Fintech innovation an SA revelation
In 2017, The South African Banking Risk information Centre (SABRIC) raised the alert on the volume of cash robberies that were taking place with an increase of 4% since 2016. A total of 695 incidents were reported in the first half of that year alone, and bank client cash losses in that time came to a staggering R21-million.
The organisation said that there was a pressing need to find safer ways to transact. The cash conundrum is further complicated by society – many South Africans prefer to work with cash and draw their entire salary from the bank the day it is paid. For the business, payments are then difficult to track, hard to manage and easy to lose, and for those who own the cash, they run the endless risk of losing it.
The reason fraud is so prevalent is because cash is easy to conceal – physically and from the owner. Businesses that rely on cash transactions from customers have to deal with risk on two fronts.
The first is the collector, the second is theft. When a collector is balancing huge wads of cash while making the monthly rounds, it is very tempting to slide a few notes from a wad and put them somewhere else, especially when the collector’s salary or income looks paltry by comparison.
Research undertaken by RubiBliue found that up to 30% of cash transactions would go missing thanks to intentional theft or fraud and un-intentional purposes such as bad systems and the inability to reconcile correctly.
Another issue is that cash is often not accounted for correctly and those who report the amounts don’t give the right numbers, keeping a little bit extra for themselves. This is compounded by unethical trading which puts the consumer and the business at huge risk.
Consumers who pay for a non-physical product, such as insurance or a funeral policy, assume that their money is going to the right place, but they fall prey to transactional scripts and fake receipts. The cash is taken, but the fraud is hidden. Until the consumer needs it and the reality of the fraud comes to light. They have no cash and no policy, and no way of getting either back.
It is into this murky realm of cash and transaction that fintech innovation needs to slide. The entrepreneur, the technology genius, the inventive inventor – their value in the South African space cannot be understated.
The advancement of technology and mobility across the country provides an opportunity for fintech to transform the dominant cash culture into one that uses entirely digital financial models and channels. Not only will eliminating the need for cash make it easier for people to transact, but it will reduce the fraud and risk by default.
Fintech has the potential to change how people feel about money and how they approach it. Using the right technology in accessible ways, it can shift perceptions about cash without impacting on how people use it or engage with businesses. Applications can ensure that cash payments are done automatically and are completely controlled by the consumers.
This eliminates the middle man, deletes the need for cash and ensures that every transaction is managed and sent to the right place. This can also be implemented from the cash collector perspective, the devices tracking the payments, ensuring they are processes and keeping track of the amounts. It means there is no cash to transact and that risk is significantly lowered.
There has been some impressive change in the fintech space in South Africa over the past few years. Consumers are more informed about technology and are becoming increasingly au fait with how it can help make their lives easier. This is further supported by the drop in prices and the rise in inventive technologies.
Consumers are demanding solutions that help them manage their money more effectively and this is pushing organisations to deliver increasingly relevant and targeted offerings that help overcome the difficulties that they face when it comes to their funds.
As seen on Business IT