South African talent building a business that gobbles up foreign currency ‘leftovers’
Are you among the thousands of world travellers wondering what to do with your foreign currency ‘leftovers’ following an international holiday or business trip? You are not alone. An article published by UK-consumer website thisismoney.co.uk estimates that GBP2.5 billion of foreign banknotes and coins enter the UK each year.
Busy executives and mid- to high-income families cannot be fussed to convert a fistful of Indian rupees, Norwegian krone or Thai baht to hard currency because the 20 dollars, euros or pounds they might retrieve via the exchange is insufficient to compensate for the inconvenience of queuing at a bureau de change, let alone to cover the costs. The result is that only one in two travellers bother to change small denomination banknotes – the bureau’s will not even consider coins – when they return to the UK. Much of this money ends up in desk drawers and similar receptacles at homes and offices countrywide.
Traditional foreign currency exchanges shunned low denomination banknotes because it was costly and time consuming to process under their labour-intensive business models. Their reluctance to chase this segment of the market created an opportunity for Fourex, a multi-currency exchange solution, to disrupt the market. Fourex was the brainchild of two UK-based South African entrepreneurs, Jeff Paterson and Oliver du Toit, who were frustrated by their inability to repurpose the coins they collected on their extensive foreign travels. At one stage Du Toit estimated he had hundreds of dollars of foreign currency stored in jars. The pair undertook to build a solution that could recognise and exchange banknotes and coins from multiple countries.
A few years – and almost GBP1 million of their own funds later – they had developed the software and image database necessary to recognise thousands of derivatives of banknotes and coins from hundreds of countries. The Fourex concept gained widespread acclaim after it won Virgin Media’s ‘Pitch to Rich 2015’ competition under the ‘New Things’ category. Fresh from this success the duo turned to the popular crowdfunding platform (www.crowdcube.com/fourex) to see if the consumer market would back the idea with hard cash. They were not disappointed and eventually raised GBP670 000 – more than double their target – in just five days. This funding cleared the way to open their first kiosk at a London underground in November 2015, with plans to grow their kiosk network to 80 sites by the end of 2019 (67 locations were active at the time of going to print). Fourex recently kicked off a second round of funding to raise an additional GBP900 000 to meet its growth targets and add to its high footfall locations at underground stations, major shopping centres and airports.
Fourex demonstrates that innovative businesses do not have to trade in technology to make money. Their success hinges on using technologies introduced by the fourth industrial revolution (4IR) to reinvent ‘old school’ business methodologies. A kiosk is nothing new; but a kiosk that that uses a combination of high speed image recognition software and a database of some 3,5 million images to process up to 300 coins per minute sits squarely in the digital age. Technology makes it possible for each Fourex automated self-service kiosk to convert some 150 foreign currencies (including out of circulation notes and coins) into dollars, euros or pounds supported by a real-time pricing solution. 4IR empowers entrepreneurs to pursue segments of the market that were previously dismissed (or ignored) as unprofitable and unsexy – and enables them to introduce the benefits of scale far earlier in the business cycle.
Changing consumer behaviour is another important component of the shifting technology landscape. Today’s digital natives are just as comfortable with a transfer to a digital wallet as they are with pocketing a wad of paper money. This introduces further savings insofar stocking and servicing the Fourex kiosks. Millennials and subsequent consumer generations are also more socially conscious than before, thus welcoming the real-time opportunity to donate their excess foreign currency to charities of their choice.
Past CEO of Dimension Data, Brett Dawson, is an early investor in Fourex and one of four South Africans on the board. He saw the potential in the idea during its first round of fundraising in 2015 and believes the concept has the potential for exponential growth from its current small base. “Fourex is a perfect example of how a traditional concept can be implemented and scaled using the growing interconnectedness between people and technology,” said Brett Dawson. He has made significant investments in a variety of businesses poised to revolutionise customer service through the positive application of technologies such as automation, artificial intelligence, data exchanges and image recognition solutions to name a few.
“People often blur the concept of the fourth industrial revolution with the period described as the digital age,” concluded Dawson. “We are witnessing the next stage of business evolution that is powering us out of the digital age to an age defined by the interconnectedness of humankind and devices – technology and business are becoming intertwined, leading to massive improvements in efficiency and customer service”.
Fourex is a self-service foreign exchange provider offering customers the ability to exchange 150 currencies in coins and notes. Operating in the United Kingdom and now in 67 locations, Fourex is targeting further growth in the UK and internationally, whilst offering new digital cash-based products. Fourex is currently crowdfunding with Crowdcube (www.crowdcube.com/fourex).