TymeBank, a lender backed by Patrice Motsepe, has logged a 20% decline in the number of new monthly clients it signs up, putting its 2022 break-even target at risk as the Covid-19 pandemic restricts people’s movements.
Launched as an app-only bank just more than a year ago to take on established players such as FirstRand and Capitec in the R6-trillion market, TymeBank has set a target of signing up 3-million customers by 2022. It expects to break even then and recover the costs of offering banking services for free.
But CEO Tauriq Keraan said the company signed up 20% fewer customers in April after SA imposed some of the world’s strictest lockdown measures to contain the spread of coronavirus. “We’ve seen the monthly rate of customer acquisition slow down since the pandemic broke out. The reason customer growth has slowed is quite obvious, people’s movements are severely restricted during these times.”
The digital bank surpassed its own target in November when it hit 1-million clients after eight months of operating. Its monthly average had been 110,000 new customers. It now has 1.6-million customers, of whom 850,000 are active, Keraan said.
The stringent lockdown restrictions have reduced the number of people visiting its partner Pick n Pay stores, where TymeBank has set up kiosks to sign up new clients. But that has been offset to some extent by an uptick in those signing up on its online platform.
The bank has positioned itself as an ultralow-cost bank but has managed to organically attract wealthier consumers; 30% of its clients earn more than R10,000 a month, Keraan said.
A decline in card transactions has also led to a drop in the number of card deposits, though this was offset by the significantly higher monetary value of customers’ deposits, he said.
TymeBank plans to combat the reduction in new clients by bolstering its digital offering to included a facial recognition feature to sign up clients quicker. It also plans to develop and market new products for its existing customer base.
“You don’t actually have to plug it by getting more customers, you can actually plug the economic gap by getting existing customers to do more with you; and that is where we’ve seen very positive behaviour,” Keraan said.
The bank has had a 50% spike in the purchase of value-added products which include airtime and electricity as well as instant money transfer services via a cellphone, Keraan said.
It is on course to launch a new life insurance product with one of SA’s largest insurers by the end of the year, Keraan said, declining to name the company.
“We are at a very advanced stages of finalising a commercial partnership with one of the very large insurers in SA. It will be a life insurance product to start off with where we leverage some very specific attributes of our product offering, we may be able to offer some rewards for early payment of premiums,” said Keraan.
The bank is also looking for ways to branch out into the small business banking market, Keraan said.
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