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November 2019

 

3 - 5 Minutes

TymeBank: Will South Africa always need face-to-face banking?

There is an explosion of neobanks in South Africa right now who are leapfrogging traditional banking to a purely digital play.

In response, established banks are overhauling their pricing and introducing competing propositions as customers increasingly use online and mobile banking services.

So why, then, is one of these neobanks – TymeBank – looking to connect with its customers, by combining the agility of digital banking with the face-to-face experience?

In short, they believe South Africans need human contact to help navigate financial products that many find daunting, and part of their mission is that everyone has the right to accessible and affordable banking.

TymeBank (Take Your Money Everywhere) was originally set up because they saw traditional banking as “expensive, inconvenient, and complex”, with just 24% of South Africans making more than three monthly transactions through their account.1

However, digital banking on its own is not necessarily the answer to financial inclusion, as many people on low incomes have not typically banked online because of concerns around fraud and a lack of familiarity. And just 1.2% of households in rural areas enjoy the same level of internet connectivity as those living in urban areas.2

“In the foreseeable future, we don’t see a world where customers are, for example, just wiring money or where bots take over completely from the call centres,” said TymeBank CEO, Tauriq Keraan.

“There will be elements of the service chain that will be digitised, but customers in this country will always need to deal with someone in person or over the phone when things go wrong, or when they have questions. Traditional banks aren’t able to unravel the infrastructure of their legacy to be able to go completely digital.”

TymeBank’s solution has been to rollout 750 kiosks located in supermarkets across South Africa, which bridge the physical and digital divide.

An ambassador – recruited from a disadvantaged neighbourhood – runs the kiosk 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 South African Department of Home Affairs’ HANIS database.

Within five minutes (subject to passing the necessary checks) customers will have a personalised Visa Debit card in their hand. Customers are able to start using their accounts immediately, and are able to deposit cash at over 14,000 Pick ’n Pay or Boxer supermarket tillpoints.

Overcoming barriers

Traditionally, the savings market in South Africa has been informal, with many joining stokvels3 – community savings clubs – where money is pooled, which has provided a further opportunity for TymeBank to target the underserved and the unbanked small and medium-sized businesses.

“When we set up TymeBank we considered each of those barriers and evolved our business model in a way that differentiates us,” said Keraan.

“People can be wary of banks’ savings products, because it is often not clear whether the rate of interest is better than the rate of inflation. That is not particularly appealing to consumers. Also their money will be locked away and they can’t get at it at short notice.”

TymeBank aims to pass on the benefits of their low-cost model to their customers with low transactional fees. To make things clearer and simpler, these fees are also charged immediately rather than being accrued. TymeBank’s simplified pricing approach is now being adopted by other players.

Creating a scalable model

As its relationship with customers deepens, TymeBank is able to increase account limits over time. This is as a result of the regulatory regime in South Africa moving away from being rules-based to risk-based which puts the onus on the issuer. For example, EveryDay account customers who have ‘just met’ the bank have a maximum account limit of R20,000 (approx. €1,200), which rises to R50,000 (approx. €3,000) for ‘getting to know you’ and R500,000 (approx. €30,000) for ‘good friends’.

TymeBank is developing its model to rollout kiosks in places with high footfall all over the country, including in transport hubs like rail stations, and even in places of work.

“We have built a model that acknowledges and supports the physical element of banking, but is also digital and scalable,” added Keraan.

TymeBank has been issuing Visa debit cards since November 2018.

Tauriq Keraan, who has an MSc from the University of Cape Town, has spent the past 10 years building and scaling digital banking businesses in South Africa.

He played a key role in the inception of Tyme, as well as its subsequent sale to Commonwealth Bank of Australia in 2015 and to African Rainbow Capital in 2018.

Keraan was appointed Deputy CEO in 2018, where he drove cross-functional execution and had line accountability for strategy, partnerships, data science, innovation, stakeholder engagement and operations. He was appointed CEO in 2019. Keraan is a family man and takes an active role in serving the needs of abandoned, abused and orphaned children.

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