Programme your bank account
Fintech set to change the way you transact
From limiting particular purchases to putting aside a dedicated Uber budget, fintech is set to change the way you transact
Struggling to stick to a diet? A debit card may soon help you do that by limiting the days on which you can buy fast food.
It’s a hint at the life-changing potential that is possible when fast-changing technology meets the financial services sector.
Root is a programmable bank account and debit card that allows software developers to get in on the financial technology (fintech) action and try their hands at building fintech products.
Through Root, OfferZen, a local job portal for software developers, has partnered with Standard Bank to "open up the financial services world" to software developers, says OfferZen co-founder Malan Joubert.
Accessible with code, Root comes with a programmable debit card, online banking interface, mobile application and application programme interface.
Standard Bank provides the underlying banking services and securely stores users’ funds.
Existing RootCode applications developed by test users include a limit on the days that fast food can be purchased, a dedicated budget for Uber rides, and real-time updates of transactional data sent to a Google Sheet to help with budgeting.
Other possible applications include automated SMS notifications telling you how much money you have spent on coffee over a week, rounding up each card transaction to the nearest R5 and adding that to your savings account, or a Root card that gives your child a limit of R500 pocket money each month but with unlimited Uber rides.
Root aims to democratise innovation in the financial services sector by being available to anyone who can write code, says co-founder Louw Hopley. He started an iPhone app development company that operated in New York and Silicon Valley, before returning to SA to start the company.
OfferZen hopes to launch Root — which comes amid a sea of innovations in fintech — before the end of June.
That Standard Bank has partnered with Root indicates how seriously financial services companies are taking the potential threat of fintech to their business models.
It also demonstrates that financial services companies are increasingly looking beyond their own organisations for innovation.
Last year, Standard Bank announced it had acquired a majority stake in Firepay, the team behind mobile payments application SnapScan.
A PwC survey across 1,300 banks, insurers and asset managers globally found that 88% view fintech as a threat, with the number rising among African respondents. On average, up to 24% of revenue is thought to be at risk from stand-alone fintech companies, according to the survey.
Nearly half of the companies surveyed are already partnering with fintech companies, with 82% indicating that they plan to do so in the next three to five years. In SA, 63% of respondents have partnered with fintech companies and 96% expect to increase partnerships in the medium term.
PwC’s research finds that fintech start-ups have attracted US$40bn of cumulative investment globally over the past four years.
Locally, Rand Merchant Investment Holdings (RMI), which has a majority stake in Outsurance and 25% stakes in Discovery and MMI Holdings — has launched AlphaCode, its "next-generation financial services platform".
It says on its website: "RMI has recognised that the core business of its underlying portfolio companies is now, more than ever, being influenced by new, disruptive ventures given the rise of shaping forces such as technology.
"As a result, RMI is actively seeking to fund and scale new and disruptive business models."
AlphaCode provides fintech entrepreneurs with office space in Sandton to develop their ideas. This gives RMI firsthand insight into new technologies that could disrupt its existing investments, and enables the group to cherry-pick which of the start-ups it would like to invest in.
AlphaCode boasts nearly 1,000 entrepreneur members covering a wide range of financial services, including peer-to-peer lending, blockchain payments, price-comparison websites for financial services products and an administration platform for stokvels.
Standard Bank and RMI are just two examples of the fintech race under way between financial services companies.
Even regulators recognise that fintech poses unique challenges. This is outlined in a report issued last month by the Financial Stability Board and the committee on the global financial system, which examined the size and scope of "fintech credit" — lending activity facilitated by electronic platforms, such as peer-to-peer lending.
Earlier this year, Outsurance bolstered its digital team by hiring the entire IT team from Take Your Money Everywhere, which was responsible for building the banking platform behind MTN Mobile Money.
Last year, Absa launched ChatBanking, which allows customers to perform certain banking transactions via Twitter.
Telematics technology now enables insurers to give premium discounts to safer drivers, while asset managers are beginning to use automated online advice platforms, known as robo-advisers, to make investing more accessible to a younger generation.
The race is on.