The drive to digital in South Africa – Old Mutual 22 November 2021

Vuyo Mpako, Chief Digital and Data Officer at Old Mutual, discusses the multitude of ways that digital is embedded throughout their business.                                                    
What value has digital generated for Old Mutual clients and shareholders?
We essentially divide the value generated by digital into two groups: the business and clients. First, let’s run through the value digital generates on the business side of the ledger. In terms of sales and first client interactions, more than 50% of direct sales at Old Mutual start off digitally (i.e. through digital marketing capabilities such as Facebook and Google, etc.). Three years ago, most of these direct sales would have been generated through expensive outbound campaigns.
We have experienced tremendous growth in the mass and foundation space (double digit growth). 30% of these interactions are now digital. Mass segments remain underserved – these segments do not have many choices, whereas the affluent segment is overserved with a lot of choices. Solutions like WhatsApp and USSD have enabled a lot of change in the way the mass segment interacts with financial services. Before they would often have to travel a distance to get to a physical branch to be served. That has changed with digital services. WhatsApp has been the standout enabler in the mass segment. OM is also running campaigns to encourage customers through our rewards proposition (1million rewards customers as of March 2020)

30% of funeral claims are submitted digitally (WhatsApp and USSD) - these claims would’ve traditionally gone through call centers and branches. It has sped up the process. Whereas it took 25 minutes in-branch, we now have a 5-6-minute online processing time. Money can be paid into beneficiary accounts within 4 hours.
Digital has also resulted in improvements in our advisory capabilities. Advisors are able to put more relevant solutions in front of clients using data-driven insights which improves success of sales and penetration. New customer insights are being generated thanks to advanced models and data lakes. 
Realizing the gains from digital hasn’t been easy. Most of the digital improvement (value generated) sits in existing core lines of business. Most digital businesses don’t have P&L accounts which makes it difficult to extract profits that are directly attributable to ‘digital’. Defining appropriate leading measures for digital impact is important from a shareholder perspective because the lagging measures come out in the profit and loss lines of the different lines of business.

For clients, the benefits are numerous. There are lower barriers to access, faster turn-around times, and tailored products. One of the measures that has been deliberately tracked by Old Mutual is “Digital adoption tracking” (active monthly users on the app). The results have been very encouraging. We had 70,000 monthly active digital users in SA in December 2017 and now in March 2021 we had 530,000+ monthly users in SA. We launched a new app in May 2020. And at the end of March 2021 we had more than 1 million rewards customers.
How have you driven your digital agenda and the relative investment in digital vs. other areas?   

The tech and digital agenda is driven by delivering to customers, intermediaries, employees and shareholders, rather than Tech for Tech. At Old Mutual we do not have a “Digital/Tech Agenda”; it is a “Customer and Advisor Agenda.” Everything is driven from a client needs and user experience perspective, with the focus remaining on solving real business and client problems. 

Digital has become an enabler to solve more client problems, but there it not necessarily a “Tech Agenda.” We avoid tech-driven transformation (e.g. metrics such as always-on, modular, etc. can be misleading from a client needs/ experience, UI/UX perspective). We found it difficult to roll out digital transformation in the traditional financial services business. So, we adopted a “roll-in” approach, which (1) centralizes capabilities across 13 markets on the African Continent and (2) scales these capabilities by “absorbing” business unit projects into the digital functions 

On a scale of 1-5, how do you rate the value generated by digital?

I would give it 4/5 rating (based on the low base in 2017). Three years ago there were no digital capabilities. Today most capabilities are in the cloud – even in other African countries – which is a huge improvement from three years ago.
How much have you invested in Digital?
The level of investment is not a hurdle at the moment (R500 million across all markets and businesses). Instead, the real challenge is to move from funding projects to funding dedicated capacity and changing people and processes. 

 How much more can digital contribute to the Financial Services industry going forward?

The FS industry is still very traditional and in the early stages of true digital adoption. The industry has struggled to grow in the past 5 years and requires serious digital disruption to remain relevant (i.e. beyond making the call center more productive and reducing costs). Regulation cannot be blamed for the lack of disruption; the disruption should happen internally.   

Legacy technology, people and processes remain an obstacle to navigate in fostering true digital adoption. Specifically, cultural alignment, ways of working, organizational design and scaling methods are the main hurdles
What are the key threats of digital going forward and how prepared are you to manage them?

Telecoms are becoming large FS players in the market and especially in Africa. Ultimately, the companies that will thrive in the future will build and drive solutions that create value for customers and shareholders. The question is whether banks can continue to do this long into the future. 

Want to know more about digital transformation in South Africa? Download your free copy of Efma-Oliver Wyman paper Digitizing financial services in South Africa

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