’
For more information go to www.solvency.co.za (T’s & C’s apply).
Image Courtesy: Supplied