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Telkom financial services unit seeks to digitise floating cash

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Sibusiso Ngwenya, managing executive of Telkom Financial Services.
Sibusiso Ngwenya, managing executive of Telkom Financial Services.

Telephony company Telkom says its newly-launched financial services unit is seeking to digitise the cash that is still floating in the economy.

Sibusiso Ngwenya, managing executive of financial services at Telkom Business, says cash continues to be the most dominant form of payment, notwithstanding its various negative attributes.

“It’s very costly, requires physical presence, to name just a few [negatives]. Our transact capability seeks to solve this real challenge, and digitise the cash that is still floating in the economy,” he says.

Telkom announced on Sunday that it has branched into financial services by launching a life insurance business.

The move means Telkom joins other mobile operators in SA that have ventured into financial services, which has become global strategy for many operators as they evolve into ICT-based service providers beyond telecommunications.

Unbanked opportunity

In an interview with ITWeb, Ngwenya said there are over 11 million unbanked adults and “we see this as an opportunity to help”.

He explained: “We have a created an inclusive offering that caters for the segment of the market that is underserviced.

“The unfortunate pandemic has also catalysed an irreversible change in how consumers and businesses will behave going into the future. One of the significant changes it has brought about is that it has normalised the concept of providing services remotely.”

According to Ngwenya, telcos have a chance of winning in the highly competitive financial services sector.

“We see this as an opportunity to leverage our core capabilities and our growing 12 million subscriber base, with the financial services ecosystem as an adjacent offering that we are able to deliver to small and medium businesses as well as consumers in a cost-effective manner.”

Ngwenya does not foresee conflict involving banks and telecommunications companies in financial services delivery.

“Banks are in competition with one another. Fintech players and other smaller financial services players will provide solutions that are not the bank’s core competency, fulfilling financial needs of customers that are currently not met.

“We see technology as an enabler in this regard. Our fintech offering seeks to harness technology and elevate the voice of the customer in terms of understanding their needs and developing solutions to meet them.”

Ngwenya said as a fintech business, the intention is to have an optimal partnership model and work with preferred partners that are experts (including traditional banks), “so we can deliver the best service possible to our customers. The aim is to deliver great products, great service, at a reduced cost to the customer.”

Aggregating financial services

Explaining the company’s strategy that will ensure Telkom becomes “a service provider of choice”, Ngwenya noted: “We are designing products that are simple to understand, and are based on solving a real customer need; tailoring of our products to respond to customer needs and expectations.

“We are also aggregating financial services through the Yep! ecosystem, and ultimately lowering the costs of the offers, thereby adding a lot of value to our customers.

“For example, the cost of accessing funding for SMBs is expensive and so there is an opportunity to deliver small and medium business lending propositions that are cost-effective, enabling small businesses to scale and grow their businesses, which in turn will drive economic growth of the country.”

The launch of financial services by Telkom has elicited a positive response from analysts.

Telecoms analyst at Africa Analysis Dobek Pater said: “This will bring Telkom’s strategy more in line with other MNOs – expansion into adjacent markets. It will allow Telkom to develop an additional revenue stream over time.”

Peter Takaendesa, head of equities at Mergence Investment Managers, says: “These services have the potential to reduce churn and generate some new revenues for the telcos.”

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