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Alternative funding becomes norm

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In a month when South Africa’s unemployment rate has hit its worst level in a decade (jumping to 29%), there’s a strong trend bubbling, which is tracing the explosive global growth of alternative financing for SMEs. In fact, in the US, they’ve dropped the word ‘alternative’. It has become the norm where banks are no longer the grand central for funding applications.

Analysts predict fintechs will be the solution to closing the staggering financing gap for small businesses across South Africa. Locally we’ve seen the emergence of alternative financing through local fintech’s such as Merchant Capital, which has experienced 150% growth in new customers in 2018 alone and has provided funding to 5000 merchants to the tune of R1-bn over the last six years. 

“In our experience, small businesses use the funds for anything that will be additive to the growth of their business: to hire more employees; buy new equipment; refurbish their store; buy more stock – and even for marketing – they don’t necessarily have to be elaborate plans, but each funding step is crucial to the next,” says Dov Girnun, Founder and CEO of Merchant Capital. He says it’s important to recognise that the average venture cycle for SMEs spans across about 10 years through various stages of growth. “The only thing you can truly count on is the constant need for working capital and the bottom line is that SMEs have an appetite for growth that traditional financial institutions have historically struggled to service.”

The reason for such exponential growth in the funding space during a time of a technical recession, a drop in GDP and staggering unemployment levels goes hand in hand with banks implementing stricter lending requirements, deterring many SMEs from applying for funding. This leaves an enormous gap among underserved SA small businesses who need to access capital quickly and easily either online or using financing alternatives. In Merchant Capital’s case, Girnun explains that they have an innovative repayment mechanism linked to the merchant’s point of sale device – using monthly credit and debit card turnover as an asset for merchants to lend against.

Global shift

Locally, the credit market has traditionally been dominated by a few main banks, and businesses that weren’t approved for funding didn’t have many options. But the landscape is opening up. While we are a smaller economy and just entering the space,  Canada – which like SA has traditionally been dominated by a number of big banks – has been slow out of the gates when it comes to mass adoption of alternative funding. Yet the latest available figures (2017) show that Canada experienced a 159% increase in market volume to $867.6-million within a single year.

According to a report by Ernst & Young, the UK has 5.5 million SMEs producing a  turnover of 1.9 trillion pounds, covering 51% of the private sector turnover in the UK, which has created a market with many diverse and complex funding needs.

In South Africa, SMEs have the greatest potential to reduce unemployment and raise South Africa’s GDP, which recently showed the biggest decline in a decade (3.2% in the first quarter of 2019). According to South Africa’s National Treasury, South Africa has an estimated 2.8m SMEs. One million of these are formally registered.

Girnun points out that in the new world of fintech funding credibility is a big thing. “The trust around a fast funding fintech model is still relatively new for SME’s, but there will be an exponential shift as this alternative moves to mainstream in the next few years. “It is often the company you keep that gives you the credibility that you need and comfort that a customer needs to have in order to use an alternative working capital option for the first time.”

The fintech caught the eye of RMI Holdings, which bought a 25.1 percent stake in September 2015. This significantly enhanced the scalability of the new disruptor and in 2018, it was announced that Standard Bank would formally offer SMEs the Merchant Capital branded lending capital solution – a move to close the gap for their small business clients. 

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The PC is back!

… and 2020 will be its big year, writes CHRIS BUCHANAN, client solutions director at Dell Technologies

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Concept Ori

It turns out the PC’s death has been exaggerated. PC sales grew between 1.1% and 1.5% in the last few quarters of the year, according to Gartner. While those don’t sound like massive leaps, they represent a large market that has been declining for several years. Windows 10 is credited for this surge, especially as Windows 7 is leading towards its end of life (EOL).

But I don’t think that is the entire picture. Windows 10 upgrades have been taking place for several years, and the market has also gotten savvier about managing EOL. Other factors are driving the adoption of PCs.

A specific one is how much closer the PC now sits to smartphones. I recently watched some youngsters work with laptops that had touchscreens. They hardly ever touched the keyboard, instead tapping and swiping on the screen. Yet they were still working on a laptop, not a smartphone. Certain things are much easier to do on a PC than a phone, and users are realising this. They aren’t relinquishing the convenience of their smartphones but applications are now available on PC’s and often easier to use.

Convertible or 2-in-1 machines have closed the gap between the two device types. This is in contrast to tablets. If you observe how people sit with tablets, it’s the opposite of smartphones or laptops. With the latter, we sit forward, attentive and focused. But tablets often prompt people to recline. It’s just a casual observation, yet I believe that PCs and smartphones have much more overlap with each other than pure tablet devices. Additionally, the convertible laptop has become the new tablet.

Chris Buchanan

Why does this bode well for PCs in 2020? 2-in-1 machines break down the barriers between the utility of a PC and collaborative culture of a smartphone. You can now flip a laptop into tent mode and use it as an interactive presentation screen on a boardroom table, or cradle it like a clipboard you jot on with a digital pen.

In the next year, we’ll see more of the market responding to this trend. Premium 2-in-1 devices have a stable and growing audience of users who are now going into their second, third and even fourth generations of devices. Mid-range and entry-level laptops are also starting to adopt touchscreens and flip displays.

2-in-1 devices are also pushing innovation, such as the emergence of dual-screen systems. Dell revealed two such concept devices at CES this year: Project Duet, a dual screen laptop, and Project Ori (for origami), a more compact approach to foldable devices. We also unveiled Project UFO, a prototype Alienware device that puts triple-A PC gaming into a handheld device. All of these reflect the desire for touch-enabled devices that are portable without sacrificing performance or excellence. They definitely point us to the future.

Convertible devices are not a new form factor. I can recall the first flip-over touchscreen designs appearing 15 years ago. Back then they were exotic and the standard laptop ruled the roost. But today, the habits and expectations of users are driving a change decisively towards convertible devices.

Desktop PCs are meanwhile becoming more specialised, yet also more widely appreciated for their versatility. Specialist non-Windows PCs, such as those used by designers, are being replaced by Windows PCs, often for lower costs. Integrated discrete graphics chips and other advancements add a lot of value to modern desktops. The smartphone overlap also appears here: many people use services such as Whatsapp Web on their PCs, and Dell customers use the Dell Mobile Connect app to show their smartphone screen on their PC display.

There is a new synergy between the PC and smartphone, created by users who find the two complement each other. Not everyone has realised this yet, but in 2020 that will be the resounding message. The PC is back and 2020 will be its year.

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Jaguar designs ‘seat of the future’

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Jaguar Land Rover is developing the seat of the future – a pioneering shape-shifting system designed to improve customer wellbeing by tackling the health risks of sitting down for too long.

The ‘morphable’ seat, being trialled by Jaguar Land Rover’s Body Interiors Research division, uses a series of actuators in the seat foam to create constant micro-adjustments that make your brain think you’re walking, and could be individually tailored to each driver and passenger.

More than a quarter of people worldwide – 1.4 billion – are living increasingly sedentary lifestyles, which can shorten muscles in the legs, hips and gluteals causing back pain. The weakened muscles also mean you are more likely to injure yourself from falls or strains. 

By simulating the rhythm of walking, a movement known as pelvic oscillation, the technology can help mitigate against the health risks of sitting down for too long on extended journeys with some drivers doing hundreds of kilometres per week. 

Dr Steve Iley, Jaguar Land Rover Chief Medical Officer, said: “The wellbeing of our customers and employees is at the heart of all our technological research projects. We are using our engineering expertise to develop the seat of the future using innovative technologies not seen before in the automotive industry to help tackle an issue that affects people across the globe.”

Jaguar and Land Rover vehicles already feature the latest in ergonomic seat design, with multi-directional adjustments, massage functions and climate control fitted across the range. Dr Iley has also issued advice on how to adjust your seat to ensure the perfect driving position, from removing bulky items in your pocket, to shoulder positioning and from ensuring your spine and pelvis are straight to supporting your thighs to reduce pressure points. View the video here.

The research is part of Jaguar Land Rover’s commitment to continually improving customer wellbeing through technological innovation. Previous projects have included research to reduce the effects of motion sickness and the implementation of ultraviolet light technology to stop the spread of colds and flu. 

Together, these efforts are driving towards Destination Zero; Jaguar Land Rover’s ambition to make societies safer and healthier, and the environment cleaner – a responsible future for our workers, customers and communities around us. Through relentless innovation, Jaguar Land Rover is adapting product and services to meet the rapidly-changing world.

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