Michael Bowren and Chris Ball have taken on a mammoth task. They’re building an online platform to enable consumers to compare financial products – including bank accounts, loans and credit cards – offered by South Africa’s lenders.
Having recognised that many South Africans are over-indebted and don’t understand financial products, Bowren and Ball launched Fincheck in November, a financial and loan comparison website with the strapline ‘better financial decisions’.
For now, Fincheck predominantly offers comparisons between the amounts, terms and interest charges on various loan products. It has contracts in place with roughly 13 credit providers, and growing, giving it access to information that is not always easily accessible online.
“Our goal is to have all the banks and lenders in the country. It must be a platform where you can find all loans in the country,” Bowren, CEO and co-founder, tells Moneyweb. “It’s a harder sell to the bigger companies”, he says, which have the marketing budgets to afford Google ads and aren’t keen on the competition.
Smaller players, on the other hand, are attracted by Fincheck’s positive search engine optimisation (SEO) ranking, which boosts traffic to their sites.
The ‘fintech’ startup plans to release another 18 to 20 products in the next month or two and would like to include comparison tools for saving accounts, cheque accounts and forex accounts, Bowren says.
The comparison of insurance products is in the pipeline too, despite the likes of Hippo, PriceCheck and Click n Compare all jostling for position in this market. “We’re not scared of competition at all, it just means it’s harder to get a share of the market,” Bowren comments.
Built for mobile
With no affiliations to any financial services providers, the company’s revenue is largely commission-based: it gets paid by the credit provider for each lead generated on a financial product.
Fincheck is not keen to carry adverts on its site, even though interested parties have approached it. Why forego the additional income? Because its website has to be uncluttered and easy to navigate on a mobile phone, explains Bowren, since this is how most South Africans access the internet.
Declining to give specific figures on the site’s monthly traffic, he says numbers are growing at more than 50% per month and should snowball as more products are added. If it weren’t investing in the rollout of new products, Fincheck could be profitable today, Bowren maintains.
Broadly following the model of London-listed MoneySuperMarket, a price comparison website specialising in financial services, the business concept for Fincheck was initiated at the beginning of 2015.
Twenty-something’s, Bowren and Ball have been friends since schooldays and have toyed with a number of ideas over the years. “This one kind of stuck,” says Bowren.
After developing the concept and determining that there was sufficient demand for it, he left his job as a junior engineer at WBHO to give full-time commitment to Fincheck.
“You go into it knowing what it could be, but you don’t know how it will turn out and so you’ve got to take that chance, relying on some stats, a bit of a gut feel and what you want to do as an individual. Hopefully it works out,” Bowren says.
Testing the concept
At this stage, the site, which makes use of only NCR-registered providers, offers a helpful snapshot of service fees and interest charges applicable on loans, as well as debt consolidation costs and a business banking account comparison.
Admittedly still a fledgling business, Fincheck would do well to offer a more tailored and transparent comparison of the fees and charges associated with specific loan amounts over specific terms. For instance, the cost in rand terms associated with a R10 000 loan over R12 months – or at least a means of calculating it on the website. While individual risk profiling at the credit granting stage does impact on charges, a tool such as this would be helpful.
Still, the site is easy to navigate and if MoneySuperMarket’s profits are anything to go by – for the six months to June 2015 they climbed 28% on the prior year to £50.8 million (roughly R1 billion at the time) – Fincheck is undoubtedly on the right track.
While price comparison websites (PCW) risk placing upward pressure on prices – because companies pass aggregator fees on to their customers, as this study from the University of Warwick finds – they are no doubt a helpful source of information.
When it comes to financial products in particular, non-profit policy body Resolution Foundation finds that, at least with low-income consumers in the UK, comparison sites help customers make informed choices while boosting their confidence in dealing with the financial services industry.