Date: Monday 10 June, 2019
Publication: Business Day
Cheap and easy: Patrice Motsepe's African Rainbow Capital owns TymeBank, which offers accounts with no monthly fees. A relationship with Pick n Pay enables customers to open an account at the retailer's outlets countrywide.
Growth beats expectations, say analysts as bank closes in on milestone
Londiwe Buthelezi Business Si Financial Writer TymeBank, owned by business person Patrice Motsepe's African Rainbow Capital, said on Friday it is on track to reach the half-a-million customer mile stone at end-June.
TymeBank is the first of the new entrants to disrupt banking in SA by offering a zero fee account. Since its launch in February, some rivals have also launched no fee products. which include value added services such as free airtime, in a bid to defend market share.
Analysts say TymeBank's growth has surpassed expecta tions given that the bank only launched officially four months ago and has no branch network.
"I think TymeBank's perfor mance is very impressive. "However, the growth might be supported by people opening a secondary account," said Avior Capital Markets banking analyst Harry Botha.
With no capability to switch salaries and debit orders yet, TymeBank's ability to steal market share from incumbent banks remains limited.
But deputy CEO Cheslyn Jacobs says even if it is not the primary bank for most customers, seeing deposits to the bank break records in the past two months shows that TymeBank is already gaining savings that would have gone to the big five banks. The bank has not disclosed how much has come in as deposits since its launch in February. But Jacobs said 52% of all deposits in the bank are under its savings pocket Goal Save, which starts offering depositors 9% interest per annum after three months.
Jacobs says Tyme has a huge customer base of people who have been banking customers for decades. "Twenty percent of our customer base is now 46 years or older. For me that's a big proportion given the view many people have that it's for tech sawy young customers."
Since TymeBank's launch, Nedbank, First National Bank FNB and African Bank have launched transactional accounts with zero monthly fees. Capitec, Standard Bank, FNB and Nedbank have all revised their entry level banking products, offering more benefits at a lower price than they used to. Absa is the only big bank that has not joined the price war.
"Our main purpose was to always create an environment that provides affordable and accessible financial services. "So we are never going to push back against their price drops. But you really have to ask yourself why it has taken them so many years to do so. Surely they were in a position to do this before," said Jacobs.
With big banks and their well capitalised balance sheets pulling out all the stops to retain their clients, it could be difficult for TymeBank to grow the number of customers who use it as their main or primary bank. Botha says launching credit products might help the bank in this regard as customers will have an incentive to switch their salary to TymeBank and to use the account as their primary account.
Wessel Badenhorst, a banking analyst at 360ne Asset Management, said the bank will benefit by broadening its products and services so that client gains do not entirely depend on what the other banks do. While growth in customer numbers looks impressive for a new bank, Badenhorst said considering whether TymeBank is gaining active clients or clients who open and leave dormant accounts is a better measure of whether it is truly gaining banking market share. "Given the increased efforts by TymeBank as well as the other banks to make opening an account less of an administrative hassle, this increases the probability of people opening an account on the spur of the moment without ever really using it subsequently," he said.