From the outset, TymeBank positioned itself as a digital bank that would service the underserviced and bank the underbanked at a low cost.
Just nine months after launching, African Rainbow Capital’s digital banking child has signed up one million customers.
Tauriq Keraan, who replaced Sandile Shabalala as CEO in August, attributes this success to the low transactional fees offered by the bank, saying: “It really appealed strongly to the customers … ”
TymeBank’s presence via self-service kiosks in Pick n Pay and Boxer stores in semi-urban areas contributed to it signing up approximately 100 000 customers per month.
The bank currently offers an EveryDay transactional account and a GoalSave savings account.
A personal loan product and low-cost bank account for small and medium businesses are being piloted and prepared for public rollout in early 2020.
The bank is primarily targeting people aged 16 and older who fall into the LSM 5 to 7 bracket and are underserved by traditional banks. However, its customer analytics show that it appeals to those outside of this demographic. More than half of its customers earn a salary of less than R5 000 per month, and 45% are older than 35.
“Certainly, when we launched the bank, we may have thought that the customer base would be skewed towards younger people,” says Keraan.
“We have delightfully been proven wrong in terms of the age profile of our customers.
“These are just some of the insights we obtain from our real-time customer data feed. I am equally delighted that our proposition reaches a broader demographic in line with our purpose of making banking more accessible to ordinary South Africans.”
With transaction costs that are either free or range from R2 to R8, one can’t help but wonder how the bank makes a profit. Keraan says it makes its money through transactional fee income.
“We have an ultra-low-cost operating model because we are a digital bank,” he explains. “We are digital to the core; we do not have a lot of manual processes and we do not have a lot of people in our back office.”
He adds that the bank also makes money through deposits, loan offerings and by connecting other businesses through its channels, such as facilitating insurance claims through its kiosks.
TymeBank has installed bright yellow kiosks at Pick n Pay and Boxer stores, which it uses to facilitate the onboarding of new customers. It has also placed young ambassadors who were previously unemployed and/or are from previously marginalised communities to assist customers at the various stores.
“Having a human face is important to bridge that digital divide, particularly for customers that have lower levels of digital savviness,” he says.
Keraan says the bank’s lending strategy is based on its own data collection as well as that of its partners.
“We have a long-term exclusive arrangement with Pick n Pay to use basket data for the purposes of lending.
“As soon as you start to curate and augment these different sets of data, it allows you to lend responsibly to customers at rates that are still competitive, whereas previously you may have not been able to do that,” he says.
After collecting the data, the bank then administers the loans digitally, so customers can receive the funds in their accounts in a few minutes.
“The speed of lending is actually important when it comes to unsecured lending,” Keraan explains.
Listen to the full interview with Tauriq Keraan on SAfm Market Update with Moneyweb: