ITC 2019 as mixer, and a mixed bag of InsurTech topics

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’. Just as swallows return to Capistrano, the insurance innovation world returns to Las Vegas for its InsureTech (sic) Connect conference, this year attended by 7000.  Well, if Jay […]

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Hybrid Security Tokens – What are they and What are they not?

NEWS  – Crypto and Security Token Exchange INX to Raise $130 Million in Landmark IPO: INX Limited, a crypto exchange startup, plans to raise up to $129.5 million through an IPO, in the first security token sale registered with the U.S. Securities and Exchange Commission. No, that’s not a typo for “ICO,” the initial coin offerings […]

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Jumia – Africa’s Alibaba and its IPO roller coaster

Feels like a long time since I posted an article on Africa. Every time I research to write about the African Fintech segment, I invariably stumble upon a story that leaves me with one emotion – hope. The youngest continent of the world is all about hope.

AFRICAEcommerce

Africa is a “mobile-first” market, where consumers access the internet from their mobile first. Sub-Saharan Africa has the highest per-capita mobile money accounts in the world. Financial Inclusion has been achieved at scale, that the number of mobile money accounts have gone past bank accounts. Most of the numbers are humble when compared to the China Juggernaut. But the opportunity to scale is immense with over 1 Billion consumers gradually moving to cities by 2050.

One African firm that has captured headlines in recent times is Jumia. In short, Jumia is said to be Africa’s Amazon and is the first African firm to list on the NYSE. They listed on NYSE on the 12th April this year, and saw their share price close 75% higher at close of business. The shares rose from $14.50 at listing to $46.99 in early May and was one of the top 10 performers of IPO’d shares of 2019. So why is an e-commerce player relevant to Fintech?

That seems to be the trend in emerging markets, as firms use e-commerce and lifestyle business models for growth, and throw in Fintech services as value add. Fintech also helps the stickiness and improves margins.

Jumia have launched their marketplace for 14 African markets. As per their SEC filing, Jumia they talk about their payments platform JumiaPay.

“We have also developed our own payment service, JumiaPay, in order to offer our consumers a safe, fast and easy payment solution, whether they shop using a desktop computer or a mobile device. JumiaPay is currently available in four markets”

For this very reason, I am not sure if they should be instead tagged “Africa’s Alibaba”. They also are catering to customers who prefer cash with on-delivery transactions. They had 81 thousand active sellers as of December 31, 2018 and over 29.5 million product listings on the marketplace.

Considering ~450 Million internet users in the continent, there is a huge market to conquer. Jumia claim they are currently the largest marketplace platform in the continent.

They have a competitor in DHL, who have launched an e-commerce platform. DHL’s logistics business has served as a catalyst of growth. They have launched in 20 African countries and are seen as formidable competition to Jumia. Alibaba are also dipping their toes into the African market, but haven’t yet taken a plunge like DHL.

The Jumia IPO day wasn’t just a big day for the firm, but should be viewed as a breakthrough for the continent’s business community, as they join main stream markets.

However, the IPO was shortly followed by a claim by Citron Research that alleged that “the firm was Fraudulent”, and their “shares were worthless”.

Jumia’s shares hit $24 in early May following these allegations. Citron research have a reputation for reports claiming such frauds in the past. Their strategy was to short the stocks and make quick bucks from the price action post the report. This has got them (Citron) into trouble in the past too.

An analyst in Citi came to Jumia’s defence with a detailed analysis of Citron’s claims. The gist of the defence was that Citron’s claims were baseless, and Jumia just had to respond to a couple of several claims with a bit more detailed disclosure.

  • Citi highlighted that it was not uncommon for firms to update their usage statistics before a key financing round
  • Citi suggested that Jumia should highlight the details of their churn, with plans to address it.
  • Several allegations of Fraud by Citron were pushed back by Citi, citing that Jumia had disclosed fraudulent employee activities in its SEC filing. Citron chose to interpret these disclosed incidents as fraud that the entire company and its management were involved in.
  • Several other points on Citron’s report on the growth of the firm were not just baseless, but contradicting to data that showed healthy growth of the firm.

We are going through a period where several emerging markets businesses are growing in stature and an IPO grabbing the headlines every week. These firms need to understand the importance of market transparency and disclosures. As financial services firms advise them with their IPO, they should also provide enough advise on the right framework for disclosure.

I am hopeful that Jumia has sailed through the initial blips post IPO, and I genuinely hope they become Africa’s Alibaba. Good times ahead for Africa.


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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Insurtech Front Page Weekly CXO Briefing – Artificial Intelligence trends

AI_Insurance

The Theme last week was P&C InsurTech trends in the industry.

The Theme this week is Artificial Intelligence trends in Insurtech. AI has always been a critical subject of not only InsurTech, but also the whole digital age. Let’s see some AI-related Insurtech news this week.

For more about the Front Page Weekly CXO Briefing, please click here.

For this week we bring you three stories illustrating the theme of Artificial Intelligence trends .

Story 1: German Insurer DFV Eyes IPO in Bid to Disrupt Allianz & Co.

Extract, read more on Bloomberg:

“With ambitions to challenge insurance giants like Allianz SE, newcomer Deutsche Familienversicherung AG needs 100 million euros ($116 million) in fresh funds to finance its expansion plan. An initial public offering is one path that Stefan Knoll, founder and chief executive officer, is considering.

DFV uses artificial intelligence to decide which insurance claims are legitimate and which are not. In partnership with Frankfurt-based startup Minds Medical GmbH, it developed an algorithm that can read so-called ICD-10-Codes, used by doctors and hospitals to categorize their bills.”

The news was from June, a recent interview on DFV founder Dr. Stefan M. Knoll was released on InsurTechnews, one of the biggest feature of DFV is that they use AI to process claims.

Editors Note: medical insurance claims has long been a hairball of complexity that causes a lot of pain for customers/patients. The most broken big market today is America, but the politics around Health Insurance are so divisive in America, that it is possible that the breakthrough will come from another market like Germany.    

Story 2: Insurers must think strategically about AI

Extract, read more on Digital Insurance:

“Much of executives’ enthusiasm is justified. AI is already being deployed in a range of arenas, from digital assistants and self-driving cars to predictive analytics software providing early detection of diseases or recommending consumer goods based on shopping habits. A recent Gartner study finds that AI will generate $1.2 trillion in business value in 2018—a striking 70 percent increase over last year. According to Gartner, the number could swell to close to $4 trillion by 2022.”

Despite the growth momentum, AI is unlikely to help insurers yield big results in the  short term. The decision on when and where to adapt AI will be a key decision senior executives have to make.

Story 3: Huge rise in insurtech patents

Extract, read more on ITIJ:

“According to analysis from global law firm Reynolds Porter Chamberlain (RPC), 2017 saw a 40-per-cent jump in the number of insurtech patents being filed worldwide. RPC found that 917 insurtech patents were filed globally last year, compared with 657 in 2016.

Telematics, artificial technology and machine learning, and P2P insurance were among the most frequent subjects of patent protection last year.”

Telematics, artificial technology and machine learning all involve a certain degree of AI. And the growth of patent numbers signifies a positive growth on InsurTech adaption.

AI application in Insurance is still premature, but Rome was not built in one day, there will be a process. And it’s good to see that insurers featuring AI have been well received by the capital markets. This can inspire more startups and insurers to adapt AI.

Image Source

Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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