The journey continues with Dominique Collett, as she shares her vision of the future, where B2B fintech companies tackle the operations of traditional banks and insurers, transforming them from the inside out.
We asked Dominque to share her thoughts about current tech trends and how they are impacting her world.
“I think that Covid has accelerated existing trends – the media world is a good example, where online media has entirely cannibalised print. But, with these casualties come opportunities. Take the world of financial services for instance. Up to now, it’s all been about digital – digital banking, digital insurance, digital servicing etc. As we were developing new offerings, we had pockets of frontier adopters who were happy to try new things, but with Covid the rapid acceleration to digital is coming to fruition. Now, even the most traditional customers need to go digital, whether they like it or not.
Dominique uses one of the companies she works with, OUTsurance, as an example.
“The average OUTsurance customer has always been your traditional South African consumer. And, while the company has always had a fair amount of digital initiatives, their customers still wanted to be able to call into the call centre, just as they always have. Suddenly, with the virus, we have seen more than 100 000 app downloads as customers choose to use the self-service digital options.
“The second big transformative result of Covid has been how financial service companies have had to bring digital into the core of their operations. With the added pressure to digitise their processes, these companies are now partnering with fintech firms to help overhaul their legacy systems. The result is that B2B fintech will become the next big thing.”
Looking at the technologies most likely to grab the spotlight over the next few years, Dominique says security will continue to be the overarching driver.
“With the world moving more towards everything eCommerce we can expect the role of authentication to really kick in. We can also expect to see a big growth in cyber insurance. The size and scope of the many recent data hacks are breathtaking. Protecting yourself against these risks will really become important for enterprises and insurance companies will need to respond with new products.”
Dominique is less optimistic about blockchain, however, saying that the continued lack of a clear use case is causing some scepticism in the financial sector. That said, she says cryptocurrencies have a place in our future – largely because she believes how people think about money will change fundamentally over the next decade.
Dominique has some unique insight into the investment side of things. She believes that the fintech valuation bubble is approaching bust.
“Some of the valuations of fintech companies of late have been crazy. A great example is the Lemonade IPO. The hype around these companies versus their substance remains blurred. They are all obsessed with the technology they are using, but there is no clear indication when they will be turning a profit, and yet they are sitting with market caps that are exorbitant. This challenge is seen so clearly with some of our entrepreneurs who spend the lion’s share of their pitch trying to convince us about the technology they use, rather than showing what the problem is they are trying to solve and how they intend to do it. Pointing out this disconnect doesn’t always go down so well with younger entrepreneurs but it’s an important lesson for them to learn.”
Looking at investment trends, Dominique says her team is paying particular attention to the newer banks, many of whom are developing products that operate on the existing banking rails. Unfortunately, fast-tracking young fintech companies are not without their challenges.
“One of the biggest challenges facing South African companies, both large and small is talent. In all of our companies, we are trying to recruit new skills, but the talent pool in South Africa is rather shallow. Make no mistake there are extraordinary skills in the country, there just simply aren’t enough of them. This is probably the biggest limiting factor to the growth of fintech in South Africa at the moment. To add to this, it’s a real struggle to import talent because of our visa regime. We’re hoping the growth in remote working with Covid will mean we can access some international skills.”
Staying with challenges, Dominique says the biggest threat to banks who are resistant to change will come from the big platform players like Facebook, Google and Amazon.
“Ultimately ownership of the user will end up with these big companies. Because they understand ecosystems, businesses like Amazon know how to access every aspect of a customer’s life. The company knows what you watch and what you buy, it becomes quite easy for it to create an insurance product that would perfectly match your lifestyle requirements.
Given her experience working with startups, we asked Dominique for some advice for aspiring fintech companies hoping to land a deal with a big insurer.
“Find someone who understands how these companies’ sales cycles work. Someone who has the corporate maturity to understand the complexities of these big organisations and who can identify your programme sponsor within it. We see a lot of fintechs meeting with the innovation teams at insurers and banks and, while these guys are really useful, unfortunately, they are often not the ones with a budget. You want to be pitching your product to someone with a big budget and who can actually give you money – find a good corporate sponsor who has the mandate to spend money on your project.
Dominique left us with some inspirational thoughts on the future of fintech in the country.
“South Africa has a world-class financial services industry, and although we may not have enough of them, the fintech skills we have in this country are some of the best in the world. I really believe that fintech should become a priority in South Africa, we have the potential to be a global centre of excellence for fintech – and most especially in the B2B space.”
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