CFO South Africa asked the insurance CFO about his role driving the group's FinTech revolution.
Financial services organisations that evolve ahead of the curve with survive the coming disruption. CFO South Africa posed nine questions to Jan Hofmeyr, CFO of the OUTsurance Group and CFO Awards 2018 nominee about his role in driving the group’s FinTech revolution while ensuring that the Group remains competitive with its current product portfolio.
1. You started out as a young CFO. How has your perspective changed over the years?
I started out as CFO at the age of 27. My initial focus was learning the ropes of being a finance executive in the insurance space. Over time, my role has become more strategic; looking after the financial health of the company as well as being a key enabler of our organisational strategy. The role has evolved to include evaluating and assisting in defining the strategic direction of the business and the associated risks and opportunities. This is the role I see myself playing, which includes being responsible for components of our FinTech strategy.
2. As a qualified finance professional, how do you prepare yourself for disruption?
Technology interests me and I participate alongside my fellow executives in an R&D forum across the organisation. Theories and ideas get tested by running frequent low-cost experiments. You have to be willing to take chances to enable growth and improve service delivery. The OUTsurance culture allows us to do so within a controlled environment. If you can test new ideas “without betting the farm”, the pace of innovation and learning will improve. This is important within a FinTech environment where understanding digital customer behaviour and interaction is critical to developing good products and services.
3. With the announcement of your new OUTvest investment service, you are making strides into the FinTech space. How has this changed the work that you do, the people you employ and your overall business strategy?
I take responsibility for large parts of OUTsurance’s FinTech strategy and sponsored the launch of OUTvest in November 2017. This is our first foray into FinTech and an important project for OUTsurance. The world of banking and insurance is facing massive disruption. We are heavily reliant on motor insurance. Some 30 years from now, with the advent of safe, self-driving vehicles, the insurance market may be much smaller or even obsolete. We therefore need to set the business up for a more diversified future. This is an opportunity for us to test the exportability of our brand into non-insurance services. We pride ourselves with our disruptive products and service offerings which aim to simplify and improve customer value-for-money. OUTvest embraces these principles by offering a new way to invest.
Also, one needs a serious challenge or headwinds to find out if your team’s fundamentals are well galvanised or a bit loose. It’s been incredible to see, with the sugar tax, how well the whole beverage industry can pull together and do the right thing. I think there will be some very positive things that come from this.
4. How are cloud, data analytics or the internet of things making a difference in your company?
Cloud-based services are becoming an increasing foundation of new system development. I am particularly interested in the cost agility offered by cloud infrastructure and cloud-based software services.
Artificial intelligence is set to have a large impact on many of our operational processes. Automation and improved data analytics is expected to improve our efficiency and service quality. AI and machine learning will increase the pace of automation. Calculating insurance premiums is a scientific process and highly dependent on rich data. Sustaining a pricing advantage in the insurance industry is dependent on good quality data which provides reliable information on factors which influence insurance risk. Investment in our data and analytical infrastructure is a key interest of mine and an area I remain close to.
Our app-based telematics product, SmartDrive, which monitors our client’s driving, offers an instant discount on premiums. This capability was built in-house using modern technologies. Telematics will play an increasing role in the future of insurance pricing.
5. You’ve recently added funeral cover to your list of insurance offerings. How will you remain competitive in such a vibrant long-term insurance market?
I believe OUTsurance can add excellent value to the South African funeral insurance market. We are a champion of customer service and value-for-money, factors which underpin our funeral offering. The funeral market is one of the largest segments of the insurance industry and we are excited to be entering the market. We have only been in the market for six weeks, [at the time of interview], and we are very encouraged by the early interest. Many insurance products today are commoditised. At OUTsurance we distinguish our offering with market-leading service levels, especially during claims stage.
6. What is your team management style and how do you deal with people challenges?
I need to be both detailed and in the big picture. It is important to be available to my team and participate in the conversations on the floor. I see my most important job as giving the team the broader decision-making context. I love taking them out of the office for a couple of hours to explain what we are trying to achieve and keeping them motivated and engaged. It is essential to be authentic and honest, not only because there is nowhere to hide in our corporate culture, but given the challenges the accounting and auditing environment is currently facing. These are the most powerful attributes of a successful OUTsurance leader.
I see people management as a continuum, so I try not to have formal mentoring and coaching sessions with my team. I prefer to do it on the job, when problems arise, providing context and evaluating solutions. We have an open-plan office, which encourages engagement with staff on a daily basis.
OUTsurance has a unique culture and flat management structure. We don’t take ourselves too seriously, but we take business very seriously.
We govern by consensus and big decisions are often subject to a detailed and analytical decision-making process which removes uncertainty. We have never had to vote at our board meetings, our culture supports collective decision-making which ensures the necessary support for new strategies or changes to the business.
7. How would you define "doing the right thing" as a finance professional and a CFO?
South Africa is fortunate to have a high calibre of finance professionals with a strong track record. The current credibility crisis brought on by a small minority should however not be wasted. Now is a good time to address the shortcomings of our profession and ensure unfailing alignment with expectations and values of the societies we serve.
8. Who or what inspires you to be the professional you are today?
The financial services industry has the power to improve the quality of life of the societies it serves by not only continually improving product access, service quality and value-for-money, buy playing a key role to enable economic growth and job creation in South Africa. This prospect of creating better client outcomes inspires me, especially in the digital age where the pace of change and innovation is ever increasing.
9. It sounds like you’ve got a lot on your plate. What do you do in your spare time to relax and unwind?
I have a very young family with three kids, and a job that involves loads of international travel. So time spent with them is my biggest source of relaxation. Spending time on my mountain bike is some of my best thinking time.