Banking innovator Tymebank in the black ahead of the pack
Profitable after less than five years, the South African digital disruptor outpaces most of the neobanks around the world. By Neesa Moodley
Digital disruptor Tymebank continues to blaze a fiery path in the banking sector. It reached the milestone of breaking even in November last year, making December its first profitable month, less than five years after launching in February 2019.
When it comes to the future, chief executive Coenraad Jonker says the most ambitious target is to become one of the top three retail banks in the country in terms of return on equity.
“We’re at the start of our next threeyear plan for the business, and we have tentatively started offering a shortterm unsecured consumer loan product. For the moment, it is purely outbound on an invitation-only basis, so we are not offering it to the broader market yet, and that’s to make sure we grow the product responsibly before going big with it,” he says.
Other initiatives in the pipeline include credit cards and overdrafts, but the focus right now is on a virtual card that clients can use both locally and internationally.
“We are extremely proud, particularly [because] less than half of the top 100 digital banks globally are profitable. In fact, the Future of Neobanking – Profits at the End of the Tunnel report by global consultancy Simonkucher found that less than 5% of all neobanks worldwide have reached profitability,” Jonker says.
“And of those that are in the black, most have taken a lot longer to become profitable, notable examples being Latin America’s Nubank and Londonbased Monzo, which took eight and seven years respectively.
“Having achieved our first month of profitable operations in a significantly shorter timeframe is a South African success story that our 8.5 million customers can share with pride.”
The bank attributes its success to several key factors:
A lowcost model that includes more than 1,000 kiosks available to consumers through partnerships.
Sustained growth of about 150,000 new customers each month.
Partnerships with reputable, established brands such as Pick n Pay, Boxer and the Foschini Group.
The rapid 30% growth of its lending portfolio year on year, driven by Merchant Cash Advance, which finances more than 50,000 SMES.
Other successful Tymebank initiatives include the launch of an interest-free grant advance for social grant recipients; the launch of healthcare insurance (TymeHealth) in collaboration with the National Healthcare Group, which is a banking first in South Africa; and the launch of the buynowpaylater product Moretyme at a time when the concept was relatively unknown in South Africa.
“As the country’s first digital bank, we’ve overcome numerous challenges as we consistently innovated and broke new ground in the market. Through it, our team has remained focused and committed to our mission of providing South Africans with affordable, accessible and quality banking services,” Jonker adds.
Dr Patrice Motsepe, founder and chairperson of major shareholder African Rainbow Capital, says that, “as the business evolves, we are seeing it gradually appeal to more affluent consumers who appreciate its unrelenting innovation, customer-centric transparency and accessibility”.