Capitec Bank’s days of regarding itself as SA’s most prominent digital bank appear to be numbered.
Capitec seems to have reached its peak and other banks are catching up. This does not mean the queues at Capitec banks are a thing of the past.
Earlier this year, Capitec informed investors that retail clients using digital channels climbed by 28% to 8.6-million for the year ended February 28 2021. Capitec said it was the biggest digital bank in SA with active users of its app, USSD channel, or a combination of digital channels.
“We embraced innovation and digitalisation, and so did our clients, and the permanent benefits and cost savings are expected to flow in the coming years,” Gerrie Fourie, CEO of Capitec, explained at the time.
“Clients are now more than ever before motivated to use digital channels such as our new banking app as they are set to benefit from the lower transaction fees and zero-rated data charges.”
But a new challenger, TymeBank, is quietly positioning itself as the next big mass-market digital bank for SA.
The bank is 100% digital. It uses apps and online platforms to support its customers, rather than traditional physical branches. TymeBank is already making strides and has a real possibility of becoming SA’s biggest digital bank in a few months.
The Covid-19 pandemic may have thrown TymeBank’s plans off course. In February 2020, TymeBank — owned by billionaire Patrice Motsepe through JSE-listed African Rainbow Capital — announced a partnership with SA’s largest religious affiliation, the Zionist Christian Church (ZCC). There are about 12-million ZCC members.
The innovative partnership will see TymeBank become the financial services partner of choice for ZCC church members. If the plan goes ahead, the TymeBank bank card will double as a membership card for ZCC members.
The product will be supported using ZCM (Zion City Moria) branded portable kiosks staffed by the church’s in-house mobile digital services company, Zetnet. The development would propel TymeBank to the front of the race to be SA’s biggest digital bank.
As more South Africans get vaccinated, the better the chances that churches will resume normal services and gather huge numbers of the faithful. When that happens, TymeBank (Take Your Money Everywhere) will be available at ZCC churches.
Last week, TymeBank stated it had successfully onboarded 3.45-million customers in just over two years since launching.
Lockdowns and vaccine hesitancy are slowing down its growth. This week the digital bank reduced the number of ZCC members to be onboarded to about 9-million.
“This initiative had largely been postponed due to the impact of the Covid-19 pandemic and the national lockdown and should gain momentum once preventive Covid-19 measures are relaxed, and it is reasonably safe to resume activities to on-board church members,” African Rainbow Capital informed investors.
There is no doubt that once the onboarding of the ZCC members begins, TymeBank could surpass Capitec as the leading digital bank by about 4-million customers.
Vaccination is considered SA’s best weapon against the virus. As more people get the jab, new infections and deaths are likely to fall, resulting in more lockdown relaxations.
In May, the leaders of ZCC — which has not opened its doors since the onset of the Covid-19 pandemic — were vaccinated in Limpopo.
Once TymeBank starts the process to on-board ZCC members, the natural next step will be for Motsepe to convince the board of African Rainbow Capital to float the digital bank on one of SA’s stock exchanges. This will enable TymeBank to raise capital and scale and compete with Capitec, Discovery Bank and Bank Zero.
A possible listing of TymeBank will also enable ordinary South Africans to stake a claim in the digital bank.
Indications are that the main shareholder — African Rainbow Capital — is preparing for massive growth. It injected an additional R505m for capital requirements into TymeBank and TymeGlobal.
TymeBank and TymeGlobal have secured additional equity funding of $110m (R1.6bn) from African Rainbow Capital and two new international shareholders, Apis Growth Fund II and JG Summit Holdings.
The additional equity funding is split into two tranches. The first tranche of $80m (R1.2bn) was concluded after the signing of the agreements in April 2021, and the second tranche had not yet concluded at the time of reporting.
TymeBank will use the funds for digital technology to make banking affordable and straightforward. This will enable more customers to benefit from lower banking costs as well as an improved customer experience.
Hopefully, the benefits of TymeBank’s growth will swell the wallets of millions of South Africans and prove its value as a digital bank.
The agility of digital banking with face-to-face experience seems to be convincing customers to switch to TymeBank. The rollout of the kiosk in supermarkets is bridging the physical and digital divide. The kiosks are manned by an ambassador — recruited from a disadvantaged neighbourhood — who runs it and guides prospective customers through the simple account registration process.
The process sees customers capture their ID numbers and fingerprints, which are then verified against the home affairs departmet’s HANIS database.
Customers will have a personalised Visa debit card in hand within five minutes (subject to passing the necessary checks).
Customers can start using their accounts immediately and deposit cash at more than 14,000 Pick n Pay or Boxer supermarket till points.
TymeBank is developing its model to roll out kiosks in places with high numbers of football fans all over the country, including in transport hubs such as rail stations and even in areas of work.
“We have built a model that acknowledges and supports the physical element of banking, but is also digital and scalable,” said the bank.
A listed TymeBank would be good for SA’s neobanks reputation and might attract new investors on the stock exchange.
• Lourie is a former correspondent for Thomson Reuters, Business Report, Fin24 and Finweek magazine. He is also the founder and editor of techfinancials.co.za
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