A serial entrepreneur, an accidental banker and an early disciple of the transformative power of the internet, Christo Davel wears the label, “grandfather of South African fintech”, with pride.

Drawn into banking in the late 1990s, Davel quit dentistry studies prematurely to go into business, and had started several businesses before coming across insurance.

“I manufactured automotive components and exported them to the States,” Davel explained. The rand was strong at the time, so youngsters with a little brass in their pocket could do things like that.

“Then, one of my friends at a brokerage suggested I pop around to see what they do.”

So he fell into investment advice and insurance broking in the 1980s. Clients and advisers still paid each other visits, but, while on holiday in the UK — where insurance was being sold on television — he realised, “You don’t have to pay the insurance broker. You dial in and they can do the rest.”

Old Mutual Direct

It was the trigger for Davel to start a direct insurance business, which Old Mutual helped to incubate before acquiring it as Old Mutual Direct in the late ’90s. It was his first foray into fintech and algorithms.

“I also realised, though, how challenging it is for a successful business to change the way they distribute their products, especially in financial services.”

In 2001, he left Old Mutual to start 20twenty — SA’s first online-only retail bank with no-frills digital banking, low transaction costs, low interest rates on loans and higher interest rates on savings.

Davel focused on the interface — the customer experience — to ensure it was very simple. “I managed to get the most amazing group of people around me and we used Saambou bank as our licence-holder.”

He had to convince customers it was possible to bank without a bank building. Within a year, they had more digital customers than the big four banks combined.

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“In 2002, there was quite a bank consolidation for second-tier banks. BOE was bought out by Nedbank. The Perm and NBS disappeared. The only second-tier bank put into curatorship was Saambou.”

Davel realised he had to find a sponsor bank to replace Saambou within a week.

“It was the most unbelievable story. Our customers formed  20twenty fan groups. There were news bulletins where customers were asked about the fan clubs and they said they wanted to keep 20twenty alive. They told the curator, ‘You’ve got to help these guys… it’s the best bank experience we’ve had’.

“I ended up selling 20twenty to Standard Chartered Bank, and not one of our customers lost any money. They didn’t care about Saambou’s woes; they just wanted to know where their money was.” He’d learnt it wasn’t just about the tech, but about the customer experience.

Davel was head of consumer banking at Standard Chartered in South Africa for two years, but says he was “too young and arrogant” to fit into corporate culture.

Direct Transact

In 2021, he joined Direct Transact — South Africa’s first provider of SaaS solutions (software that allows data to be accessed via a web browser) to banking and financial services. The company serves 70% of clearing and settlement banks in the country, is a major VISA processor and processes more than R40-billion in transactions a month.

Davel decodes the jargon, explaining that they offer banking as a service. “What that means is the entire front-to-back process — from when the customer enters her bank account online, to all the processing, down to the settlement with other banks and the Reserve Bank overnight.”

Hennie Dreyer and Anthony de Gray Birch, Direct Transact’s founders, were executives at Saambou and bought the technology from the Saambou curator, taking second mortgages on their properties, and started their business to enable second-tier banks to do banking without a sponsor bank.

“It’s come full circle for me… I have found myself back in the saddle with two guys who I met more than 20 years ago.”

Together they create digital financial services that ultimately give customers better experiences when they transact. It started with banks but today 50% of Direct Transact’s customers are non-banks. 

In the next few years, he foresees that all innovative brands will offer embedded finance solutions for their customers on all the devices they like to use. Embedded finance will allow any businesses to integrate financial service offerings into their products and services. This means clever and practical financial solutions can be brought into the everyday customer experience. “Fintech will become so ubiquitous, it will seem to disappear,” he says. 

It’s the fulfillment of his confessed “obsession with financial customer experiences” that started more than 20 years ago, before “fintech” was even a word. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.