Take two for Be­la­m­ont

Us­ing tech­nol­ogy to reach the masses

Finweek English Edition - - Business strategy - BRUCE WHIT­FIELD

“That would be mad­ness,” he says. It un­der­lines the power of the coun­try’s big four com­mer­cial banks, cur­rently un­der in­ves­ti­ga­tion by the com­pe­ti­tion au­thor­i­ties over their con­trol of the Na­tional Pay­ments Sys­tem and its ef­fect on com­pe­ti­tion in the sec­tor.

The new tie-up comes af­ter Ned­bank off­loaded its 25% stake in Net1, pre­vi­ously Aplitec, which was listed on the JSE. Ned­bank ac­quired the stake at the height of the global tech­nol­ogy boom with an op­tion to gain con­trol of the firm – but it failed to cap­i­talise on the re­la­tion­ship. When CEO Tom Board­man took over, he set about sell­ing off non-core as­sets in­clud­ing the Aplitec stake.

EN­TRE­PRE­NEUR Serge Be­la­m­ont is hav­ing a sec­ond at­tempt at get­ting a lo­cal bank to use his smart-card tech­nol­ogy to pro­vide ac­cess to fi­nan­cial ser­vices to the poor. His com­pany, Nas­daq-listed Net1 UEPS, has signed an agree­ment with Grindrod Bank, which will see it of­fer low-end prod­ucts and ser­vices to the mass mar­ket.

While Net1 says it plans to use the new re­la­tion­ship to of­fer wage earn­ers a smart card that will al­low them to re­ceive pay­ment and trans­act cheaply and se­curely, Grindrod Bank MD David Polk­inghorne stresses the bank isn’t go­ing to be pit­ting it­self against the big four.

Net1 plans to of­fer wage

earn­ers a smart card that will al­low them to re­ceive pay­ment and

trans­act cheaply.

Ob­servers sug­gest the rea­son why Net1 and Grindrod Bank, which has no ex­pe­ri­ence in re­tail bank­ing, have teamed up, is be­cause the group doesn’t have the legacy sys­tems that would re­quire in­te­gra­tion into a new tech­nol­ogy plat­form. Cru­cially, how­ever, it does have a bank­ing li­cence.

The deal gives Net1 ac­cess to that li­cence, but Polk­inghorne stresses it’s not a joint ven­ture – a busi­ness con­cept frowned on by the regis­trar of banks. In­stead, he de­scribes it as a tech­nol­ogy agree­ment that will see Net1 paid a fee based on the amount of busi­ness the ar­range­ment gen­er­ates.

Grindrod Bank, a wholly owned sub­sidiary of listed ship­ping group Grindrod, was pre­vi­ously Mar­riott Bank. The ship­ping firm had owned a 50% stake in the in­vest­ment bank and bought the re­main­ing 50% last year when Old Mu­tual bought Mar­riott and saw no need to hold an­other bank­ing li­cence.

While the unit must still de­fine its prod­uct of­fer­ing, it’s likely to be com­pet­ing in the same space as mo­bile phone of­fer­ings Wizzit Bank and MTN Bank­ing – two other ini­tia­tives seek­ing to use tech­nol­ogy to pro­vide ac­cess to fi­nan­cial ser­vices to peo­ple in re­mote ar­eas.

Not want­ing to rock the boat.

David Polk­inghorne

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