Smart Choice CEO and co-founder Sibtain Jiwani tells Jonathan Swift about the challenges of building a Pakistan-based insurtech business in an immature, yet potentially lucrative market.
What was the inspiration behind Smart Choice?
Jiwani, pictured: When studying in the UK [at Manchester Metropolitan University] I was living on a tight budget and had to be creative with my money to get through each month whilst saving enough to visit Pakistan during the summer and winter holidays.
This all required planning and a lot of research so I used to shop around to find the best deals on everything - including my mobile plan, internet, insurance, credit card and even groceries.
The UK comparison platforms often came to my rescue which made me wonder whether a similar localised service could be launched in Pakistan - to not only help people make better decisions about money matters but also raise awareness of them.
How easy/difficult was it to assemble the Smart Choice team?
It wasn’t easy as it is early days for the start-up culture in Pakistan hence people - especially techies - prefer working for established software companies and banks as there is job security and visible career growth opportunities.
However our start-up became incubated at Nest I/O, backed by Google for Entrepreneurs which gave us access to a network of like-minded people who were looking to become part of a start-up ecosystem. Being involved with a well-known incubator also gave Smart Choice validation and recognition.
When hiring I went through some learning pains as I struggled with new graduates, especially in application development. However once I started recruiting experienced staff members we were able to move really quickly and innovate and iron out our user experience, features and bugs.
Having experienced people on board has made the hiring process faster and smoother as departmental managers can now make decisions and I do not have to be involved.
What are the biggest obstacles to success?
Financial literacy [in Pakistan] is one of the biggest challenges as insurance companies have focused heavily on the corporate sector and not built products and established service levels that can transfer readily to the retail market. More than 70% of the insurance business here is in the corporate space and four insurance companies have 80% market share.
This has meant that the market has not experienced the growth it deserves given the population of 200 million. Consumers in general give little value to insurance and have limited knowledge of the available coverage, benefits and what it means to claim. Due to this restrictive knowledge, consumers are afraid to avail this service.
To address this challenge, we are building different types of content to explain the ins-and-outs and give them a perspective of things. We plan to publish this in the form of animated videos in the local language in order to increase their reach. To market this we are tapping social media channels like Facebook as more than 30 million consumers use it on daily basis.
We have also set-up a call centre where users can enquire about a product and buy policies over the phone. This reduces the friction and also means they can make decisions based on complete information.
What has the reaction been in terms of support from both insurers and investors?
Local insurers have very limited understanding of digital channels and rely heavily on sourcing business via agents and their own physical branches.
However, the idea of aggregating services has been very well received as they acknowledge that there is a huge untapped market with millennials who now spend most of their time on social media. These insurers increasingly understand they should working with us to raise brand awareness to generate new business.
Investors are very positive as there is a huge gap in the market and they are interested in funding innovative solutions that cater for different market segments. Even various international aggregators are now exploring the Pakistan market.
Is there an insurtech/fintech scene to speak of in Pakistan?
There is certainly a fintech scene as only 23% of the population in Pakistan use [traditional] banks. As a result several telcos and banks have introduced solutions for branch-less banking to bolster financial inclusion. A number of mobile wallet solutions have also been launched in the last year, however, the biggest issue is still the interoperability and customer on-boarding.
By contrast insurtech is slower and very few are working on this. There are some innovations happening in terms of claims and information based apps, however, these are not end-to-end solutions.
Very little is being done on the customer acquisition side, apart from a few insurance companies, as most of them do not even have websites that consumers can view to acquire information and understand product offerings. What is needed is a cultural and mindset shift within organisations to embrace the technological advancement and invest in them for long term.
A sign of progress is perhaps the fact we were shortlisted for Fintech Disrupt Challenge organised by Karandaaz Pakistan (backed by Bill & Melinda Gates).
What would success look like for Smart Choice in the near future [one to three years] and beyond?
It will be a major win when Smart Choice becomes a go-to platform for anyone looking for insurance in Pakistan and they are able to buy a policy as easy as they do with other products online. Additionally we want to play a pivotal role in educating and raising awareness about insurance products so consumers can be more aware and conscious of their decisions.
What does a typical Smart Choice customer look like?
As we are into all kinds of personal finance products the type of customer varies; to give you an idea - it is someone in the age bracket of 25 - 50 who has a budget for different services and is looking for the best deal in terms of money and service.
With market conditions for European insurers are extremely challenging, and companies facing a wide range of difficulties, just who has made the list of the top 30 European insurers complied by Am Best.
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