Dominique Collett, head of AlphaCode, a Rand Merchant Investment Holdings organisation aimed at assisting fintech startups believes that existing banks will become utilities by opening up their platforms to new innovators. For Collett, the next frontier is blockchain. However, she says blockchain itself is merely an enabler. More important is what it can do. “If you’re just using it because it’s sexy and cool, then it won’t take off.”
She says that, while cryptocurrencies such as Bitcoin hold significant potential in the area of making anonymous money transfers, the price volatility and the difficulty in using them in day-to-day transactions mean their current usage is limited. There is also uncertainty over the legality of running initial coin offerings, which startups use to raise funding in cryptocurrencies, for products or services. Clear regulation could however help propel the sector forward, she says.
While the regulatory environment has become more stringent since the 2008 global financial crisis, Collett says regulators have become more astute.
She says the Reserve Bank has smart people in the regulatory office who are open to engaging with startups over their fintech solutions. While she admits that fintech is not a big job creator – primarily because it involves using technology to streamline and cut down on things such as branch infrastructure and staff – she points out that it will likely be a driver of new business creation. Above all, she believes that South Africa could become a ‘back office’ for developing fintech for the rest of the world.
Read about another disruptor, Michael Jordaan, here.