TymeBank, which bills itself as SA's first digital-only bank, has signed up 4 600 clients in the three weeks since its soft launch.
The Johannesburg-based bank, which is wholly-owned by billionaire Patrice Motsepe's African Rainbow Capital, launched to the South African public in the second week of November.
It does not have any banking branches and relies solely on digital means (mobile app and Web site), and kiosks. The bank offers typical transitional services, allowing customers to earn discounts and rewards when they use their debit card at partner retailers.
TymeBank CEO Sandile Shabalala told ITWeb that the bank's business model is premised on a digital-only approach, allowing it to deliver banking services to under-serviced South Africans in a simple and affordable way.
"We want to deliver digital banking services to South Africans, because it's a cost-effective business model which allows us to reach a large number of people, while offering banking products and services in an innovative and attractive way," explains Shabalala.
"Our strategy is based on financial inclusion and simplicity; it takes less than five minutes for customers to open an account on our zero-rated mobile app. We have partnered with 33 Pick n Pay and Boxer stores, which offer a point-of-presence for customers to interact with the bank and we will continue to roll out kiosks throughout the country."
After opening an account via the app, the user has limited services and is required to verify their details at their nearest Pick n Pay or Boxer store. At the kiosk, TymeBank's digital system links with the home affairs database to capture biometric data, which verifies the customer's identity.
While the bank does not have a specific target market, its focus is slanted towards under-serviced South Africans and small, medium and micro enterprises looking for a more innovative and affordable way of banking, adds Shabalala.
The bank's pricing structure is based on a two, four, eight model: R2 for withdrawals (at all major retailers), R4 for cash deposits (at Pick n Pay and Boxer Stores), and R8 for ATM withdrawals (at any ATM). The bank also claims to have the highest interest rates for any savings account in SA, offering customers up to 10% interest.
"Since our launch, the response from the public has been very positive. South Africans are loving our value proposition because it's simple and affordable. Some clients don't understand their bank's pricing model because the structure is often too complex."
In addition to offering a rewards programme, the bank says it is running a financial education drive via the app to educate South Africans about financial literacy.
TymeBank will officially launch at the end of the first quarter of 2019, when it will add more banking products and services, such as a USSD banking option, an international payment feature, and extend its partnership to add other local retailers, notes Shabalala.
Disruptive banking rivalry
TymeBank is one of three digital banks issued a banking licence by the South African Reserve Bank, with Discovery Bank and Bank Zero also being granted licences to operate.
The key differentiator of these new banks is that they will operate as full-service digital-only banks without physical bank branches, ensuring competitive rivalry in the local banking sector.
Health insurance group Discovery CEO Adrian Gore and Discovery Bank CEO Barry Hore announced the launch of Discovery Bank at a media briefing in Johannesburg recently.
The bank, which will open its doors to customers in early 2019, will be completely digital, with products designed to improve the money management of clients."
Adrian Schofield, ICT veteran and programme consultant at IITPSA, says digital banks have the potential to bring healthy disruptive competition to the South African market.
"In many ways, this development parallels the arrival of mobile phones: they became the forerunners of digital banking terminals with the use of airtime as a currency. The low overheads mean they can offer low fees and better interest rates than the traditional banks.
"TymeBank has no barriers to entry for potential customers who are looking for lower cost and secure transactions; they can get immediate access online, as long as their South African ID is valid. It is likely that many customers of other banking services will 'give it a try'. If they are satisfied, they will move up the profile ladder and will spread the word among their families and friends."
Bank Zero, which was founded by former First National Bank CEO Michael Jordaan and banking innovator Yatin Narsai, started its alpha-testing phase among the bank's staff members on 30 October.
The bank has partnered with technology giant IBM to deliver an open-source-based banking platform. Beta testing will start during quarter one of 2019, with public operations expected to start around mid-2019.
George Etheredge, digital transformation consultant at research firm Frost & Sullivan, says while digital banks offer attractive and affordable services, there are also cons. "Discovery, Bank Zero and TymeBank are all offering lower bank fees, rewards incentives for healthier banking and increased functionality, which will attract the consumer to opt for a digital bank instead of a traditional one.
"However, the cons are that by not having a way to interact with customers face-to-face, digital-only banks are missing out on important upselling and cross-selling opportunities. Furthermore, the bank may have difficulty delivering advisory services digitally as people are more inclined to trust someone who they can interact with physically."
Another concern, according to Etheredge, is the security on the TymeBank app, which he believes should have a fingerprint login feature.
Share