Tech companies will take on banks and insurance providers

Dawie Roodt, the chief economist at the Efficient Group, has warned that tech companies – particularly fintech companies – pose a big threat to banks and insurance providers.

“Tech companies will kill banks and insurance companies,” Roodt told MyBroadband.

He said that investing in the financial sector in South Africa at the moment was a good idea for the short term, but banks would come under pressure from tech companies in the future.

Roodt said that “fintechs are amazing companies”, but that investors must be cautious when putting money into the sector.

Another group of companies which Roodt said has great potential are tech companies working on blockchain and cryptocurrency solutions.

This is thanks to the technology driving this sector, which tech companies are either developing or implementing.

Companies which were directly involved in mining cryptocurrencies like Bitcoin were not in the same boat, however, said Roodt.

He stated that if you invest in a Bitcoin mining company, you are essentially investing in Bitcoin.

While the technology behind Bitcoin is impressive, Roodt does not view the coin as an investment.

Bank Zero

Roodt’s comments come after the recent launch of Bank Zero in South Africa.

The new bank, founded by Michael Jordaan and Yatin Narsai, is aimed at smartphone users and will use their devices as a primary banking tool.

Bank Zero will not have physical branches, but will offer attractive savings account deposit rates, low or no banking fees, and will function as a mutual bank.

Jordaan said there is a young, mobile-savvy generation in South Africa that “wants to bank in the same way they use Facebook, WhatsApp, and Instagram”, and these users will be drawn to Bank Zero’s app and its functionality.

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Tech companies will take on banks and insurance providers