TymeDigital to target lower end of market
SA’s first full banking licence in 18 years Backed by Motsepe’s African Rainbow Capital
Commonwealth Bank of Australia’s TymeDigital is set to disrupt consumer banking at the lower end of the market after clinching the first full banking licence the Reserve Bank has awarded in 18 years.
The digital bank, headed by former Nedbank business banking MD Sandile Shabalala, will begin setting up its operations from November, with the official launch planned for the second quarter of 2018.
TymeDigital plans to target customers from the small and medium-sized enterprises (SME) market.
The fledgling bank, backed by a 10% equity stake from Patrice Motsepe’s African Rainbow Capital, has already reached agreements with retailers Pick n Pay and Boxer for its money-transfer service, where customers register with their identity documents at a small kiosk, then use tills to send money. More than 200,000 customers have signed up for the service.
With the banking licence, TymeDigital can now extend its offering to digital bank accounts and transactions. Shabalala said the bank was “very particular” about the markets it would serve and would not be aiming for customers at the higher end of the market, or be offering large commercial products.
“We believe we can add value at those levels where people are underserved, where banks are not represented,” he said. “If someone doesn’t have a bank account, for example, they have a cellphone.”
Shabalala said TymeDigital’s customers could use cellphones and other devices to transact on its platforms. “On the SME side, there are huge opportunities with SMEs that are undercapitalised — they need loans. The question for us is how do we simplify the offering to SMEs?”
He would not divulge details about the cost of TymeDigital’s accounts, or even its capital expenditure, but said it was much lower than that of traditional brick-and-mortar banks.
Patrice Rassou, head of equities at Sanlam Investments, said TymeDigital’s offering could be cheaper. “I think it will be online
mainly, so for more savvy millennials to start with.”
TymeDigital is the first of three provisional licensees to secure a “final” licence, beating insurer Discovery’s upcoming bank and even the post office’s Postbank to market. “We really expect the bank will be profitable,” Shabalala said. “This is a foreign bank coming into SA, showing a lot of confidence.”
Coenraad Jonker, group executive at Commonwealth Bank, said it was drawn by the strength of SA’s institutions, especially that of the Reserve Bank, which it felt had done well in securing the stability of the banking sector in SA. Although TymeDigital is a subsidiary of Commonwealth Bank, it is required to have its own board.