Pre-empt­ing dis­rup­tion

Financial Mail - Investors Monthly - - Opinion - Oosthuizen is chief ex­po­nen­tial of­fi­cer at MMI’s Ex­po­nen­tial Ven­tures

F inan­cial tech­nol­ogy (fin­tech) has grown with the ad­vent of new tech­nol­ogy. From blockchain to drones, data anal­y­sis to crowd­funded in­sur­ance, ar­ti­fi­cial in­tel­li­gence to robotics, the In­ter­net of Things to genome tech­nol­ogy and wear­ables, ex­cit­ing new tech­nol­ogy will trans­form the way con­sumers en­gage with fi­nan­cial ser­vices com­pa­nies.

Fin­tech and in­surtech have enor­mous po­ten­tial ben­e­fits for the in­dus­try, en­trepreneurs, clients and the econ­omy.

MMI is par­tic­u­larly in­ter­ested in fin­tech, in­surtech and healthtech be­cause of their po­ten­tial to dis­rupt tra­di­tional busi­ness mod­els. In­surtech is lag­ging fin­tech by about four years but is pick­ing up ex­po­nen­tially.

Last year MMI launched Ex­po­nen­tial Ven­tures, a busi­ness unit fo­cused on po­ten­tially dis­rup­tive in­no­va­tion op­por­tu­ni­ties in the fi­nan­cial well­ness space. Rather than be dis­rupted by a new en­trant, MMI is fu­ture-proof­ing its busi­ness by cre­at­ing dis­rup­tive ca­pa­bil­i­ties within the com­pany. It be­lieves dis­rup­tive in­no­va­tion in the fin­tech and in­surtech sec­tors will al­low it to trans­form its ex­ist­ing busi­ness model by part­ner­ing with and in­vest­ing in start-up busi­nesses and build­ing new busi­nesses.

Ac­cord­ing to global research con­ducted by Ac­cen­ture, play­ers with a vested in­ter­est in the fin­tech space have in­vested over US$50bn in al­most 2,500 com­pa­nies since 2010.

In SA, lack of fund­ing has been a bar­rier to en­try, with many en­trepreneurs re­ly­ing on self-fund­ing or fund­ing from friends and fam­ily. This is chang­ing as cor­po­rates be­come in­volved. Ex­po­nen­tial Ven­tures has cre­ated a new tech­nol­ogy ven­ture cap­i­tal fund, the 4Di Ex­po­nen­tial Tech Fund, aimed at earlyand growth-stage star­tups with am­bi­tions to reach in­ter­na­tional mar­kets.

Tra­di­tional in­dus­tries that pre­vi­ously fu­elled the SA econ­omy are stag­nant or in de­cline. The rapid growth of fin­tech and in­surtech in SA is good news not only for the econ­omy but also for im­proved em­ploy­ment lev­els.

To boost Ex­po­nen­tial’s im­pact, MMI has in­vested in the first-ever in­surtech ac­cel­er­a­tor pro­gramme, Star­tup­boot­camp In­surTech, based in Lon­don. Star­tups across the globe par­tic­i­pate in a rig­or­ous se­lec­tion process, af­ter which only the top 10 get se­lected in the ac­cel- er­a­tion pro­gramme in Lon­don. In the re­cent Star­tup­boot­camp in­take of Jan­uary 2017, 10 start-ups were se­lected world­wide, three of which are SA busi­nesses. This is an­other way that Ex­po­nen­tial is con­tribut­ing to­wards growth in SA’s in­surtech ecosys­tem and ul­ti­mately cre­at­ing eco­nomic value.

Ex­po­nen­tial Ven­tures hopes gov­ern­ment will fo­cus on en­abling en­trepreneurs, given their abil­ity to po­ten­tially boost eco­nomic growth rates while cre­at­ing fresh em­ploy­ment op­por­tu­ni­ties.

For start-up busi­nesses eco­nomic sta­bil­ity is es­sen­tial, as is firm pol­icy di­rec­tion. To boost small busi­nesses and en­trepreneurs, gov­ern­ment needs to re­duce the cur­rent oner­ous ad­min­is­tra­tive com­pli­ance bur­dens. Eas­ing reg­u­la­tions that threaten to sti­fle any lo­cal in­dus­try is es­sen­tial to grow new busi­nesses as well as the over­all econ­omy.

In­creased tax con­ces­sions for smaller com­pa­nies as well as en­tic­ing for­eign in­vest­ment into SA will also en­hance en­tre­pre­neur­ial growth.

It would also ben­e­fit en­trepreneurs if it were eas­ier for start-ups to do busi­ness with gov­ern­ment.

Ex­po­nen­tial Ven­tures looks for­ward to mak­ing great strides in the fin­tech and in­surtech ar­eas, to build sus­tain­able busi­nesses that will make a mean­ing­ful con­tri­bu­tion to MMI’s stated pur­pose of en­hanc­ing life-time fi­nan­cial well­ness, while at the same time grow­ing the wealth of SA and South Africans.

MMI is fu­ture­proof­ing its busi­ness by cre­at­ing dis­rup­tive ca­pa­bil­i­ties within the com­pany

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