New account pulls 100,000 clients in healthy boost for African Bank
Transactional offering helps diversify profile, with many customers employed in Sandton, as shift from low-income earners goes on
African Bank, which is still trying to rebuild its image after its near collapse in 2014, says 100,000 individuals trust it enough to do everyday business with it just six months after it launched its transactional product.
African Bank is, however, still way behind TymeBank, which reported in August that it has attracted more than 600,000 customers since its official launch in February. However, it is ahead of Discovery Bank, which said in September that more than 22,000 accounts were opened in the first three months after its launch.
African Bank, whose customer base has been shrinking as it moves its focus to lowerrisk customers, launched a transactional account, MyWorld, in April as a strategy to attract the kind of customers it wants.
Transactional products, which include cheque and debit accounts, provide for the everyday banking needs of individuals and businesses.
When African Bank entered this space, it joined a highly competitive environment after the establishment of Discovery’s behavioural bank, TymeBank and the pending launch of Bank Zero.
Speaking at the JSE SA Trade Connect on Wednesday, African Bank CEO Basani Maluleke said the bank is now training 29 data analysts to help it compete.
“The reality is that, as competition intensifies, we know that customers are going to become a lot more selective about who they decide to trust their money with,” said Maluleke, adding that the bank is investing more into systems that will help it understand its target market better than others.
Maluleke said the entry into transactional banking has helped African Bank attract a different customer profile, mostly working in Sandton, which is why it will be opening a branch in Sandton City in November.
“We’ve always said that a big part of our strategy must be to diversify customer bases and diversify products,” she said.
Maluleke said the bank wanted to play across all income segments, in a shift of strategy from before it was placed under curatorship in 2014.
At the time it was a microlender serving mostly lowincome earners.
African Bank’s older investment product, which has attracted R1.5bn in customer deposits in the six months to March, had attracted wealthier customers than the bank’s traditional customer base. These were mostly pensioners.
“With MyWorld, we are seeing that the average age is younger than 36 years old.
“But we also want to appeal to an older audience because at the end of the day the success for us is how we manage to switch people to make us their main bank, because that will give us more deposits.”
Maluleke said close to 3% of the more than 100,000 MyWorld customers have switched to make African Bank their main bank where their salaries are deposited.
And a large number of those who still use it as a secondary account are transferring more money to it.
“Although people who have switched make a very small percentage, what’s been really assuring is seeing that people are funding their accounts more. We are seeing a nice increase in the number of transactions that people are running through their accounts,” said Maluleke.
She said although African Bank’s transactional account is a digital product, 90% of the accounts were opened in branches and therefore the bank will continue investing in its branch network.