Information Technology

5 reasons your busienss needs an it consultant it consultant meeting

5 Reasons Your Business Needs an IT Consultant

By Information Technology

Most businesses utilize internal talents to install and run new technology. The strategy may work at first since most professionals have basic IT training. However, some situations require that a business hires professional IT consultants to handle its technology. Below are the top reasons why a business may require the services of an IT consultant.

1. Saving Costs

Hiring a permanent IT expert is expensive, especially for a startup. IT consultants in Nottingham such as the Custard Group charge for their services based on the amount of work done for a company. A business may not require advanced IT services every month. For instance, a company may only require an expert to install a new system and train the users on how to use it. After the installation, the company can run the system and consult the expert when issues arise.

2. Enhancing Data Security

One of the greatest concerns when adopting new business technology is data security. IT experts can advise a business on the safest technologies to use. The experts can also help businesses identify loopholes in their current systems that may lead to a security breach. Hiring an IT consultant is the right move whenever a business experiences or suspects a data security breach. Internal IT professionals may be too busy managing daily operations to monitor data operations keenly.

3. Professional IT Services

The main advantage of hiring an IT consultant is that a business gets professional services and advice. Business technology is dynamic and IT experts can help a business integrate the latest technologies into its operations. In addition, experts can predict future trends in business technologies and help businesses adjust their operations in line with those trends. Certified IT consultants can analyse the current and future technology needs and help a business to meet those needs.

4. Improving Customer Service and Productivity

Business owners are always looking for new ways to improve customer satisfaction. Technology can help achieve this goal when implemented in the right way. Current technologies enable businesses to communicate with their customers easily and efficiently. The technologies also help employees to improve their productivity and efficiency. IT consultants can advise businesses on the best technologies to adapt to improve their efficiency. The most appropriate technology depends on the nature of business and number of users.

5. Solving a Crisis

Some technical issues or crisis may be too overwhelming for an internal IT department to solve. Sometimes, hackers breach the systems in a way that internal experts cannot reverse or contain the damage. Natural disasters such as floods or fires may affect technology in a way that only experts can resolve. In such cases, a business cannot avoid hiring experts to restore normalcy and prevent a similar crisis in the future.


IT consulting offers multiple benefits to both small and large organizations. Businesses benefit from their wealth of expertise and experience in handling technical tasks. Unfortunately, many business owners wait until they experience a crisis to hire experts. Such an approach may lead to irreversible damage, especially in the case of a security breach. The best approach is to hire consultants regularly to ensure that a business has the best systems in place.

investing in private equity investment

FAQs on investing in private equity and venture capital

By Information Technology

1. What is the difference between private equity and venture capital?
Both private equity (PE) firms and venture capital (VC) firms aim to raise money from investors, with the intention of investing in private companies, increasing the value of these companies and in due course, selling their interest in these companies at a profit. The sale could be to another private firm, or by listing on a stock exchange. However, VC firms invest in early-stage companies, while PE firms generally invest in more mature companies. The VC or PE firm that raises the money, chooses new investments and manages the turnaround of these investments is called the general partner (GP). Investors who commit capital to the GPs are called limited partners (LPs).

2. Who are the typical investors?
In South Africa, LPs generally consist of development finance institutions (DFIs), insurance companies, pension funds, banks, investment holding companies, government agencies and wealthy individuals. The high minimums and sophistication required to manage committed capital have traditionally kept ordinary investors away from investing in PE.In recent years however, governments have become keen promotors of both PE and VC investing, as there are important social returns to be gained from investing in small- and medium-sized businesses. SMEs have been found to play a vital role in job creation, particularly for employees with low skills. In a South African context, the PE investment structure lends itself to creating opportunities for black management and BEE beneficiaries.

As a result of these developments, maximum thresholds for pension funds have been increased. From 2011, South African pension funds have been allowed to invest up to 15% into ‘alternative investments’ – a group that includes private equity funds, hedge funds and other derivative or pooled vehicles. In addition, tax breaks have been introduced for small companies and those who invest in them.

3. Why do investors invest in PE/VC funds?
Possible outperformance: The chief investment premise of investing in a PE or VC firm is to catch the upward growth of a promising business and/or the ‘value-add’ of a talented PE firm. The ‘2018 SAVCA Private Equity Industry Survey’, released in February 2019 by industry body the Southern African Venture Capital and Private Equity Association, reported that the private equity industry delivered a ten-year internal rate of return (IRR) of 11.6% compared with the 10.7% from the JSE All Share Total Return Index over the same period.According to CEO of SAVCA, Tanya van Lill, over the past two years the average PE IRR has fluctuated between 16% and 11%. Globally, the top PE firms traditionally offer returns higher than 20%.

She commented that PE is cyclical in nature and it takes a few months from the initial investment for the PE firm to unlock the value through bringing expertise such as people, processes, new products or services, access to markets and other relevant innovation.

Internationally, some PE/ VC returns, relative to public investments, have been more compelling. The ‘Asia-Pacific Private Equity Report 2019’, published by management consultancy firm Bain and Co, reported that the pooled IRR for Asia-Pacific-focused funds with a five-year investment horizon was 14%, compared with 8% for Asia-Pacific public markets. The IRR for a ten-year investment horizon was 11% versus 6% for public markets.

The liquidity premium: The PE industry is particularly attractive to investors who have a long-term horizon. By sacrificing liquidity, an investor gives a PE manager time to make meaningful changes or for a new idea to gain traction, which has a greater chance of yielding greater returns over time. On the other hand, investors can be locked into loss-making investments. There is an old joke that a PE relationship is generally longer than the average marriage in the United States, which is eight years.

Uncorrelated returns: PE returns tend to be uncorrelated to listed equity returns. This makes them popular with institutional investors looking for diversification, reduced portfolio risk and lower portfolio volatility. Both PE and public equities are exposed to the same broad macro-economic conditions but PE/VC valuation is not affected by the same investor sentiment and stock price volatility – which is a normal feature of publicly-traded markets. The investment horizon of PE investment is well suited to the long-term horizon of a pension fund.

Alignment: In private equity funds, the tradition of a general partner commitment ensures that there is full alignment between the interests of the PE or VC firm, the management team and the LPs. Everyone has skin in the game.

4. What are the disadvantages of investing in private equity?
Investing in PE and VC funds can be risky.Investors essentially agree to invest large sums of money, for long periods, for no guaranteed outcomes, with no regulatory protection other than the law of contract.

While clearly target firms are identified due to their potential, relative to listed companies, they are higher on the risk curve, either because they are either small with untested ideas or because they offer turnaround potential. Turnarounds can sometimes be longer and more difficult than planned.

Returns in PE investments are notoriously uneven; there is a significant return disparity between top-performing private equity firms versus industry laggards. Manager selection is a key determinant of success in PE investing, and unlike most investing, past performance and a strong track record is a stronger indicator of future performance, a proud hallmark of PE.

Like many other investments, timing of the entry and exit points is crucial to investment success. Big winners and losers tend to emerge during periods of turbulence and volatility. While most PE investments have a pre-planned exit arrangement, these plans can go awry. In difficult economic environments, PE firms tend to defer planned listings until investor appetite is deemed ready, further locking in LP money.

Disclaimer: Please note that this article should not be construed as solicitation, advertising or sale in any shape or form. Nor is it advice of any description. It is an information-only article of general interest that aims to describe the risks of investing in PE and VC opportunities.

Original article found here.

it consulting technology consultant demonstration

Why IT Consulting Is Important

By Information Technology

IT consulting can play a vital role in your business

By definition, IT consulting involves the management, implementation, deployment and administration of the IT Environment. Taking on an advisory role, IT consulting assists organisations with optimising their IT environment and assist in achieving business goals and objectives.

IT consulting can be an internal operation, however, by outsourcing the service there is the added benefit of the objective insights of the service provider.

By understanding what IT consulting is and how it fits into the business, you may be asking yourself how important IT consulting really is within your IT environment.

The Importance of IT Consulting
The answer to how important IT consulting really is, is a simple one, especially when considering the integrated way in which IT assists in achieving business objectives and a well-run IT environment is often essential to the running of a business.

Downtime as a result of “technical issues” where your IT team is left to face unexpected issues which may take hours or even days to resolve has the potential to impact the productivity of staff and their abilities to meet business objectives greatly.

If carried out correctly, IT consulting plays a pivotal role in ensuring that this isn’t the case. Not only avoiding issues that are already apparent within the IT environment but assisting in the development of strategies to avoid future challenges.

The Role of Triple4
IT Consulting is in our DNA, and we take a specialised approach to our client’s IT. By developing bespoke strategies, tailored to the pain points the client is experiencing within their IT environment we are able to not only offer analysis on all system architecture and infrastructure but assist with insight into the environment as a complete entity.

Through our hands-on, bespoke and tailored insight into your IT environment, we are also able to provide expert strategic business analysis, even developing recovery strategies for your information and ensuring all elements of your IT environment are working cohesively towards the common goal of meeting the business objectives.

In doing this we acknowledge the understanding that people are only as effective as the processes they follow, and likewise, processes are only as effective as their purpose. Our consultative approach to the IT environment ensures that neither is without purpose or direction.

–  by Business Essentials

customer engagement client showing customer document

Is Customer Engagement the new CCM professional’s challenge?

By Information Technology

Customer Communication Management (CCM) has long been about sending wads of documents to customers (i.e. also called output management). These documents are statements, invoices, contracts, direct mailings, etc. New technologies like mobile services, social networks, big data or cloud services have changed today’s customer expectations. People, I mean existing customers as opposed to prospects, are now looking to engage in real-time with enterprise and brands. They want a continuous dialogue, access to personalised advice, peer reviews and immediate answers from experts. CCM is therefore no longer about complying with regulations or “telling” customers but actively engaging with them, in an open and bold way instead.

The CCM Maturity Model proposed by Quadient outlines how enterprises manage to move from “Print” to “Customer Engagement” in 4 key stages. This journey is as follows:

  • Print to e-delivery
  • CCM platforms consolidation
  • Online presentment
  • Customer engagement
Revealing Discussion with 7 Customer Experience Pioneers GMC Software

In most enterprises, the first 2 stages are often managed by IT departments as they are in control of core systems and data storage. They design documents while managing and operating output management solutions. Marketing or line of business departments, such as claims or retail banking departments, send hundreds of document change requests to IT.

They may ask to update a line in a paragraph if a regulation has changed, a signature if a supervisor has been newly appointed or a logo if branding requires. This process tends to be time-consuming as IT needs to prioritise these requests while maintaining legacy systems at the same time.

IT is, therefore, looking for solutions that are easy to use in order to increase productivity. They are consolidating systems to centralise and to share work to reduce CCM management costs. There are four lines of improvements to reduce costs: Data extraction, data transformation, digital assets management and layouts.

Marketing or line of business departments drive work in the last 2 stages as they see a surge in customer demand. Online presentment & customer engagement drive traffic to digital assets like websites, mobile websites or mobile applications.

Customers have instant access to personal details through using online services. They can perform actions such as payments, money transfers, order new products, subscribe to services, etc. These capabilities define a new kind of customer experience that differentiates enterprises from traditional competition and “neo-competition” like Fintechs or Insurtechs.

One of the reasons marketing or line of business departments are driving these stages is that they want to drive new revenue through delivering and optimising customer experience.

Print to e-delivery
This is the first stage when tier 1 enterprises want to cut customer communication costs as they spend millions of dollars annually to send documents to their customers. A recent discussion with several large print service providers in North America suggested this cost be between $600 to $800 dollars per 1000 posted mail pieces. It would, therefore, cost between $72M to $96M annually to an enterprise posting one monthly statement to its 10 million customers. Migrating from Print to e-delivery reducing this expense by a huge amount. Learn more about how Quadient helped BMO (Bank of Montreal) to cut costs.

Is it, therefore, a no-brainer to switch from print to e-delivery?

If figures suggest massive financial gains to make that switch, it remains important to manage change and to equally explain the benefits it will bring. As an example, I met with a large insurance firm in the UK that took more than 18 months to send life insurance contracts as PDF attachments in emails. They explained that it took time to reach internal consensus as some people argued that the life insurance product was the actual physical document itself. They said that not sending this document would diminish the value of the service, affect brand recognition and damage sales in the medium to long term. Then, once agreement to move from sending a printed version to e-delivery was reached, it took months to implement the solution as IT was busy with other important requests that led to impact 3 legacy systems.

Another Quadient client explained that they only achieved to migrate 50% of their customers based on posted physical mail to PDF delivery. They explained that the remaining 50% had either refused to receive PDFs or did not provide the bank with a digital address (i.e. email address or a website personal account).

CCM platforms consolidation
As enterprises develop and/or acquire other companies, they often have several CCM platforms to manage. Operating and maintaining several CCM platforms come at a high price for several reasons:

  • Support of different technologies
  • Maintain people skills to support different platforms
  • Pay maintenance for each solution
  • Maintain different customer communication portfolio repositories with consistency risks
  • Inconsistent customer experience on different channels

In this context, Enterprises are often struggling to maintain consistent and up-to-date customer communications. They explain the difficulties to keep up with several vendors upgrading their software version every 20 to 36 months on average (i.e. average vendor new solution General Availability -GA- lag in the CCM industry).

Each new release requires migration work and testing. It generally freezes change requests for months while IT departments are upgrading to the latest software version.

A CCM expert in Australia once reported that each communication (i.e. document composition) template’s true cost was between $5000 (USD) and $7000 (USD). He also explained that sharing resources, access to data, and operating work from one single CCM platform instead of several could save up to 40% in operational expenses.

A tier 1 enterprise implementing a CCM project would typically have to manage 250 to 500 templates or more. Having to migrate these templates is expensive and rationalising CCM vendors provides a quick return on investment.

At Quadient, we target to deliver positive ROI after only a few months. To achieve this objective, enterprises would migrate their entire customer communication portfolio under Quadient Inspire covering all their use cases with one solution only. Quadient provides easy migration paths for supporting other CCM solutions migrating or upgrading Quadient software version.

In most countries, enterprises run CCM RFPs to rationalise CCM costs. They often consider two aspects:

  • CCM platforms consolidation
  • Digital content enablement or in other terms “Online presentment” and “Customer Engagement”.

Online presentment
Online presentment is the next logical phase in the CCM maturity model. Enterprises are looking for developing personalised content directly accessible from websites or in mobile applications. In the same way, customers were receiving personalised documents by post, they are now accessing personal information from these digital channels.

Websites and mobile applications propose all sorts of personalised screens accessible to customers once they have logged into their personal account. These screens show prefilled forms, account statements, invoices, terms and conditions, policies, etc. To the exception of a few screens such as account balance checks or some forms, personalised content is not delivered in an optimised way. For instance, a website would link to PDF documents that are hardly readable on smartphones.

One of the common reasons for not being able to deliver the full scope of personalised content on websites and in mobile applications is the cost of developing and maintaining personalised content on digital channels. This content is often developed manually by web or mobile application developers. 90% of customer custom-made mobile applications are developed using iOS and Android SDK solutions, according to Gartner. It is, therefore, an expensive process. Quadient considers the cost of personalised content management in websites and mobile applications represents up to 70% of the overall cost of running these channels. Quadient brings solutions to ease personalised content management across all communication channels including digital channels. A recent Quadient internal study demonstrated that tier 1 enterprises spend between 5 to 10 Million USD annually on internal staff or on external resources to manage personalised content across all communication channels including digital channels.

Customer engagement
Customer engagement is the ultimate phase in customer communication management. This phase targets existing customers as opposed to prospects. Better customer engagement drives new revenue through upselling and cross-selling products and services. New revenue generation motivates marketing and line of business departments to take ownership of this space. They are looking for optimising customer experience across the entire customer journey. They want to implement consistent and easy interactions across all channels.

A few commonly agreed industry figures outline the challenge: Whereas about 80% of customers will discover new products and services from a website, 70% of them will use their mobile phone during the engagement process and more than 60% will complete it after meeting or talking to a sale representative. This illustrates the importance of providing personalised, up-to-date and cross-channel content to customers. It also shows that each touch point is as much a business opportunity as a risk if not delivering the correct message.

There are new ways to engage with customers as technology enables new capabilities while lesser and lesser people are going to bricks-and-mortar branches and shops to interact with enterprises.

A new trend shows that enterprises are developing solutions to mobilise their field agents. Using mobile devices such as tablets working online and offline, they are mobilising their workforce while reducing operational costs associated with a large number of branches to manage. Mobilising workforce implies digitising business processes and developing mobile solutions. However, IT departments have large amounts of business requests to manage and they often have to manage mobile applications skills shortage. A few figures illustrate the issue:

  • According to an Outsystems 2017 Research Report (IT is Overwhelmed), 37% of enterprises face mobile application development skills shortage
  • Forrester states that the true two-year cost of building and maintaining a mobile application is 3 times the initial cost of building the application
  • A VDC Research survey highlights how 80% of cross-selling take over 3 months to develop while 40% over 6 months

Quadient provides solutions for redefining the customer experience through omnichannel communication. It includes designing print documents, emailing PDF, consolidating CCM platforms plus enabling true digital customer communications in mobile applications and websites. It also includes building mobile applications from scratch to mobilise the workforce.

With artificial intelligence (AI) and bots coming up, on customer engagement is still at its infancy stage. In a bit more than one decade we will likely be talking to machines instead of human beings without even noticing it – but that is another topic that I already touch upon in my Banking Legacy Systems Interrupted – the Disruption of AI, Blockchain plus Robotics blog post.


Quadient partners with Beehive Online Solutions

By Information Technology, Partnership

Quadient partners with Beehive to spread the customer experience revolution across Africa

Financial Services specialist will sell and support Quadient products across the continent, helping customers take the next step beyond customer communications

London, 05/02/2019: Quadient, the award-winning leader in Customer Communications Management (CCM), has announced that Beehive Online Solutions has become its first partner in South Africa. Building on its established experience supporting the financial, telecommunications and retail sectors across the continent, Beehive will use Quadient’s software to provide solutions including omnichannel customer communications and mobile application development; and support organisations in moving beyond simple customer communication and towards delivering a complete customer experience.

“Our focus is on far more than just customer communication,” said Mike Davies, Vice President Business Partners at Quadient. “Our aim is to enable a conversation between businesses and their customers, over any channel. This means offering a complete customer experience, from first contact to a satisfying resolution. Africa is an exciting market for us, and businesses there are already making use of both existing and new technology in imaginative ways to address the unique challenges their customers face. As a result, we’re delighted to enter into this partnership with Beehive, and see them as an extension of Quadient in Africa: acting as a single source for businesses across the continent to take advantage of our customer experience technology and expertise.”

Beehive has identified a step change in African businesses: as they begin to move from offering customer communications to understanding the need for a complete customer experience, where every step of a customer journey is mapped, understood and ultimately satisfied.

Beginning as a Quadient Silver Business Partner, Beehive is already engaged with customers in South Africa, Botswana and Namibia who are keen to understand how to make the next step in offering a richer customer experience. This is especially important as many customers are beginning to expect more from businesses, and are at risk of leaving for more progressive companies that can provide the experience they want. Beehive aims to offer local support to these businesses, helping them meet the challenges of the modern African economy with on-the-ground knowledge.

“There is no denying the importance of having local experience and understanding,” said Reg Bath, Executive Director, Beehive Online Solutions. “We are pleased to not only act as Quadient’s local representatives, but more importantly support our customers through what is a highly transformative time. For many African businesses, understanding and making the leap from legacy customer communications to a digital customer experience will be the difference between success and failure. Our customers aim high, and want their solutions to deliver the maximum possible value – even in areas the developers didn’t even consider. By partnering with Quadient, we are confident that we have technology that will give our customers what they need and help them forge ahead in the new customer experience-focused era.”

About Quadient Plc
Quadient® combines the capabilities of three Neopost sister companies, GMC Software, Human Inference and Satori Software into one technology portfolio of solutions designed to improve customer experience by improving the customer journey across print, digital and social channels. Our solutions bring together and activate the entire organization in the name of customer experience, through better collaboration and visibility into the customer journey.

For further information, contact our press office:
Stephanie Smalberger | +27 78 323 6882

Consumers buying behaviours typing computer

Consumers buying behaviours

By Information Technology

Internet technology has prompted significant changes in many aspects of human life and society as well as in shopping culture. An important phenomenon, surrounding the human life as a continuum, is shopping through the Internet or e-commerce. Shopping through the Internet has interconnections with many disciplines such as law, economics, psychology, and marketing. Many academicians, researching in various disciplines, studied this issue, which is a dynamic field of study. However, the case is this, we can say that the studies about the reasons for shopping through Internet by the consumers are very new and few in number. Shopping through the Internet involves social, technological, economical, behavioural, and educational dimensions. There are many prior factors behind shopping through the Internet by the consumers.

According to Nielson research (2013) one third of the worlds population is online , increase of 528% over the past 10 years. While Internet penetration rates vary by geographic region; North America (79%), Australia/Oceania (68%), Europe (61%), Latin America (40%), Middle East (36%), Asia (26%), and Africa (14%), these rates continue to climb steadily. The Internet is the primary source for information research and has significantly affected the dynamics of business, both in terms of innovation and increased sales. The U.S. Census Bureau e-stats Report released May 27, 2010, revealed that U.S. retail e-commerce sales were $142 billion in 2008, a gain of 3.3% from the previous year. For the first three quarters of 2011, U.S. retail e-commerce sales amounted to $135.9 billion. Marketers and researchers have examined the behavior of online consumers. In particular, how do demographics and psychographics play a part the pre-purchase information search? (Zayer & Coleman, 2012) Connected devices, such as computers, mobile phones, and tablets have become a way of life for many. But customers are digitally engaged to varying degrees, depending on the products they buy. It is important to understand the behavior of consumers toward online shopping. Therefore, online shopping environments are playing an increasing role in the relationship between marketers and their consumers (Hsieh & Liao, 2011).

At TCG Financial Services we continue to ensure we remain abreast of consumer behaviour when developing new products ensuring we embrace our new age customers in a new age way.

cape town location estuaries garden

New Cape Town Location

By Information Technology

Transformation Capital Group is pleased to announce that we have formally opened offices in Cape Town. The new address in Century City is well positioned and central to the new city business hub.

All our business units will have a presence in the Cape which bodes well for customers in the Western and Eastern Cape and the expanding client base.

Please feel free to stop by and say hello! Our address is:

Suite 2, Ground Floor, Ibis House
The Estuaries, Oxbow Crescent
Century City, Cape Town
Western Cape
South Africa

Phone: 087 135 4100
Fax: 086 457 6642
Email: info@tcg-sa.com

millennials financial advisors people sitting table

Engaging with millennials

By Information Technology

Millennials: Should Financial Advisors Embrace or Avoid Them?

Who are Millennials: the generation of people in their 20s and 30s — are a population of folks who have a lot of positive attributes, namely immense creativity and a thirst to make the world around them a better place. As a full disclaimer, I am a millennial, but I wouldn’t necessarily recommend that advisors work with us. At least, perhaps not yet.

Millennials have a number of traits that don’t make them ideal clients for a financial advisor who is used to working with established clients who easily adhere to financial advice. Here are some examples: (For related reading, see: Money Habits of the Millennials.)

1. Millennials Are Entrepreneurial
While an entrepreneurial spirit isn’t necessarily a bad thing, it can certainly mean that the client has a variable income. One month could see great revenue returns while another, not so much. Generally, innovation is one of millennials’ greatest strengths, but in terms of being an ideal client for an advisor, it could be a while before he or she becomes wealthy or his or her business becomes profitable.

Because millennials are more entrepreneurial, they are also typically interested in investing in other entrepreneurs and new or upcoming technologies. Advisors who have been in business for quite some time might not be able to relate to these goals or might not see these investments — which are definitely considered risky — as safe or conservative choices, which can cause some head-butting.

2. Millennials Are Independent
Although many people like to give millennials a hard time for being spoiled, the reality is that they’re fiercely independent, especially when it comes to pursuing goals and staying true to their own beliefs. For that reason, it can be difficult for millennials to follow specific directions that a financial advisor might have. They might have their own ideas of how they want their retirement to look and how they want to get there. Even if they seek out a particular advisor for their advice, if they don’t like the advice or don’t think it’s sound, they generally will not heed it.

3. Millennials Are Impatient, Tech-Dependent
Growing up with computers and smart phones means that millennials like to have information and results immediately. We live in the land of same-day shipping. It can be difficult to envision the long-term benefits of financial planning and investing. Not only that, but millennials prefer to conduct most of their communication over the Internet and not necessarily in person. Because of this, it can be difficult to develop a genuine relationship with them because they prefer to interact over their devices and not over the desk in your office.

4. Millennials Have Significant Debt
Many millennials suffer the burden of debilitating student loan debt. Because the average student now graduates with around $35,000 worth of student loan debt, it might take millennials significant time to pay off their debt and slowly build wealth. While financial advisors should be willing to help all types of people with their finances — not just the wealthy — it might be difficult for millennials to become profitable clients, at least at first.

The Bottom Line
Millennials are a unique population. They hold a lot of promise and are known for their ingenuity and creativity. However, because of their large student loan debt, their tendency to want to conduct their life in their own way, and their penchant for wanting quick results, they might not necessarily be the best (or easiest) clients for financial advisors under their current operating practices. Eventually, though, advisors who want to remain in business over the coming decades will have to learn how to work with millennials as they get older and as they need more help with their finances. Step one? Embracing the technology and communication methods they are using now and will be be using in the near future. (For related reading, see: A Financial Advisor’s Guide to Millennial Clients.)

TCG through its financial services arm will be launching a suite of products and services under the brand “4me” early in 2016. The 4me suite of product are financial services related which address life’s choices  – With Millennials in mind – the products are new age, aimed at new age consumers , delivered in a new age way. see more at-  www.4me.co.za.

south africa insurers graph lines

SA’s insurers

By Information Technology

SA’s insurers post solid results amidst challenging market conditions: PwC Analysis

South Africa’s major insurers posted a solid financial performance for the year ended 31 December 2014. The results are indicative of continued growth initiatives and operational improvement in the industry, despite tough market conditions and economic uncertainty.

Dewald van den Berg, PwC Director, Financial Services Division, says: “The outlook for the insurance industry remains positive despite difficult operating conditions experienced in the past year, heightened by labour disputes and inflationary pressures on consumers. In addition, insurers have to contend with a host of regulatory changes, as well as proposed amendments to tax legislation.

“Most insurers have made significant investment in preparing for the implementation of the new solvency regime, with the Solvency Assessment and Management (SAM) comprehensive parallel run currently underway, and ensuring business practices are ready for treating customers fairly (TCF) and the retail distribution review (RDR).”

“Client centricity also remains top of the agenda for many insurers. Companies are seeking opportunities and new initiatives to better understand the needs of their clients, in order to provide fit-for-purpose products,” adds van den Berg.

These are some of the highlights of the fourth edition of PwC’s Insurance Industry Analysis. The survey analyses the results of South Africa’s major insurers for the year ended 31 December 2014. The survey identifies common trends, issues and challenges that are shaping the industry, as well as trends in the rest of Africa.

Overview of the long-term insurance sector

The financial results of the top five players (Discovery, Liberty, MMI, Old Mutual and Sanlam) were included in the survey.

These long-term insurers recorded combined group IFRS earnings of R28.4 billion, up 17% on 2013. Victor Muguto, PwC Long-Term Insurance Leader for Africa, says: “The JSE All Share Index closed 7.6% higher than in 2013. The combined invested assets of the long-term insurers grew by 10.4% from R1.77 trillion in 2013 to R1.95 trillion. Total investment income earned amounted to R186.7 billion representing a return on average investments of 10%. This is reflective of subdued equity market performance in 2014 compared to 2013.”

Insurers had to deal with the ongoing volatility in interest rates, particularly in the second half of the year, and emerging market currency fluctuations. The combined group embedded value earnings were close to those of the 2013 levels (2014: R39.4m; 2013: R39.2m). “This result reflects the robust operating performances by most South African operations in 2014,” adds Muguto.

Despite a challenging environment, the combined new business volumes reflect solid results. The 20% year-on-year increase is well in excess of CPI of 5.3%.

However, the competitive environment took its toll on the embedded value profit margins achieved on the new business written. The value of new business (VNB) margin of 2.9% reduced by 7% compared to 2013. The combination of strong growth in new business written with a marginal decrease in margins resulted in the overall VNB written increasing by 12%.

The industry as a whole managed actual expenses within the range of the projected actuarial assumptions set at the end of 2013. As in the prior year, insurers also profited from better-than-expected mortality and morbidity experience, which contributed about 6% to 2014 embedded value earnings.

The VNB for all the insurers is more sensitive to changes in lapse rates. “This may be due to most insurers writing age-rated, increasing premium business compared to level-premium policies written in the past,” explains Muguto. It is not surprising that insurers are also paying more attention to consumerism. Client centricity is a common theme among most companies.

Acquisition costs incurred by the businesses of the long-term insurers also increased by 17% to R16.9 billion in 2014. The Financial Services Board (FSB) is in the process of implementing RDR to achieve better outcomes for insurance customers. It is expected that the key proposals for RDR will support the broader objectives of ensuring that distribution models support the TCF outcomes and are applied consistently across all financial subsectors.

Overview of the short-term insurance sector

The results of the following four short-term insurance companies were considered in the survey: Mutual & Federal, OUTsurance Holdings, Santam and Zurich Insurance Company South Africa.

Van den Berg says: “After experiencing a difficult year in 2013, insurance companies improved their performance considerably in 2014. One of the key factors contributing to the much-improved results has been the absence of major catastrophe events. The only catastrophe event of note during the 2014 year related to the earthquake felt in the Gauteng region. Catastrophe events of the past few years have led insurers to restructure and optimise their reinsurance arrangements.

Companies’ claims ratios have improved significantly (decreasing from 68% in 2013 to 63% in 2014). The combined IFRS earning for the year of R3.1 billion increased by 23% on 2013. This was largely due to the improved underwriting margins. The underwriting margins increased from 4.6% to 7.6% in 2014 as a result of the reduced claims experience.

Gross written premiums increased by 11% from 2013 to R50.2 billion in 2014. This was mainly due to insurers continuing to effect selective rate increases in order to mitigate rising insurance costs as well as to counter the effects of the previous lean years.
Growth across the rest of the African continent.

Insurers are increasingly looking for growth opportunities outside of South Africa. Insurers view Africa as a growth market, organically as well as through mergers and acquisitions.

The contribution to the VNB for life insurers from other African countries has increased significantly over the past several years. Overall, the VNB of the rest of African business as a percentage of the value of new business for South Africa ranged between 3% to 22% for the long-term insurers, and 10% on a combined basis.

Looking forward

Muguto concludes: “The industry realises that it needs to proactively look for new, innovative opportunities to facilitate growth and deliver strong financial performance. The approaches of the various insurers range from new alternative lines of business to achieve growth, geographical diversification, driving efficiencies, cost-cutting and optimisation of reinsurance arrangements.”