TymeBank is planning to introduce new products and services, as the digital bank looks to meet its target to become one of the top three retail banks in SA, in the next three years.
Last month, Tyme Group, parent company of TymeBank, announced it had secured $250 million (R4.4 billion) in the latest capital raise, led by Nubank, one of Latin America’s largest digital financial services platforms, with over 110 million customers.
Nubank has now joined Tyme Group’s shareholder base, along with investment firm M&G’s Catalyst, as the second new shareholder.
TymeBank, with over 10 million customers, is the group’s flagship bank.
During an interview with ITWeb, Karl Westvig, CEO of TymeBank, explained the Nubank partnership is expected to bring new expertise and resources to TymeBank.
This will help better position the bank to roll-out new product offerings and improve its banking infrastructure and customer satisfaction, he noted.
The bank has set a target to become one of SA’s top three banks.
New products include credit card offerings, expanded lending capabilities and building an intellectual property (IP) advisory service to provide independent evaluation of the IP and assess the financial risks customers are facing.
“The new funding will help us build good advisory IP and provide the capital to be able to build our product proposition,” said Westvig.
“The big focus for the next 12 to 18 months is to make sure we build our product proposition so that we are able to compete with the big banks. Secondly, we will put the foundations in place to be able to offer good customer service and customer experience.
“Nubank also brings deep experience – they've built a 110 million customer-focused business in South America, with good customer experience and a high net promoter score. So, they will help us build our customer experience and add new lending capabilities.
“They are also experts in credit cards and we certainly want to build a scaled credit card in the next 12 to 18 months. We are also in the process of rebuilding our app platform at the group level and we will be re-launching it in SA.”
Majority-owned by Dr Patrice Motsepe's investment holding company African Rainbow Capital, Tyme Group holds an effective 57.7% stake in TymeBank, which bills itself as SA’s first digital-only bank.
According to Westvig, TymeBank is looking to adopt the same approach used by Nubank to assess customer credit worthiness through data analytics, as well as apply the same model used in some of Nubank’s customer offerings.
Credit cards will initially be issued to consumers, with businesses to be serviced in the next phase.
Since TymeBank became profitable last January, it doesn’t need working capital anymore, he added.
“However, what we will need is capital to be able to grow the assets out of the balance sheet. As we grow the cash loans and the merchant advance side of the balance sheet, we will need some capital, which will come from the funding.”
Discussing the strategy to reach the “top three bank” position locally, Westvig pointed out the bank is focusing on improvements in several key metrics, including customer satisfaction, return on equity, efficiency ratio and scaling the business nationwide.
TymeBank is targeting a return on equity of about 30% for the business. It is also working to keep the efficiency ratio at under 40%, whereas the big banks are currently at an average of 60%. Its net operating income and revenue grew significantly over the last two years and the bank is on track to sustain good growth in the coming years, he noted.
“We have broken even; we have a large fixed cost base so any revenues we generate will become profitable in the bottom line, which means there is no reason why we can’t get to over 30% in return and equity. Meeting our target is very do-able.
“In terms of customer growth rate and customer numbers, we can get to the top three position, as we are currently still signing up around 200 000 customers per month. And we are at 10.6 million customers right now. So, there is no reason why we can’t be a top three bank in the medium- to long-term.
“The metric that will take us a lot longer to get to, is growing our asset size, as we are only a five-year-old bank and most banks are over 100 years old. The other two metrics that will help us get there are return on equity, as well as cost to income ratio or efficiency ratio.”
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