Tech categories are timelines, not maps. Every visualisation that maps out a particular tech category in Asia does so in the common cluster style. That is, it’ll list the main category on top, such as fin-tech. Then it’ll list all the various sub-categories, such as digital finance, crypto, mobile money, and so on, and include the logos of the relevant companies within each grouping.
While these infographics are an interesting starting point in discussing how a tech category is growing (or not growing!), it is a bit misrepresentative. Visually, it seems to suggest that all the categories are equal, but that is not true. For many tech fields, some sub-categories will need to come before others as a kind of precursor. There is, in short, very much a tech category life cycle just as much as there is a product life cycle.
This thesis can perhaps be most clearly seen in fin-tech. Arguably the most important category is mobile money. You need to give people a means to transact with money before they can participate in other fin-tech applications. Most people erroneously assume that mobile money is the only necessary precursor, which opens all other categories – Pandora-box style – for the taking of founders and startups.
In truth, there is another major category that comes next—or at least should—on the evolutionary timeline of fin-tech: Insurtech. After giving people a means to store money digitally, they also need to be given means to protect their finances, property, and livelihood as they go about their day-to-day. Digital can similarly allow people to obtain this insurance easily, instantly, urgently.
Insurtech as an evolutionary milestone
The significance of insurtech as the second major milestone in fintech is most clearly seen when you analyze a major player in the space. In the Philippines, one need to look no further than the recently relaunched InsureShop, which is backed by leading insurance firm Pioneer, to see just how crucial insurtech is.
Led by Pioneer Chief Executive Officer Lorenzo Chan Jr., InsureShop offers three key products, including medical insurance (MediCash), travel insurance (SafeTrip), and motorcycle insurance (RideSure). Each of these products is essential to protecting value for upwardly mobile and digitally-savvy Filipino people. Let’s take the case of MediCash for example.
In the Philippine context, medical emergencies can bankrupt people, or worse, leave them stuck with years and years of debt. Because of the tropical climate, two common issues are Dengue or Leptospirosis. Dengue is a mosquito-borne affliction that can often be fatal, while Leptospirosis is a disease transmitted by rodents, often brought on by exposure to contaminated floodwaters during excessive rains or typhoons.
In the event that a person gets either of these, MediCash disburses P10,000 in cash to help with medical bills or other expenses as the person chooses. Such protection prevents the occurrence of Dengue or Leptospirosis from not only being a life-threatening affliction, but one that ruins a person financially.
Through InsureShop, Filipinos can enroll, buy, and receive instant policy delivery for MediCash as well as SafeTrip and RideSure. The advent of InsureShop is actually not surprising given the rise of ecommerce in the Philippines led by online shopping and ride-hailing — evidence of the new Filipinos predilection for turning to digital for many of their needs. If Filipinos are already buying their clothes and gadgets online, the thesis goes, why not add insurance to the mix?
Innovative insurtech products like Pioneer’s InsureShop, in short, protect the value that the new digital economy offers Filipinos and that they store in and transact with via mobile money apps. Once the double layer of bedrock is established in mobile money and insurtech, the fintech space can move onto more advanced use cases, such as everything from alternative finance and reg-tech to robo advisories and comparison sites.
As a founder, it’s tempting to ignore the idea that there may be necessary precursors to the space you want to operate in. Many founders, after all, may think that having vision is enough and everything else can follow. But the truth is that most tech categories have a natural evolution that may not necessarily be linear, but still has dependencies and co-dependencies.
Founders would be wise to break-down their respective spaces into a timeline, not a map. What types of businesses must come before theirs in order for their own startup to succeed? If there are quite a few sub-categories that you determine should precede yours—but those are still not built or have reached maturity—it may clue you in to the fact that your company is too early. It would be smart to move further back into your industry’s evolutionary timeline toward what people need now.
Javi Medina is a chartered market technician and the current Managing Director and Chief Investment Officer at Deeptech Investment Management.