TWINS Lwando and Lwazi Ndlangalavu have always gone into business together for a double impact.
Their strategy is proof that two heads are better than one.
The other day, they were over their weight in the liquefied petroleum gas (LPG) industry – and were having a killing spree. Their latest business is more suited to their training as a bean counter.
They own 4surity (Pty) Ltd, a Johannesburg-based company that offers software as a service (SaaS) that proactively monitors and reports cancellations or lapses of mandatory insurance coverage on funded assets on behalf of banks.
Lwazi (or is it Lwando?) Explains their job: âWhen a bank finances a car or a house for hire-purchase or mortgage, one of the conditions for granting is compulsory insurance coverage for the duration of the financing period which is between five to six years for a car and between 20 and 30 years for a house.
âResearch, combined with experience, tells us that clients of these loans terminate these insurance policies as soon as they are faced with difficult times. The consequences of these cancellations are disastrous for banks as they create enormous exposure to financial losses (loan write-offs or write-offs) in the event of incidents such as theft, fire or other contingencies on the financed asset.
âStatistics from the South African Insurance Association (SAIA) show that only 35% of vehicles in circulation are insured. This problem is further exacerbated by the financial difficulties faced by consumers, for example, now with the damage caused by the Covid-19 on people’s jobs, small businesses and layoffs, this problem has just worsened. “
The other half of the duo adds: âThis is an unprecedented solution, a first of its kind. It was idealized, defined and built in South Africa, by South Africans for the benefit of the South African banking sector and other African countries where similar problems exist.
One of the twins echoes the other: âWith the Fourth Industrial Revolution shaping the way business is conducted globally, the banking industry is also moving away from traditional banking for digital to improve its business. service, reach, market penetration and credit risk management.
âOver a decade ago, banks began to use technology in their credit scoring space (scoring system) to expedite and standardize decision making under similar circumstances. this is always done manually. The 4surity system is a pioneer in risk monitoring using technology, the use of big data and collaboration with existing international companies to manage this huge problem which is both expensive and difficult to manage manually due to the size. of these loan portfolios and other dynamics that make this problem a moving target.
âThe 4surity solution manages this problem more effectively and efficiently, as the software proactively manages these cancellations with extremely limited human intervention once agreed scopes are defined as opposed to current reactive processes. “
The size of the market and the opportunity of 4surity are attractive.
âThe size of the mortgage portfolio exceeds just over R1 trillion and the vehicle portfolio is just over R 493 billion. Both books are exposed to the same risk of cancellation of compulsory insurance. The mortgage portfolio at this point had a delinquent value of R 40 billion and the vehicle portfolio was R 34 billion. These two figures represent the amount of those books that are overdue by three months or more, for a number of reasons.
âRisk management experience tells us that once people run into financial difficulties with their finances, the first thing they write off is insurance, even on funded assets. This is a major risk that banks should ignore and the 4surity offering has a major advantage in the market, âsays Lwando or Lwazi.
They operate from their premises in Pomona, Benoni and employ five people full time.
Their staff is made up of excellent talents, including a seasoned banker with more than 10 years of experience in credit risk management in the retail banking, investment banking and investment banking sectors. and investment, who is their CEO; and a qualified accountant with over 10 years’ experience in financial systems.
The twins both studied accounting and auditing.
âWe both started our careers in an office at ABSA (Kempton Park). We transferred to ABSA (Cape Town) the same day. We both ended up in credit risk management; Lwando through a banking career and Lwazi through the earthmoving machinery industry. We have been working together on different companies for over six years now.
Either one says, âOur plan is to first serve the big four banks in South Africa, which have over 95% of the funded asset market, and then expand our offering to other houses. specialized financing, such as SA Home Loans. and Sasfin. It is our medium and long term plan to extend this offer to other African countries as well, starting with the SADC countries, then the rest of Africa.
Lwazi, or his Lwando, has the final say: âWe take inspiration from people like Bonang Mohale and Strive Masiyiwa. They both pursued great visions with determination and perseverance, and they achieved great success. Just like them, failure is not an option for us, no matter what obstacles we face.