Mobile operator MTN and JSE-listed financial services group Sanlam yesterday announced a joint initiative to launch a new disruptive insurance product that would see them venturing into funeral cover and other life products through digital platforms.
MTN said although the date would be communicated closer to the time of the launch and kept mum on the name of the product, it said customers could expect it between September and December.
The group said insurtech would be a standalone product offered by MTN’s insurance division, which forms part of MTN’s mobile financial services. It said the sign-up process would be by a digitally customer-centric process via any device attached to the network, adding that the product would be pitched at LSM 6 (Living Standards Measure) and above, as well as youth and young adults.
MTN chief financial officer Ralph Mupita said fintech contributed 6percent service revenue to group revenue last year, but the group wanted to push it above 15percent in years to come. He said the strategy was to be in more markets and to launch more services.
MTN said the new product would be complementary to its mobile money app, MoMo, which was relaunched last year. MTN’s 233 million telecoms subscriber base spans Africa and the Middle East.
Mupita said the group brought 300000 points of sale to the partnership and a significant penetration in the market with a subscriber base that was just shy of 30million
Sanlam group chief executive Ian Kirk said the launch heralded a big day for the group as MTN had an unrivalled reach while Sanlam had a big bet on the continent.
“We are preprepared to disrupt ourselves for clients,” he said. “We have invested a lot in insurtech.” Sanlam Indie and Go Cover were examples of this.
The global fintech investment market, which was valued at $39.6billion (R561.15bn) in 2017, is anticipated to grow by more than 18.4percent to reach $152.94bn by 2025, according to WiseGuy Report, one of the world’s largest premium market research and statistical report centres.
Ernst & Young, the global audit and advisory firm, has reported that investments in fintechs have reached more than $100million over the past two years.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said insurance was a new area that MTN was targeting.
He said the new partnership would provide Sanlam with access to Africa, which was a difficult market to access. “They will need to collect premiums through prepaid airtime recharge to do transactions in some markets as the majority of mobile users are not banked,” he explained. He said fintech was a growth area of the group, with mobile money transfers already a significant contributor to group revenue.
Takaendesa said a related insurance partnership with MMI Holdings called “MTN aYo” had not yet taken off strongly in Africa, whereas mobile insurance to cellphone handsets had taken off strongly in South Africa.