Banking group Sasfin and money transfer service Hello Paisa will launch a bank in South Africa this year, hoping to bring thousands of people into the financial system for the first time, the firms said on Wednesday.
The new bank, one of a host of start-ups in the sector this year, will use Sasfin’s licence and infrastructure and Hello Paisa’s distribution network and technology.
Ahmed Cassim, managing director of Hello Paisa, told Reuters the bank expects to attract tens of thousands of customers in its first year, leveraging an existing base of 1.4 million people already using either Hello Paisa or its sister firms’ products.
“We spoke to these customers and it was crystal clear they were underserved and they needed banking solutions,” Cassim said, adding 200 members of staff were working in places like informal settlements every day to promote the bank and help people use it.
The millions of people who aren’t properly served by the financial system offer a big potential source of growth for both new players and South Africa’s big four, FirstRand, Absa, Nedbank and Standard Bank.
Fellow start-up banks like TymeBank, backed by billionaire Patrice Motsepe, hope to attract them with slick technology, low fees and simplicity.
Others, including Discovery Bank, a unit of insurer Discovery and Bank Zero, have their sights set on higher-income or business banking customers respectively.
Sasfin CEO Michael Sassoon said banking can be intimidating for some South Africans, but Hello Paisa’s network of outlets and field agents would educate people and win their trust.
That leaves Hello Paisa “far better positioned” to serve that segment of the market than rivals, he said.
The bank’s customers will be able to open an account in minutes, and will be offered a mobile app, mobile sim card and visa debt card, the companies said.
Fees will be low, Sassoon continued, and the bank will look at offering credit and other products like insurance, leveraging the data it has on customers.
He added that such products could be offered by third parties, in line with a model being introduced in Europe and elsewhere that forces lenders to open up customer data to rivals and encourages such partnerships.
Cassim said while the bank will be loss-making in the short term, it has multiple products to leverage allowing it to get to break-even and profitability quicker, although he declined to give a timeframe.