Sanlam is putting the building blocks in place to disrupt the retail mass market in the banking sector without the need to open a bank, with group CEO Paul Hanratty backing the mooted partnership with TymeBank as key to the financial services major achieving its goals.
Hanratty gave Business Day more insight into the deal announced earlier this year in terms of which Sanlam and TymeBank will form a retail credit joint venture focused on unsecured personal loans with an embedded credit life offering.
The transaction, with cross-selling opportunities between the two entities central to the deal, is still subject to approval by the Prudential Authority after the competition authorities gave the deal the green light.
“We used to have a partnership on personal loans with FirstRand which was very constraining for us. FirstRand limited the growth of that business because it was competition for their business and they only owned 30% and we had 70% of the joint venture,” Hanratty said.
“TymeBank has been a great digital transaction bank but not in the credit space. Ultimately they need to build their credit business. They have a great client base who need access to credit. By partnering with them, we open up the possibility of writing credit into their base and in an unconstrained way we can develop credit to our client base,” he said.
“Over time, we expect a steady growth in that business and I think we will become a significant player in that space. The product will be more aimed at the retail mass market going forward, which historically we have limited that segment heavily, focusing on affluent clients.”
Sanlam Personal Loans (SPL) was in partnership with Direct Axis, a business unit of FirstRand.
SPL provides unsecured personal loans of R5,000-R300,000 on repayment terms of 12 months to six years at a fixed interest rate. The SPL loan book size was R5bn at end-December 2024, a drop in the ocean compared with the loan books of SA’s largest banks.
Capitec has made great strides in the retail mass market, amassing about 25-million clients.
Market share
Hanratty said TymeBank had the ability to win market share in the sector, adding that their partnership would also leverage Assupol’s vast branch network.
“With the Assupol transaction, we have taken over a large branch network and we have begun to modernise that network. So customers will be able to come to branches or transact digitally with us. For us the partnership with TymeBank is a new, big growth opportunity,” Hanratty said.
“The other half of the idea behind the TymeBank partnership is to take banking services to the Sanlam customer base and there we are also in the process of getting regulatory approval. We will end up with a proposition in Sanlam where we can take both credit and banking services to our customers.”
Sanlam rival Old Mutual is set to launch its banking offering, OM Bank, before year-end — marking the financial services group’s re-entry into the banking sector after its disinvestment from Nedbank in 2018.
OM Bank will not roll out ATMs countrywide, but will be entering into partnerships with retail outfits to make its services available to consumers.
The likes of Discovery have also made a foray into the banking sector. TymeBank, launched in 2019, has about 10-million clients, making it one of SA’s fastest growing banks.
Its valuation shot up to nearly R27bn last year after a capital raise of $250m as Brazilian fintech Nubank bought into the group.
Nubank invested $150m, with M&G’s Catalyst subscribing for $50m, with existing shareholders putting in a further $50m.
Hanratty said that through the partnership with TymeBank via a joint venture they would equally own, there was no need for Sanlam to open its own bank.
“Time magazine has ranked TymeBank as one of the top 100 companies in the world. Nubank, the most successful digital bank in the world, is a significant shareholder in the company. Why would we try to do something ourselves and compete with what is already globally recognised? For us, we’d rather partner,” he said.
“Personally I can’t wait to shift my own banking from one of the traditional banks to TymeBank where the service is at a different level compared to what South Africans have been subjected to by banks.”
TymeBank and Sanlam share ownership commonalities with Patrice Motsepe, a large shareholder in both groups.
Motsepe is also Sanlam deputy chair.
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