Franc Founder, Thomas Brennan Talks Bank-Fintech Collaborations in Africa

Franc is a highly innovative investment app that provides smart investment advice. It was founded in May 2018 by tech whiz Thomas Brennan (pictured above) and Sebastian Patel – an investment guru. The fintech platform helps people who have never invested before access the leading cash (Allan Gray Money Market Fund) and equity (Satrix 40 ETF) funds in the market.

I was opportune to sit with Brennan on Franc’s journey in making it easy for everyone to invest profitably and the company’s viewpoint on the future of Africa’s fintech.

BEA: Do you see a future where banks collaborate more with fintech companies?

Thomas Brennan: Financial Institutions have faced fierce competition from fintech firms for years and are slowly realising that innovation is critical if they are to retain their customer base. Franc believes that traditional financial institutions such as banks, collaborating with Fintechs is a great way to close the financial access gaps faced in Africa from services such as investment products, credit and savings. Traditional financial institutions are increasingly accepting that they cannot reach this market alone and are partnering with Fintechs whose solutions can reach these unique markets. 

BEA: How do you see Africa’s fintech industry evolving over the medium to long-term?

Thomas Brennan: The African fintech industry is always evolving, and stats from Ernst & Young say that the number of fintech firms in Africa has recorded a compound annual growth rate of 24% over the past 10 years. It seems that the major drivers of this growth are young populations, the proliferation of mobile phone access and poor levels of financial inclusion across much of the continent. Over time, fintech companies will challenge traditional financial services providers through innovative offerings such as branchless distribution and mobile banking. 

BEA:  What does Franc do?

Thomas Brennan: Franc is an easy-to-use, award-winning investment app. Franc keeps it simple by helping consumers to invest when they aren’t sure how to start. Franc users can access the best cash and equity fund without minimum requirements, so users can invest any amount at any time. There is no paperwork and a one can set up a profile on the app and become an investor in minutes. There are also no restrictions, meaning the money can be withdrawn at any point – without penalties.

BEA: What path led to where Franc is right now?

Thomas Brennan: Franc was born in 2018 when an engineer, an actuary, an investment guru and a tech whizz shared a common idea of making investing affordable, accessible and social. After working in Discovery’s R&D lab and being exposed to a broad spectrum of financial services, Franc’s CEO, Dr. Thomas Brennan, couldn’t understand why only 5% of the country was investing, despite being top in the world for the search term ‘how to invest’. After discussions with his friend Sebastian Patel (now COO and co-Founder of Franc) the two realised this was likely because of financial barriers, product complexity and limited access. They saw an opportunity to create a simple investment app giving access to leading cash and equity funds without minimums or limitations.

BEA: What would you say is your greatest strength of Franc?

Thomas Brennan: Franc is built for people who are not quite sure where to start in the confusing world of investing. Franc wants to help users reach their financial goals. A risk assessment helps them first discover what type of investor they are and guides them in deciding how much investment risk they should take on. Franc has selected the best cash and equity funds in the market so that you can have some cash stashed away for a rainy day and investments in SA’s largest companies for your big dreams. 

Franc’s two investment options – the Allan Gray Money Market Fund and Satrix 40 ETF – were selected because of their credibility, consistently high performance and low cost. Members simply choose how much they would like to invest, how often, and how they would like to split their investment.

BEA: Tell us about your funding?

Thomas Brennan: Franc may be considered a startup but is already off to a great start, having received funding from investors such as Fitech Ventures (who’ve invested in other financial startups such as Ukheshe and Bettr bank) as well as AndAfrica LLC, a Japanese firm connecting Japanese investors to African tech companies.

BEA: Any Awards / Big achievements?

Thomas Brennan: Franc’s previous awards also include: winning the start-up competition ‘Seedstars’ in 2018, winning the best South African Solution award at the MTN App of the Year awards in 2019, and scooping Stuff Magazine’s Top Financial App in 2020. Most recently, Franc was elected as one of two South African companies to participate in the Google for Startups Accelerator Africa (“GFSA Africa”) programme, taking place virtually from 29 June to September 11. The GFSA Africa programme helps startups build even better products and businesses by matching them with the best of Google – its people, network, thought leadership and technology. 

BEA: What need is Franc meeting in South Africa?

Thomas Brennan: Franc was founded based on a very real need in South Africa. Among the G20 countries, we rank the lowest in our household savings rate. In 2019, the ratio of household savings to disposable income was at 0.15%, which means the ability for a household to weather financial shocks is at an all-time low. This need has become an alarming focus under the COVID-19 lockdown in which households have been under severe financial stress.

Only 6% will be able to maintain their standard of living after retirement, with 40% of South Africans having no formal retirement savings. This is something Franc wants to change by providing access to high-performing, low-cost investments through a simple and intuitive mobile app.

Franc’s founders believe that too many institutions have made investing overly complicated, with excessively high minimum investment requirements and exorbitant fees. Franc has removed all of those barriers by doing one simple thing – making leading cash (Allan Gray Money Market) and equity (Satrix 40 ETF) funds in the market accessible to every South African so that they can invest for their future.

BEA: Anything else specific to Fintech’s in Africa you’d like to add?

Thomas Brennan: Most Fintech companies in Africa have focused on the credit, payments and remittance space; more recently, a few insuretech companies have started to surface. But unfortunately, investment platforms remain few and far between. People across Africa should be able to invest to break out of the vicious debt cycle many people find themselves in. The surest way of doing so is to build wealth that can support education, help households weather financial shocks and achieve their dreams. 

BEA Throwack is Business Elites Africa series where we recall powerful stories from our archives.