Entersekt: SA’s Fintech Gem Making It Safe For Millions To Bank, Shop Online

All those times you pay your monthly rent online or buy those must-have blue jeans through Superbalist, you’re probably doing so without worrying about your identity or money getting stolen.

Little do you know, however, you most likely have South African fintech company Entersekt to thank for that peace of mind. Over the past few years, the fast-growing company has been operating behind the scenes to safeguard millions of people around the globe against fraudulent attacks online.

On the day we met up with Entersekt CEO Schalk Nolte, a sweltering heatwave hit the Cape and the company’s air-conditioning units were offline, so its Techno Park offices were nearly empty. It made the interview, which consisted of the two of us gulping down cold water and sodas in between our discussions, a little unnerving. We talked about banking security (he did most of the talking here), Techno Park as a hub for innovation, and making it as a successful company in South Africa.

With offices around the globe and millions of dollars raised in investments, Ventureburn expected a little more. It was a relief then when the entrepreneur took us on a tour of the seven-year old company’s other offices, three blocks down the road where about 30 of its engineers were tapping away on their keyboards.

In total, the fintech company employs 55 people. Most of these are engineers who are constantly refining the company’s patented two-factor authentication technology, which has established itself as a successful deterrent against online fraud. The technology currently services 18 blue chip financial institutions around the globe.

With high-profile clients like Nedbank and Capitec, Entersekt prefers the label “small enterprise” — an identity Nolte believes is essential if you are to make it in South Africa’s enterprise space.
“The thing about startups in South Africa is they are not taken seriously. Then if you look at Facebook and Google in the US, they still like to refer to themselves as ‘startups’,” Nolte quipped, who has worked as an engineer at various telecoms around the globe, including Nigeria and Papua New Guinea in the early 2000s.

Back at the ranch, in 2008, Nolte’s brother Dewald together with Christiaan Brand, Niel Müller, and Altus van Tonder were studying at Stellenbosch University. They were trying to figure out how to stop one-time passwords being beaten after one of their family members got hacked and accounts cleaned out.
“Fraud is a multibillion dollar industry,” Nolte said. “Some stats estimate it to be around US$6-billion in terms of losses. That’s quite a significant country-size GDP.”

To seize this market opportunity, the team of engineering and computer science students then set out to build a two-factor authentication system using a patented digital certificate technology that would protect customers against fraud attacks. For every transaction initiated on any digital channel, a second, two-way communication channel is established in real-time between your financial institution and the relevant customer’s mobile device. Essentially, this means that you can now make transactions online, safely, and go buy those blue jeans.

“In 2009, I told the team: ‘Listen guys, this is actually quite solid.’ They agreed, and we went on to find angel funding,” Nolte shared, who then joined Entersekt as CEO.

Through the engineer’s far-reaching professional network, Entersekt managed to convince Ramzi Mansour from Carita Investments to join the company’s board as chair in exchange for US$250 000 (about R2-million at the time). While the early capital injection was essential, it was the angel’s expertise as a business partner that really shined through. “Without Mansour, we couldn’t have done it,” said Nolte. “It’s as simple as that.”

Over the next few years, the company went on to raise millions of dollars through undisclosed partners, which amounts to a total of US$9-million. In terms of the tech, it’s managed to get certified by Visa, MasterCard, American Express and validated by IBM PartnerWorld’s Ready for IBM Security Intelligence. In 2014, Entersekt achieved its FIDO Ready U2F (universal second factor) status and was awarded its patent in the US.

Yet, regardless of all these milestones, out of Entersekt’s 4.5 million active end users, very few people actually know that they probably use its technology on a day-to-day basis. This, as Nolte pointed out, is perhaps a good thing. “I think that is probably how security should be with your bank, where it’s something that the bank just takes care of,” he said “You should be safe in transacting and shouldn’t really worry about whether you should go to this website or whether you should buy that online.”
Nolte further explained that the trust factor that Entersekt brings to the table is essential for financial institutions, and others alike, to really take advantage of mobile devices’ full potential:

Security is one thing. Security enables trust and if you can really trust a device, you can really empower what you can do with that. If we can solve that trust issue, we can insure that mobile really comes into power as it should be. True mobility, where you can do anything on your mobile.

Location, location, location
Having two offices split up in the same neighbourhood is just one of the growth pains of a fast-growing tech security company in South Africa. He recalls the early days when he managed to easily impress potential US investors and clients with an elevator pitch, only for them to turn away once they found out the company operates from South Africa. It’s a no-brainer then for the company to have offices in Atlanta, Amsterdam and Johannesburg today.

Apart from having hauled in South Africa’s Nedbank, Old Mutual, Capitec and Investec, Entersekt has managed to establish itself as a global security product. It also services a couple of financial institutions in the UK, a client in Switzerland, some of the top banks in East and West Africa, and its soon-to-be first client in the US.

Although being based at the southern tip of Africa might have its disadvantages as a global product, as Nolte explained, being based in the Winelands student town has been one of Entersekt’s key ingredients to its success. “I think Stellenbosch has all the essential building blocks to emulate, or hopefully surpass, one day what is in Silicon Valley,” Nolte said. Not only does he argue the fact that there are four good universities within a 60km range from each other, there’s also a lot of VC around compared to the rest of South Africa.

The CEO believes that one of the most important factors of the town’s success has been its attractive environment:

People don’t want to move away. They would rather stay here and find some way to stay here. And that’s essential. I stay in an estate with over 200 houses and don’t know anyone there who works for a big firm. Everybody is trying to do something and is building something so they can stay in Cape Town and maintain their lifestyle. Perhaps we’re all just lazy and want to find an excuse to stick around.
Shedding the startup skin
While Entersekt might be shedding its startup skin, tell-tale signs of that culture still remain within the company. Outside the office, Nolte pointed towards a handful of company-branded bicycles used for commute between the two work spaces — an idea he unashamedly stole from Google.

Inside the engineering department, employees enjoy core working hours of 10am to 3pm alongside memes and cheeky quotes plastered all over the walls like:

“The thing about quotes from the Internet is that it’s hard to verify their authenticity.” – Abraham Lincoln.

“It’s super sexy to have written something in a garage, but no bank wants to buy from that,” Nolte explained. “They want substance. They want to know that you’re going to be around within three years’ time.” Which is exactly why Entersekt decided to lose the startup label. Moving into its brand new office building (which is currently under construction) is evident of that. We were promised that the new AC would work this time next year.

Peaking into Entersekt’s future, the CEO is aggressively looking to expand and increase the company’s team within the next few months. He noted the importance of focusing on emerging markets going forward:

We’ve seen that in emerging markets there is no plan B. Mobile is the only channel. Nigeria, for example, is a country of nearly 200 million people and there’s about a thousand ATMs. Mobile banking in Africa and other emerging markets allows banks to have a leapfrog technology to move towards all-inclusive banking.

Asked whether an exit was in the cards for Entersekt, Nolte said that though they have been approached, he never really considered it. “How would you handle a blank check,” we asked. His response: “Well, we all have our number, don’t we?”

Source: Ventureburn, Jacques Coetzee
Photo: Entersekt CEO Schalk Nolte