Lesaka Technologies is working to grow its consumer business, having doubled its customer base in the past four years.
The JSE- and Nasdaq-listed company, formerly Net1 UEPS Technologies, consists of two divisions: a merchant unit and a consumer segment. The consumer unit focuses on products such as unsecured credit, transactional banking, microinsurance and value-added services through the EasyPay platform.
There are now 1.8-million customers in the consumer division, 1.6-million being social grant recipients, a market that the group holds a 12% share in. The balance, 200,000, came onto Lesaka’s books as a result of its 2024 acquisition of fintech operator Adumo.
Having grown the consumer base from about 1-million at the start 2021, some have speculated that the group is attempting to build a bank through EasyPay.
CEO Lincoln Mali refers to this unit as “a platform”.
“When you enter this platform, you are now opening up to access credit where nobody, no registered financial institution, can give you credit, like we do.
“We’re the biggest lender in that space and we’re the cheapest lender in that space. And, through that same platform, we can offer alternative digital payments or value-added services (VAS).”
In future, the group hopes to also offer a loyalty programme.
Personal lending is an area that has seen much attention and investment from fintech, as well as non-banking players over the years.
Of Lesaka’s consumer base, about 688,000 have opted in for a loan product, with more than R1.6bn worth of loans up to the value of R2,000 each having been dispersed.
To grow the consumer business, Mali and his team are attacking the market in a number of ways.
First, the imminent collapse of the SA Post Office has reduced its ability to facilitate the payment of social grants, creating an opportunity for private companies interested in a piece of the pie.
“We have customers who have been moving from the Post Office and we are growing faster than other organisations in acquiring those clients. We think that will continue because our value position is richer,” said Mali.
Second, “we are going to get clients that are in the other financial institutions, but realise that they only have a transaction account. There’s no value proposition for them, and we can show them the richness of our proposition.”
Third, “is the work we’ve done with our team, on our technology ... the fact that we can open an account using a digital device in minutes, the fact that we can do home services, that we can go to a township or a village, and open accounts en masse, these are [advantages] we have, where we are fighting with a competition.”
Beyond social grants, the group sees opportunity in other corners of the market.
Mali said its customers from the Adumo transaction were made up of group from large corporates like mines. “Why can’t we give those same clients digital access to their money [and] a digital view of their money and the products that they have? That’s where we now start to move away from just being so focused on social grants.
“We are focused on underserved communities wherever they may be,” he said.
This comes as the group reported revenue of R2.6bn for the second quarter to end-December — at the upper end of its revenue guidance − and compared with R2.7bn a year ago.
The group, however, reported operating income of R14.2m for the period, much lower than the R42.5m a year earlier.
Group adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) were up 26% to R211.8m.
Revenue for the consumer division increased 31% in local currency to R410.7m, with segment-adjusted ebitda up 61% to R77.5m.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.