According to the Reuters news service, South African operator Telkom has launched a life insurance business that, it has said, will initially sell funeral insurance.
Operator efforts to move into the highly competitive space of financial services are not necessarily surprising. Some 11 million South Africans do not have bank accounts, and operator-led initiatives to offer them lending and other financial services could open up a major market, while also challenging the dominance of traditional and digital banks.
Operators are also seeking to expand their mobile payment apps into online marketplaces to make the most of their network and customer base. And of course this move by Telkom allows the partly state-owned operator to diversify its income streams beyond its fixed-line business.
Underlining the promise of such initiatives, Sibusiso Ngwenya, managing executive for Telkom Financial Services, said (in a joint statement with insurer Guardrisk, which will underwrite the service): “In recent years Telkom has made a strategic shift to digital distribution, which puts it in an ideal position to distribute insurance products using its considerable digital structure and intellectual property.”
Telkom newspaper advertising has claimed that it also plans to offer business loans and launch a digital wallet service for customers to buy products and pay for services via its Yep! app as well as other online transacting platforms.
The drive to build markets among the unbanked will no doubt continue among operators, many of which are uniquely able to reach such markets thanks to high levels of mobile phone penetration.
In South Africa, MTN Group is apparently moving into online shopping payments and microloans, and Vodacom Group has similar plans, while a flurry of recent announcements from across sub-Saharan Africa underlines the evident belief among operators that they can have a stronger role in financial services generally and cashless payments in particular.
