DURBAN - 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," said Mutoda Mahamba, Chief Executive and founder of Solvency, an innovative new insurance product of GENRIC Insurance Company Limited.
Mahamba explained, "Sometimes FinTech brands are consumer-facing, but often they are buried within the financial services value chain. While consumers may not have noticed their presence, they may already be using and enjoying FinTech services".
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. 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," said Mahamba.
Solvency clients, for example, can choose how much of their monthly car and household insurance premium (up to an average of 45 percent) 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. 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," concluded.