Big financial institutions in South Africa have changed their attitude and are now ready to collaborate with FinTech companies, says investment professional Colin Vallis (PlatCol Investments), who was on the panel during the successful 2nd FinTech Africa event in Johannesburg. In the lead up to our 3rd event - in Cape Town on 20 October - Ebrahim Moolla spoke to Colin and got his vision on the state of FinTech in the country. Are there too many virtual payment solutions? Where are the venture capitalists? What should entrepreneurs do better?
"These types of events are excellent for networking and putting faces to different players in the industry. I touched base with guys I haven't seen for 15 years and learnt about special purpose acquisition companies. It is all too easy to get stuck in a bubble and not get out there and mix."
Tell us about your background.
"My background is engineering, but I studied post-graduate finance. I started my career at Dimension Data in the 90s and then moved on to investment banking. I've worked for Deutsche Bank, Ethos Private Equity and Standard Chartered Bank on early and later stage general private equity and technology companies. I now run my own business, PlatCol Investments, focusing on small- and medium-sized enterprises and corporatization/realization processes, so it isn't just about funding, but about transforming businesses so that they can be scaled and sold to specialist funds big banks and corporate trade buyers. We've been involved with several later-stage FinTech businesses."
You were on the panel at the FinTech Africa event held at Gordon Institute of Business Science in July. What did you make of it?
"It was very interesting to see how the attitude of big financial institutions has changed towards technology startups for the positive. In the past, they did not get involved with startup businesses and certainly not fund them and co-invest in technologies with them. They only dealt with big guys like IBM, Dell and Dimension Data, but are now collaborating with early-stage entrepreneurs, which is very good for the industry. This, for me, was the best take-away. These types of events are excellent for networking and putting faces to different players in the industry. I touched base with guys I haven't seen for 15 years and learnt about special purpose acquisition companies. It is all too easy to get stuck in a bubble and not get out there and mix."
"Data analytics and network aggregation are areas that will see lots of interest in the FinTech market over the next 2-5 years."
How do you see FinTech developing in Africa?
"There are pockets of excellence all over the continent. I've seen software companies in Kenya that rival those in London, but they just don't have a platform to be heard and present themselves. This is the major challenge for African businesses. If you take West and East Africa, there is a huge opportunity to network and learn. FinTech is increasingly becoming a space where technology is shared."
Are there any companies that have impressed you?
"There were no new companies that have jumped out at me. There are currently too many virtual payment solutions providers going; its hard to determine which business model will prevail in the long term. I think there is potential in the bill presenting and payment and transaction efficiency space, not consumer-to-consumer and peer funding - those are still quite a way off for ubiquitous maturation. Data analytics and network aggregation are areas that will see lots of interest in the Fintech market over the next 2-5 years."
What do you think is driving the sudden interest in FinTech?
"There have always been businesses that are trying to apply technologies to financial services. It is an evolution of competition in banking and this is driving costs down and encouraging innovation. Things have just matured to a point where the field has been given a name. It is a positive for financial services."
Do you foresee there being resistance to FinTech from the banking industry?
"There are one or two financial institutions that still harbor old-school beliefs that collaboration with smaller entrepreneurial companies is too risky, but it will be to their detriment. I saw more than enough evidence of leading institutions embracing FinTech at the previous event that will swing the pendulum in the right direction."
Do you think South Africa has the entrepreneurial talent to support a FinTech boom?
"The talent is there, but not the early-stage venture capital. There aren't enough sophisticated venture capitalists in the country to support the entrepreneurs. This is why a lot of businesses die in the early stages sadly."
Do you have any advice for aspiring or new FinTech entrepreneurs?
"Put yourself out there in the market. A lot of guys focus on technology and leave the sales and marketing for later. Position yourself and build your brand as quickly as you develop your technology."
- Join the FinTech Africa Event 'The future of investing in FinTech in Africa' on 20 October 2015 in Bellville, Cape Town. RSVP now here or contact us on [email protected] or +27 11 0837515.
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