TymeBank, controlled by Patrice Motsepe’s African Rainbow Capital (ARC) and which this week received the backing of Chinese internet giant Tencent as a funder and new shareholder, has ambitious plans for SA, setting its sights on becoming the country’s number three or four retail bank in the next five years.
CEO Tauriq Keraan says he “knows this is ambitious”, but adds that TymeBank was set up “for scale” and that “if we continue to execute and grow the way we are doing there is no reason why we can’t”.
“By top three or four I don’t mean in terms of balance sheet but certainly in terms of active customers,” Keraan said.
Since its launch in February 2019, TymeBank, which operates a hybrid model based on a digital platform and a physical presence through kiosks and other outlets at retail partners such as Pick n Pay and Foschini owner TFG as well as the Zion Christian Church, has attracted 4.2-million customers, with plans to continue expanding as quickly as possible.
The group’s global arm — which is called Tyme and is headquartered in Singapore — is at the same time pursuing a growth agenda in Southeast Asia. It was awarded a banking licence earlier this year for its digital bank, GOTyme, in the Philippines.
Tyme is chaired by Coen Jonker, who originally cofounded the company with Tjaart van der Walt in 2012 and oversaw its evolution into the fully fledged bank called TymeBank.
Jonker says he agrees with Keraan about the ambitious growth plans for TymeBank, adding that it won’t try to be “all things to everyone” but will keep a specific focus on retail and small-business banking.
“We are not going to compete in the investment banking space. We are very much a retail and small-business bank, but I think we can became a top-three retail and small-business bank in SA.
“We also think that this whole distinction between traditional banks and digital banks will actually become less important over time. It will be about customer service, about pricing, about keeping our operating costs very low and keeping our service great.”
Motsepe, who is chair of ARC, says SA’s banking sector is becoming “increasingly competitive”, adding it would be “unwise to dismiss any of the banking players”.
He says TymeBank’s “ambition is to be one of the top three banks in the country, helping our customers in SA on the journey of digital finance and making a contribution to consumers’ economic prosperity”.
He adds that TymeBank’s “high customer satisfaction scores and its stellar growth in terms of customer numbers” proves the bank offers “what ordinary South Africans want and need”. Motsepe says ARC is also “certainly committed to maintaining its majority shareholding” of more than 50% in Tyme and TymeBank.
Keraan and Jonker both see TymeBank gaining increasing market share from SA’s traditional banking establishment, with Jonker adding that the big players are also facing competition “beyond the banking industry” in areas such as fintech.
“I think that the mobile operators, the wallet plays, the other fintechs in the market, they are slowly but surely eating the banks from the bottom up, and SA is actually a market where we see fantastic fintechs starting to mature who are really good at what they do.”
Tyme, in building its fintech capabilities, would probably seek partnerships with existing fintechs, he says.
Tyme and TymeBank’s growth ambitions were given a significant boost this week with the news that Tencent and UK development finance institution CDC had participated in Tyme’s latest $70m (about R1.1bn) funding round. About 70% of this funding will be used for TymeBank’s South African expansion and the remainder will go to GoTyme , which is expected to launch next year.
This completes $180m in funding raised by Tyme this year. In the first quarter of 2021, $110m was raised from private equity firm Apis Partners and JG Summit Holdings, the Philippines-based group owned by the Gokongwei family. The family is a joint partner in GoTyme.
Explaining the shareholder structure following the capital raise, Charmaine Padayachy, deal executive at ARC, says the shareholding structure in both TymeBank and Tyme mirror each other.
In terms of the first deal tranche, concluded in March, Apis Growth Fund II — a private equity fund managed by Apis Partners — and JG Summit Holdings together held about 20% of Tyme and TymeBank. The latest fundraising sees Tencent and CDC together holding about 11%, with Tencent holding just over 7%. ARC will continue to hold a majority stake of just over 50%.
Padayachy says the balance of the shareholding is held by the founders, executive management, the Ethos Artificial Intelligence Fund, and a small investor in Hong Kong.
Keraan says the investment by players such as Tencent and CDC is “not only a massive vote of confidence in TymeBank ... but the actual South African banking sector as a whole”.
Vestact portfolio manager Michael Treherne agrees that it is a “vote of confidence” in TymeBank, as the Chinese group’s venture capital arm is “one of the most successful in the world”. But he adds that it is also important to bear in mind that Tencent makes a lot of investments, “expecting only a few to be winners”.
He says TymeBank will have its work cut out for it in the battle for market share in SA as other banks such as Capitec are also growing customers quickly and it is difficult to lure customers away from their existing banks.
Standard Bank has almost 10-million customers in SA, Absa 9.5-million and FNB 8.7-million. Nedbank has 7-milion retail customers, while it was reported in October that Capitec had 16.7-million customers.
Patrice Rassou, chief investment officer at Ashburton, says the only way for new entrants such as TymeBank to grow is to “grab market share like Capitec did”.
“It would mean one of the big four banks losing out to them.”
Tyme's idea of expanding its footprint in other markets such as the Philippines makes this partnership with a consumer-facing business like Tencent, which has deep pockets, interesting, Rassou adds.
Jonker, meanwhile, says that Tyme intends to hold future capital raises, with potentially more international investors being brought on board.
“The current investors have indicated their intention to follow their rights in the future so they will always have the first bite of the cherry as new raises come up. But I think that in time we will want to invite one or two other global investors onto the capital table”.
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