Sasfin builds small business bank
CEO says his B//YOND platform needs only 10,000 customers to be viable
Sasfin says it is building a go-to digital bank for small and medium enterprises as competition in the sector intensifies. /
Sasfin says it is building a go-to digital bank for small and medium enterprises (SMEs) as competition in the sector intensifies.
The business-banking specialist said that despite more SME offerings by big lenders, its customer deposits rose 11.9% to R4.98bn, driven mainly by its transactional banking platform B//YOND which was launched in 2018. This showed Sasfin attracting deposits from SMEs.
Sasfin CEO Michael Sassoon said digital banks were getting commonplace thanks to new entrants disrupting the status quo, but no-one knew how to build one for SMEs like Sasfin.
“Most of the incumbents have either taken a retail internet banking offering or a corporate internet banking offering and they ’ ve tried to repurpose those into an SME offering, which is quite complicated. SMEs needs are quite specific,” Sassoon said.
Three new banks launched in the past year: TymeBank, Discovery Bank and Bank Zero. African Bank launched a new transactional account. As for SME offerings by existing banks, Standard Bank launched a digital solution to help SMEs start online stores this year, and FNB said it simplified its lending process for SMEs.
Sasfin intends to use B//YOND as a one-stop-shop, especially for small businesses that do not have certain functions in-house. It is expected to be fully launched in mid-2020.
Sassoon said that while the other banks might need large customer numbers to offset low fees in some digital banking platforms, Sasfin needed only 10,000 to make B//YOND viable as a transactional account as business-banking clients tended to be “good quality ” customers.
“I think we are quite well placed both in terms of [competing with] the incumbent and in terms of new players, specifically for businesses,” Sassoon said.
Thanks to better credit management, the banking division contributed 68.4% to the group ’ s earnings, helping Sasfin lift its headline earnings for the year to end-June by 32% to R161.3m. The tighter credit controls also helped the banking group reduce its credit loss ratio to 1.02%, from 1.97% a year before. The bank has been struggling with an elevated credit-loss ratio, which was more than double that of Nedbank, Standard Bank and Absa in 2018, as it also lends to small and less stable businesses.
However, the group recorded a 0.18% fall in gross loans and advances, but it said that was not an indication of a flat credit environment; rather, it was a result of running off a lending book it inherited when it acquired Absa Technology Finance Solutions in 2017.
Sassoon said that while the economic environment had been challenging for SA businesses, there was demand “for our money ” and the bank could grow its credit portfolio quite significantly, but wanted to balance growth with improving the quality of its credit book.
WE ARE QUITE WELL PLACED IN TERMS OF [COMPETING WITH] THE INCUMBENT AND NEW PLAYERS, SPECIFICALLY FOR BUSINESSES