Business and operating models

The complexities of doing business in Africa are stark in financial services. Faced with rapid technological change, growing competition from non-financial service providers, shifting national policy and regulation, and significant economic headwinds, retail banks and insurers have to work hard to create value for their stakeholders. A key to unlocking this value is to apply structured thinking to what business and operating models are best suited to the African context.

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Expertise Areas

Business model advisory

We have been assisting banks and insurers across Africa and the Middle East for over 20 years to make strategic business model choices in response to shifting market conditions. During this time we have learnt the importance of understanding what works in a given market, customer or industry context and applying this knowledge to help our clients approach new opportunities. Our approach to business model advisory is therefore to understand the suitability of our client’s existing business to capture value from new opportunities, or from industry and regulatory developments.

Operating model design

A complementary proposition to our business model advisory expertise is the support we provide to financial sector clients in identifying and developing responsive offer, operation and sell-and-serve strategies. Where we add value is in understanding the intersection between our clients’ current capabilities, the market context of financial services in Africa and the operational capabilities that are required for organisations to deliver on new opportunities.

Capabilities mapping

Our comprehensive understanding of value chains within financial institutions enables us to identify capability needs that are required to deliver on new businesses cases, value proposition designs or new solution architecture. We define all the required capabilities whether they are people, processes or systems based, and we are also able to provide investment advisory support to clients that are considering whether to build, buy or partnering to acquire these capabilities

Cost allocation models

We work in partnership with our clients to design, build and implement activity-based cost allocation models, ensuring that their businesses can effectively track profitability at all levels of their organisation. Our approach to cost allocation involves a combination of project management, focused on close engagement with stakeholders, and independent data analysis aimed at linking costs to specific activities and relevant cost-drivers.

Projects

Helping SA bank to keep up with digital innovation

Project name:
Future of payments project

Service:
Strategy
Business and operating models

Sector:
Financial Services Strategy

Area of Expertise:
Payments
Digital

Client:
Large South African Bank

Date:
2017

Country:
South Africa


The growth in non-cash payments has increased the revenue potential of the payment sector, making it one of the high-stakes sectors in financial services. 

Until recently, banks were dominant but new players have successfully challenged this dominance. From MNOs to fintechs to third-party payment processors, increased technology has intensified competition. Improved speed, ease, security and cost of making payments are common in contactless payments to biometric authentication features, social-media payments and distributed ledger platforms. 

Banks are faced with how best to respond to these developments. Genesis engaged with a large South African bank to create and maintain a market insights capability that would enable it to develop internal points of view on developments in the payments sector, allowing the bank to respond with appropriate short-term and medium-term strategies.

Genesis compiled a live database of developments within the payments sector and analysed them according to the payment flow, rail and theme. From this, we built a comprehensive as-is analysis of the payments space, identifying the ongoing technological developments as well as that of the competitors, both banks and other entities. 

We formed our points of view on key issues that the bank needed to consider. These included, among others, the entry of Chinese payment giants into the South African market and innovations in the acceptance frontier. We outlined the main trends and analysed their impact, imminence and risk to the bank.

Our insights provided the bank with a comprehensive view of the trends and developments in the payments sector. Our recommendations included considerations for short-term tactical investments and also longer-term considerations of the direction of payments innovation. 

Our insights were presented to the senior management and key stakeholders of the bank. These formed the basis for discussion on appropriate strategies the bank should take regarding its payment services and product offerings.

Business model for e-wallet customer payments

Project name:
Licence application and business model for an e-wallet and peer-to-peer lender

Service:
Business and operating models
Digital
Regulatory economics and accounting

Sector:
Financial Services Strategy

Client:
A large provider of online retailing and services

Date:
2014

Country:
Nigeria


Genesis was commissioned by a large provider of online retailing and services to examine the regulatory regime of Nigeria, with respect to the launch of an e-wallet for customer payments and the launch of a peer-to-peer lending service. 

The project involved the development of a detailed business plan for each business, and an assessment of the licensing options available for each business, as well as a review of the regulatory model that is evolving globally with respect to peer-to-peer lending. 

Following the advice of the consultants, the business model was reconfigured to take advantage of the card eco-system which would reduce the complexity of operations and the need for additional licences.

Building a cost-allocation model for the JSE

Project name:
Building a cost-allocation model for the JSE

Service:
Business and operating models

Sector:
Financial Services Strategy

Client:
Johannesburg Stock Exchange (JSE)

Date:
2015

Country:
South Africa


The Market Regulation Division of the JSE appointed Genesis Analytics to develop a cost-allocation model that defines its cost of regulating each of the JSE's markets. 

The principal objective of the project was for the model to function as a strategic tool for the division, informing strategic and tactical decision-making with respect to the JSE and regulated members as ultimate beneficiaries. The project was divided into two components, the first of which was a discovery phase that scoped what analysis had already been conducted within the JSE and then charted a way forward for the project.

The second phase required Genesis to develop an accurate five-year costing model that reflected direct and indirect cost associated with regulating each of the JSE's markets, and took into account evolving IT infrastructure projects.

Feasability of vertically integrated business model

Project name:
A business model review for a large financial services and insurance provider

Service:
Business and operating models

Sector:
Financial Services Strategy

Area of Expertise:
Insurance and asset management

Client:
A large South African financial services and insurance provider

Date:
2014

Country:
South Africa


Genesis Analytics was appointed by a large South African financial services and insurance provider to review the feasibility of an innovative, vertically integrated business model, connecting an independent distribution network to a large investment product range and manufacturing capability.

The business model was premised on anticipating and responding to several shifts in the investment industry, the most important of which was the Retail Distribution Review (RDR) programme implemented by the Financial Services Board (FSB). Within this context, Genesis conducted a review of the business model against key regulatory programmes such as the RDR and Treating Customers Fairly, as well as against the requirements of FAIS and the Long-Term Insurance Act.

Following this review, recommendations were made to enhance the appropriateness of the business model in anticipation of the expected content of upcoming reforms. 

These recommendations formed an integral part of the subsequent model design.

30 Kenyan banks adopt innovative payments infrastructure

Project name:
PesaLink Channel migration strategy

Service:
Strategy
Financial inclusion
Business and operating models
Market analysis and positioning

Sector:
Financial Services Strategy

Area of Expertise:
Payments
Digital

Client:
FSD Kenya

Date:
2017

Country:
Kenya


Kenya has been at the forefront of mobile payment innovation in Africa, primarily through the rapid growth of the mobile money ecosystem. Leading this are non-banks, in particular Safaricom, which pioneered payment solutions for consumers with little access to formal financial services. 

With the banking industry facing a challenge of falling card transactions, banks needed a new low-cost payment solution to compete with non-bank payment providers.

MNOs have been the primary drivers of financial inclusion in Kenya. To improve the banks’ contribution to financial inclusion, collaboration between FSD Kenya and banking industry stakeholders led to the creation of PesaLink – a payment infrastructure that allows banks to offer real-time, person-to-person transfers at a low cost. 

PesaLink met with some resistance from banks over concerns that it would cannibalise their fee revenues from existing payment products, without understanding that traditional banking products were declining in the face of Safaricom’s growing market share.

Genesis partnered with FSD Kenya to develop a business case to convince Kenyan banks of the value of joining PesaLink. Genesis carried out a series of stakeholder interviews with the banks to understand their problems. Incorporating these findings with historical payments trends in the market as well as bank data, Genesis developed a financial model to assess the impact of PesaLink on the banks’ existing product revenues. 

The model incorporated the expected revenue diversion from existing bank products and illustrated the potential savings from the more efficient PesaLink infrastructure. It demonstrated the opportunity for increased transactions because of convenience to the client, resulting in raised revenues for the banks. The model was shared and workshopped with the banks. 

Through Genesis’s work there was greater buy-in from banks to develop their unique products to be rolled out on PesaLink. Thirty banks now offer products on the PesaLink infrastructure, resulting in KSH15-billion transaction value flowing through the infrastructure in the first six months of its launch.

Meet the Team

Areas of Service Expertise

  • Business model advisory
  • Operating model design
  • Capabilities mapping
  • Cost allocation models

Projects

Project

Helping SA bank to keep up with digital innovation

Genesis engaged with a large South African bank to create and maintain a market insights capability that would enable it to develop internal points of view on developments in the payments sector, allowing the bank to respond with appropriate short-term and medium-term strategies.

View Project
Project

Business model for e-wallet customer payments

Genesis was commissioned by a large provider of online retailing and services to examine the regulatory regime of Nigeria, with respect to the launch of an e-wallet for customer payments and the launch of a peer-to-peer lending service. 

View Project

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Leading the team

Richard Ketley

Director and Managing Partner (Financial Services Strategy)

Richard Ketley
Director and Managing Partner (Financial Services Strategy)
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Bavani Naidoo

Principal

Bavani Naidoo
Principal
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Chidinma Lawanson

Regional Lead Consultant (Nigeria)

Chidinma Lawanson
Regional Lead Consultant (Nigeria)
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