Business acumen runs in the family
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TWINS Lwando and Lwazi Ndlangalavu have always gone into business together for double impact.
Their strategy is proof that two heads are better than one.
Just the other day they were punching above their weight in the liquid petroleum gas (LPG) industry – and making a killing. Their latest venture is more attuned to their training as bean counters.
They own 4surity (Pty) Ltd, a company headquartered in Johannesburg that offers Software as a Service (SaaS) that proactively monitors and reports on compulsory insurance cover cancellations or lapses on financed assets on behalf of banks.
Lwazi (or is it Lwando?) explains their business: “When a bank finances a car or a house on hire purchase or mortgage agreement, one of the conditions of grant is a compulsory insurance cover for the duration of the finance period which is between five to six years for a car and between 20 to 30 years for a house.
“Research, combined with experience informs us that customers of these loans cancel these insurance policies as soon as they are faced with hard times. The consequences of these cancellations are dire for the banks as they create a huge exposure to financial losses (Impairments or write-offs of loans) should incidents like theft, fire or other eventualities happen on the financed asset.
“The statistics by the South African Insurance Association (SAIA) is that only 35% of vehicles on the road are insured. This problem is further exacerbated by financial difficulty experienced by consumers, for example, now with the damages caused by the Covid-19 on people’s jobs, small businesses and lay-offs, this problem has just increased.”
The other half of the duo adds: “This is a novel solution, a first of its kind. It was idealised, scoped, and built in South Africa, by South Africans for the benefit of the South African banking sector and other African countries as well where similar problems exist.”
One twin echoes the other that: “With the Fourth Industrial Revolution shaping the way business is done globally, the banking sector is also moving away from traditional banking to digital to improve its service, reach, market penetration and credit risk management.
“More than a decade ago, banks started using technology in their credit assessment space (ccoring system) as a way of speeding up and creating uniformity in decision-making for similar set of circumstances, now when it comes to credit monitoring, a lot of it is still done manually. The 4surity system is pioneering risk monitoring using technology, use of big data and collaboration with existing international companies to manage this huge problem which is both expensive and difficult to manage manually due to the size of these loan books and other dynamics which makes this problem a moving target.
“The 4surity solution manages this problem in a more effective and efficient manner as the software proactively manages these cancellations with extremely limited human interventions once agreed perimeters are set as opposed to the current reactive processes.”
The size of the market and the opportunity for 4surity are enticing.
“The size of the home loan book is just over R1 trillion and the vehicle portfolio is just over R493 billion. Both books are exposed to the same risk of compulsory insurance ending up being cancelled. The home loan book at this point had a delinquency value of R40bn and the vehicle portfolio was R34bn. These two figures represent the amount of these books that are three months plus in arrears, due to a number of reasons.
“Risk management experience tells us that once people experience financial hardship on their finances, the first thing they cancel is insurance, even on financed assets. This is a major risk for banks to ignore and the 4surity offering has a first mover advantage in the market,” says either Lwando or Lwazi.
They operate out of their premises in Pomona, Benoni and employ five full-time staff.
Their personnel is a stellar cast of high achievers, among these a seasoned banker with retail, business banking and corporate and investment banking credit risk management experience spanning over 10 years who is their CEO; and a trained accountant with experience in financial systems spanning over 10 years.
The twins both studied accountancy and auditing.
“We both started our careers in one office at ABSA (Kempton Park). We transferred to ABSA (Cape Town) the same day. We both ended up in Credit Risk Management; Lwando via a banking career and Lwazi via the earth moving equipment industry. We have been working together on different businesses for over six years now.”
One or the other says: “Our plan is to service the four big banks in South Africa first, which own over 95% of the market of financed assets, then we extend our offering to other specialised finance houses as well, like SA Home Loans and Sasfin. It is our medium-to-long-term plan to extend this offering to other African countries as well, starting with the SADC countries and then the rest of Africa.”
Lwazi, or its Lwando, has the last word: “We take inspiration from people like Bonang Mohale and Strive Masiyiwa. They both pursued big visions with determination and persistence, and they achieved great success. Just like them, failure is not an option for us no matter the obstacles we are facing.”