Purple Group CEO Charles Savage

Charles Savage, CEO of Purple Group, is no stranger to standing up in front of large audiences all around the world to talk about the award-winning EasyEquities platform and democratisation of the stock exchange. 

Earlier this year he pitched EasyEquities at the Rise Conference in Hong Kong, which is the leading annual tech conference in Asia. He also picked up a great deal of insight into tech, and particularly fintech. Here’s his first-hand account of the experience:

Every day we read about disruption; we have endless conversations about the tech revolution and the strategies we plan to adopt to address it. But it wasn’t until I attended the recent 2017 Rise Conference in Hong Kong – a gathering of 14 000-plus people from more than 90 countries – that I started to understand the true scale and speed at which this revolution is happening.

The numbers are staggering! We are over the moon by the fact that our investment platform, EasyEquities (a semi-finalist in the Shark Tank-style contest at Rise, which they call Pitch) has 65 000 users. For us, that’s major traction. So when the COO of HSBC gets up on stage and talks about how its future as a bank – once the biggest bank in the world – is being threatened by organisations such as WeChat, Uber and Alibaba (which aren’t even banks) it made me sit up and listen. When they talk traction, they talk in billions. Over Chinese New Year, for example, when it is traditional to give money to loved ones in a red envelope, the WeChat platform handled red envelope transactions of more than 72 billion Yuan (almost R 145 billion) in five days. Five days! Most companies in South Africa don’t see that much money in five years.

But before you book yourself on the next flight to Beijing with Yuan signs flashing in your eyes, be warned that people are almost finished talking about China. The Chinese opportunity arrived a while ago and is already being delivered. If you missed the boat, it’s simply too bad. The question today is, “Where is the next China?”

General consensus seems to be leaning towards India and Indonesia as the next hotspot for large-scale business opportunities. Population-wise, those two nations’ combined headcount stacks up quite closely to China’s. And so those who missed out on China are watching these markets very closely. For EasyEquities, India and Indonesia are natural areas for expansion since our focus in on emerging markets.

A big eye-opener for me at Rise was how far we still have to go in Africa. The conference heightened my awareness of how poor the start-up scene is on the continent. The richness and quality of the presentations, the level of thinking, the simplicity of the innovation and the agility and speed in bringing products to market were astounding. If we are going to change the world here in SA, or even get our own GDP moving upwards, we have to embrace and create a world-class start-up culture. In the financial services industry, the only way forward is through what is being termed fintech 2.0, or fintech-through-partnership.

Fintech 1.0 saw the emergence of potentially disruptive business models in the fintech space. But despite all the hype around it, there are only two markets where fintech has really gained good traction, being China and India. South Africa ranked ninth on the fintech traction scale, which is really impressive.

Fintech has presented opportunities in emerging markets to bypass traditional financial services systems. However, beyond those disruptive business models, and outside of the top two markets, the fintech movement and the “old establishment” are starting to move closer.

This trend is being labelled fintech 2.0. It sees the best and most disruptive businesses partnering with the biggest, oldest, trusted brands. This gives fintech companies access to customers and big-brand trust, while allowing them to be who they are – which, by definition, is easy, engaging and transparent. Established financial services companies are starting to understand that they can’t be those things. They need to join forces with fintech companies. If they try to make it on their own, they risk losing out on huge opportunities.

This is what happened in China. The banks underestimated the impact of fintech. As a result, HSBC (and others) saw non-banking brands usurping their positions in the market. This is something that the markets in India, Indonesia, and even the US, are hoping to avoid. Fintech 2.0 is a partner-driven approach, and one which we have adopted at EasyEquities. Our partnership with Satrix, for example, has proven to be really successful for both parties – and our model allows us to partner with big brands all along the value chain, both within and outside of the financial services sector. Our approach is to disrupt as much as we can with our own brand and balance sheet, but to partner with the best, too.

I don’t believe South African financial services companies are as serious about these partnerships as they claim to be. They still see fintech as something interesting that’s happening on the periphery of the market. They haven’t seen any major disruptions to their bottom lines – yet. They don’t look at the start-ups in the investment space, for example, and see them as a threat. They don’t believe that asset management as we know it could be redundant in 15 years’ time. The start-ups are going after the established companies’ assets and customer bases – and by the time they’ve captured everything, they will have their own banking licences, insurance licences, etc. etc.

We need to be taking note of what is happening in Asia. Yes, South Africa is a different market. We still operate in a relatively closed-off environment because of our political history and exchange control. So let’s start closer to home. How do we disrupt South Africa, and then Africa? That is for me the real opportunity that we have – to partner the right opportunities and services and marry balance sheet and brand with innovative, disruptive fintech players.

Asian banks learnt the hard way from what happened in China. This can happen again, and it most certainly will in South Africa if the big financial services companies don’t partner the right opportunities!

Charles Savage (@csavagegt247) is CEO of stockbroking company (and CN&CO partner) Purple Group, which comprises EasyEquities, GT24.com, Emperor Asset Management and GT Private Broking.

Header image: Rise Facebook page.