TymeBank cashes in on SDR grant recipients
TymeBank, which is attracting an average of 200,000 new clients per month, says it is making inroads with social grant recipients who are increasingly looking at the fledgling lender for banking services, giving it scope for further growth.
The digital bank’s CEO, Coen Jonker, told Business Day’s podcast, Spotlight, that the bank is attracting a mixed bag of customers and is pleased that more and more of SA’s 17-million social grant recipients are banking with it.
“What we find interesting is that we have a wide variety of customers. We have many social grants recipients ... over 2- million of our base being people who qualify for social grants,” he said, adding that grant recipients “are profitable customers for us. Those are the customers we are keen to have on our platform.”
More than 70% of their customers are active clients. “We make enough money from our customers to make some really good revenues in the business.”
The bank, which now has just more than 8-million clients on its books, says it is also attracting customers in the midmarket segment.
“We also have a lot of customers in the middle-class segment, what other people describe as the mass-affluent market. These are customers that use our products to enhance their shopping experience,” Jonker said.
“And we have another group of customers who we call cyber customers. These are customers who never want to see the inside of a branch. They just want to bank on their phone. This is the smallest segment on our consumer side but a very profitable segment. These are the likes of crypto traders.”
The National Treasury in November allocated an extra R33.6bn to continue provision of the social relief of distress (SRD) grant in the 2024/25 fiscal year.
The grant, introduced in the wake of Covid-19 to alleviate financial hardship for the poorest, now reaches about 8.5million beneficiaries.
TymeBank, backed by one of SA’s richest men, Patrice Motsepe, has recorded exponential growth since its launch in 2018.
Business Day reported on Wednesday that the bank may list on a major stock exchange in the next four to five years, as its valuation approaches R20bn.
The bank, controlled by Motsepe’s African Rainbow Capital Investments, a year ago bought Retail Capital, a fintech company that provides funding to small and medium-sized businesses, in a R1.5bn deal, making its foray into the hotly contested business banking sector.
Jonker said the small business segment is important for the company.
“We lend money to about 50,000 small businesses in the country. We provide them with a unique product which is a working capital loan. This is a very important segment for us.
“Since we bought Retail Capital we have almost doubled the money we lend to entrepreneurs,” he said, adding that “the credit book is performing very well. The bad loans in the book are quite low at around 5%.”
The traditional banks and new ones have been beefing up their business banking capabilities or making acquisitions to unseat market leader FNB.
Business Day reported in October that African Bank is in the final stages of developing a digital lending product aimed at small, medium and micro enterprises, with the offering expected to go to market in the first quarter of 2024.
African Bank’s digital lending business will target businesses with a minimum turnover of R5m.
Capitec, the country’s biggest retail bank by customer size, in 2019 bought Mercantile Bank from Portuguese state-owned banking group Caixa Geral de Depósitos in a R3.5bn deal. It has since rebranded the entity into Capitec Business.
Investec, known for its commercial banking prowess, has said it plans to double its market share in business banking in the next two years.
Business banking generally refers to the services used by small companies; commercial or corporate banking refers to the services used by large enterprises with a high turnover.
WE ALSO HAVE A LOT OF CUSTOMERS IN THE MIDDLE-CLASS SEGMENT, WHAT OTHER PEOPLE [CALL] THE MASS-AFFLUENT MARKET
Coen Jonker TymeBank CEO