Meet South Africa's FinTech rock star, Tobie van Zyl

Tobie van Zyl is as close as it gets to a FinTech rock star from South African soil. He started and exited multiple successful companies, consults for promising startups and is now eyeing a global mobile banking venture. In the runup to our landmark FinTech event in Cape Town, our reporter Ebrahim Moolla spoke to Tobie about the challenges and opportunities of doing business in South Africa.

Tell us about your background.
"I'm a serial technology entrepreneur, big ideas innovator and energetic leader. I grew up in the financial services industry and since the age of 21 has founded my first online company, an internet insurance lead generator, which I sold three years later. I went on to start Limitless Technology Group, a FinTech company, serving as CEO from August 2010 until June 2015. I recently exited the group to start a global mobile banking venture, developing experimental, programmable banking systems, incorporating crypto currency and block chain technologies. The company is due for launch in private beta by mid-2016."

Do you think SA has the entrepreneurial talent to support the FinTech boom?
"There is a massive skills drain in SA at the moment. Silicon Valley has a great marketing strategy and there are more opportunities abroad. People think on a global scale in New York, San Francisco and London. Here in South Africa, we look to Africa for opportunities, with all its challenges and lack of infrastructure. SA is a slow-moving market. There isn't a lot of capital and there aren't as many start-ups as we think. Reaching profitability takes up to five times longer than in other markets. SMEs have never been funded by banks here, as it was seen as too risky, and there are not many successful mentors. We don't have big exits and acquisitions. The level of risk adverseness means investors want 25 to 30 percent of equity for every R1 million of capital. You'll be a founder with no controlling stake and the least incentivised to build a big business. I'm not raising my money locally anymore because it comes at such a high price."

"Stay hungry and poor as long as it takes, because you can raise five times more money in a bigger foreign market for a fraction of the equity than you can locally."

"However, the technology, if applied in SA, improves on adoption rates, it makes it easy to customise software for any country. The local market is very B2B, with banks, insurers and investments firms owning most of the customer base. It makes sense to build a product that can pivot both ways. There is the customer-facing side of it, for adoption, traction and to prove that your software works, but ultimately, the money will come from sales into banks and insurers. You won't own the customer base, but rather the client relationship of the corporate that will be the lifeblood of your business."

Are there any South African or continental initiatives that impress you?
"Bevan Ducasse at WiGroup, the mobile payment platform, has done a remarkable job to realise his vision, considering the challenges and incumbent infrastructure. I am a consultant to RainFin, a peer-to-peer lending platform that has been first to market in SA and really empowered consumers. The CEO, Sean Emery, is a great leader. eKaya is changing the rental market by offering tools for landlords to do their own due diligence and cut out the middle man. Then there's Ordercloud, which aims to create the Internet of Commerce under the leadership of Erni van Biljon. And, of course, I admire the Limitless team - I wouldn't be who I am without them."

Have encountered any resistance from big financial institutions?
"There are cultural differences between the banks. FNB has been lauded as the best digital bank in the world, so why would they want to do a business with a start-up? Absa, on the other hand, as one of the largest banks in Africa, needs partnerships to expand business model and provide cost-effective services to more people. It is embracing FinTech through accelerators and investment funds. Banks are realising that FinTechs are faster, quicker, more innovative and able to solve big problems without legacy. Regulation is the big problem - we have a very slow-moving regulatory framework. For far too long, the market has been dominated by big players, with little competition. Digital businesses can bring costs down for end consumers."

How do you see the FinTech revolution panning out?
"Fintech will become the fabric of many things. I see it as an inter-operable concept. Banking will not be a place to go to, but something that you do. It needs to be open source, but I don't see it being that way very soon, unfortunately. Consumer services are going to have third-party FinTech companies integrate products into their business models."

Do you have any advice for budding FinTech entrepreneurs?
"If I look back, there were so many times that I should have gone with my gut instinct. Focus on a single piece of the puzzle and quantify your financial needs to test your product. Stay hungry and poor as long as it takes, because you can raise five times more money in a bigger foreign market for a fraction of the equity than you can locally. Communicate and be transparent with your team so that they support you. Be aware that entrepreneurship is hard work and that execution is the only metric that matters when you're starting out."