Technology-driven convergence across banking, telecoms, retail, and insurance is reshaping who really “owns” the customer relationship in the African insurance and savings markets.
A new article by Deloitte highlights that traditional insurers and savings product providers who do not adapt to this shift risk being pushed into the background as companies from other sectors move to the front of the value chain.
The article, “The role technology innovation is playing in the convergence in African insurance landscape”, shows how new technologies, business models, and customer expectations are blurring traditional industry boundaries.
Andrew Warren, insurance sector lead at Deloitte Africa, says the next decade will determine whether incumbent insurers and savings product providers keep their place in front of customers, or whether they become product manufacturers sitting behind stronger consumer brands.
“Convergence is no longer a theory. Across Africa, customers can now buy insurance and savings products from banks, retailers, telcos, and fintechs, often through the same digital channels they already use every day. If insurers and asset managers do not respond to that reality, they will wake up and find that other sectors own the client relationship and the data. At the same time, they are left supplying balance sheet and product in the background,” he says.
South Africa: Saturated and intermediated
Deloitte’s analysis notes that convergence is most visible in South Africa’s insurance and investment management sectors.
A key factor is the distribution model. Most South African providers do not go directly to customers the retail market. Instead, they rely heavily on intermediaries, particularly independent financial advisers, who control client relationships on their behalf.
This heavily intermediated model creates an opening for strong retail-oriented brands with high consumer recognition to become the “go-to” brand for insurance and savings products, and to build their own operations to capture more of the value chain.
On the asset management side, the report describes a crowded sector with many players and a wide range of funds, which has proved difficult to disrupt. Deloitte argues that a business that is brave enough to embrace technology and simplify the way the sector operates stands to capture a significant share of the market.
“The independent financial adviser model is ripe for disruption through greater clarity, transparency, simplicity, and inclusivity, particularly for underserved segments,” says Warren. “The report makes the point that the player who digitises and clarifies what advisers do, and opens that experience to a broader market, will become the equivalent of a Capitec in insurance and asset management. That opportunity has not been taken yet, but it will be, and it will not wait forever.”
Other African countries: Greenfield growth for those who move first
Across the rest of the continent, the picture looks very different. From an investment management perspective, Sub-Saharan Africa is described as one of the most untapped markets globally for traditional savings, stockbroking, and retirement planning.
On the insurance front, penetration remains low, but non-traditional players, such as telecoms operators, have already begun to move. Telcos are becoming central insurance counterparties for device cover and, in some cases, are conduits for long-term insurance, selling general policies.
The wider environment is highly supportive. In markets such as Kenya, regulatory sandboxes allow companies to test products without full licensing upfront.
At the same time, telcos and digital wallets have already shown how powerful platforms can become when they act as both payment rails and stores of value.
The report notes that an estimated 59% of Kenya’s GDP flows through the M-Pesa platform. Deloitte argues that the key opportunity for insurers and asset managers lies in harnessing platforms like M-Pesa and other digital stores of value.
“Across the continent, the platforms that control digital stores of value will shape the next generation of insurance and savings. If insurers and asset managers design products as if the old distribution model still applies, they are building for a world that is already changing underneath them,” says Warren.
Convergence in practice and a roadmap for action
In South Africa, VodaSure is presented as a case study of how to harness convergence effectively by leveraging Vodacom’s cellular services and devices to integrate short-term and funeral cover into the value chain.
Looking ahead, Deloitte outlines a convergence roadmap with three core action areas for insurers and investment managers across Africa: digitising and disintermediating independent financial advisers, using client and deep market insights to integrate into value chains, and finding strategic opportunities to collaborate across sectors, with a specific focus on store-of-value dynamics in the rest of Africa.
“The story over the next few years is obvious. In South Africa, insurers and asset managers need to protect and react through digitisation, operational change, and collaboration. Across the rest of Africa, they need to innovate and disrupt, especially by building around the platforms and wallets that already hold the customer’s value. Convergence is a real threat for those who stand still, but it is an equally powerful growth engine for those who move first,” concludes Warren.