RMI’s intriguing deal with insurer Hastings
At first glance, last week’s Rand Merchant Investment Holdings (RMI) announcement barely warranted a mention, but anyone who read the Sens announcement all the way to the end would have noted a subtle change in approach to its minority stake in Hastings.
The investment holding company, which recently sheared off its large stake in FirstRand, plans to marginally increase its stake in the British general short-term insurer to 30% alongside its subsidiary Outsurance. The meat of the deal includes the option for RMI and Outsurance to increase their shareholding to 40% within 18 months at a pre-agreed price of 250p a share. RMI’s other partner in acquiring the entire share capital of Hastings is Sampo, a Finnish-domiciled, Londonlisted financial conglomerate.
But far from being a significant minority investor, RMI and Outsurance intend to formally combine its expertise with Sampo to “drive the strategic direction” of Hastings in what it considers to be one of the most digitally advanced markets.
RMI CEO Herman Bosman was prevented under British takeover rules from saying anything when Business Day contacted him last week, but the transaction looks intriguing.
Can the expertise of a wellregarded local operator combined with an ambitious Finnish financial giant yield results in the cut-throat world of online British consumer insurance? How will delisting the business help? What, if any, tie-ups can happen with FirstRand’s UK-domiciled Aldermore bank?
CLOUD ADVANTAGE
Cloud computing might be the unfair advantage that new digital banks have over traditional players.
By now, we’ve all heard about cloud computing and its apparent benefits in saving companies high data storage and processing costs.
The undeniable king in cloud services is Amazon Web Services (AWS), which globally commands about 34% of the market. Some of the company’s core technologies were developed in SA, with the company having established a Cape Town office in 2004.
That foundation has given new entrants such as TymeBank, the fully digital retail bank, a leg up on long-established players in terms of costs and ability to develop new products. The bank says it is “all in” on AWS and is leveraging a number of its services to create “a smooth, paperless, rewarding and free banking experience for millions of South Africans”.
Prabashni Naidoo, director at AWS SA, says their technology has helped TymeBank to “achieve consistent customer service and realise cost savings” of 44% on its IT bill since setting up the bank in 2018. As US technology companies are often tight-lipped about their level of investment locally, this example gives a welcome insight into the benefits of Amazon’s operations to SA’s economy.
Even established players are looking to capitalise on the trend, with Absa, Discovery, Standard Bank, Old Mutual, and Pick n Pay all now using AWS to lower operating costs, launch new business ideas and digitalise their organisations to deliver better services and products.
Now that we have an idea of how much money this new technology is helping institutions to save, the next frontier is making sure those savings are passed on to consumers.