Banking on a new logic
It takes courage to declare war on conventional accounting logic, but in the banking and accountancy professions, courage is an occupational requirement.
invoiceworx, an online repository for financial information founded by two former bankers, is in the process of creating a platform that will enable small- and medium-sized enterprises to have quick and transparent access to lines of credit. Siya Ntutela and Mdu Thabethe decided to start Invoiceworx after spending a number of years in the local banking industry, and identified a gap in the market. Says Ntutela: “We met by chance. In 2010 I left investment banking to start Bonsai Capital, a consulting company working in the enterprise development sector, and during that time I met Mdu (who has over 20 years of experience in the banking industry, including as regional head: Absa Small Business Credit) through a common client. We then started discussing the local banking environment and discovered that we shared the same views on how it could be improved, and that’s how the idea for Invoiceworx began.”
Through their discussions they discovered that despite some of their clients getting big orders, banks remained inefficient when it came to accessing their working capital applications. “Our clients were being rejected because they were not big enough or [didn’t have] the required credit history. What we wanted to do was to build a platform that could help them secure working capital, collate all the relevant documentation and enable the credit provider to get an accurate credit score of the potential lender,” says Ntutela.
Apart from improving credit score assessments using technology, Invoiceworx hopes to digitise some of the credit application processes that are currently being done manually, and people are starting to notice.
In October, Invoiceworx won R1m in enterprise development funding at a black economic empowerment pitching event sponsored by Merrill Lynch South Africa and AlphaCode, a Rand Merchant Investments (RMI) club for fintech entrepreneurs.
Invoiceworx managed to impress an experienced panel of judges consisting of RMI’s senior investment executive, Dominique Collett, chief executive of Merrill Lynch South Africa Richard Gush, chief executive of Royal Bafokeng Holdings Albertina Kekana and principle partner at Identity Partners Sonja Sebotsa.
Collett says the winning businesses were selected because of their ability to meet the judging criteria, which included their pricing and revenue-generating models and how delivery and implementation would occur.
While the global fintech start-up scene is a lot more advanced in both the US and Europe, South Africa is slowly making some inroads, a view Gush shares. “SA has the potential to become a fintech centre of excellence as it has an incredibly advanced financial services infrastructure. This provides an empowering context for emerging fintech entrepreneurs and financial technology innovators to develop solutions that meet the needs of different communities, many of whom have previously had little access to safe and reliable financial services,” he says.
Unlike some of its European and American counterparts, Invoiceworx does not see itself as a challenger bank, though if the company succeeds it will have a disruptive impact on existing job descriptions.
“With any disruptive technology, there will be casualties, but at the moment we’re not going to see jobs being replaced by our platform. Ours will be a complementary technology for existing credit managers. Our view is not to replace banks; we will always need banking infrastructure so we’re not trying to replace banks. In my view banks, at least for now, cannot be completely replaced,” argues Ntutela.
If Invoiceworx succeeds, the future credit manager will have a more reliable platform backed up by solid data to help him or her to make better credit granting decisions. But does this spell the end for accountancy professionals? Not yet, says Ntutela.
“Accountants will still have a role because in the South African market people still prefer and rely on human knowledge. So, in my view what we’ll see is an increased collaboration between technology and human talent. The other problem with South Africa is that data costs continue to be high, which limits the penetration rate for our financial services innovations. That said, there’s a big market out there for providing free accounting services. Increasingly the SME sector is going to start asking tough questions of the accountancy profession as more and more of that knowledge can be accessed for free.”
Invoiceworx is trying to re-imagine the future of banking in SA, and if their track record is anything to go by, this is a start-up worth keeping an eye on.