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TymeBank has attracted R1.6-billion in new capital from global investors as it prepares for stiffer competition in the digital banking space in South Africa.

The bank, owned by Patrice Motsepe’s African Rainbow Capital (ARC), has more ambitious plans too: it’s aiming to extend its services to millions of under-served banking customers in Southeast Asia, starting with the Philippines.

TymeBank has attracted 2.8 million customers since launching in late 2018 and expects to reach three million by the end of March. About 60% of its customers make active use of their accounts, which can be accessed through banking apps, online banking and kiosks in Pick n Pay and Boxer supermarkets. It’s also about to extend credit to customers, starting with the buy now, pay later facility MoreTyme and a credit card.

The investment, by private equity investor Apis Growth Fund II and JG Summit Holdings, a family-owned conglomerate in the Philippines, will help to fund local growth and replicate its model outside South Africa.

For the R1.6-billion, Apis will get a 14.9% stake in TymeBank and JG Summit a 5.13% shareholding, valuing TymeBank at about R8-billion. ARC made an additional investment to maintain a 59% interest and there are other smaller shareholders, including employees, Ethos Private Equity, and African Figtree, a vehicle for the co-founders and starting crew.

“Going into this venture we were very clear that we wanted to bring in partners from a financial capital perspective but also a strategic perspective,” ARC executive Charmaine Padayachy told Business Maverick.

“Also to have a deep skills-set in terms of FinTech. All that came together towards the end of last year when we found Apis and JG Summit.”

It gets the financial muscle from Apis, which focuses its investments on financial services and financial infrastructure businesses. What JG Summit brings is a massive infrastructure and hundreds of thousands of prospective customers through the businesses it owns in the Philippines, ranging from shopping malls and residential buildings to thousands of drug stores, supermarkets and hardware stores. It also has operations in Myanmar and Vietnam.

Just as TymeBank taps into Pick n Pay’s Smart Shopper loyalty programme, JG said the rewards programme across its businesses had about seven million members, of which about 3.8 million were active customers displaying behaviour that was very similar to TymeBank’s customers.

“Our footprint becomes ready infrastructure that TymeBank can lay its experience and technology on to,” said Jojo Malolos, president and CEO of JG Digital Equity Ventures.

“We already have a bank, so we have the right infrastructure to connect the dots, knowing that the bulk of our customers in the conglomerate are those that we will target in the under-served market.”

As TymeBank prepares to enter new markets, it has yet to turn a profit at home. It expects to break even only next year, about two years after the formal launch, which co-founder Coen Jonker said was world class in terms of global standards as similar ventures typically took five to six years to become profitable.

“We feel as a team that we have done the hard yards in SA to establish the business,” Jonker said. “Our product development machine is working like clockwork.”

Malolos believes growth may come faster in the Philippines, which has a population almost twice that of South Africa and an even larger under-served market.

While TymeBank CEO Tauriq Keraan admitted that continuing its growth trajectory would become tougher as competition intensified in the South African banking sector with the imminent launch of Michael Jordaan’s Bank Zero, he said the differentiator for TymeBank was its hybrid model.

It had the cost efficiency and data benefits of a digital bank but the advantage of a physical presence using kiosks at Pick n Pay and Boxer supermarkets, as well as the partnership it formed last year with the Zion Christian Church (ZCC), SA’s largest religious affiliation.

“In an emerging economy like South Africa the hybrid model is critical for scale; people still want to engage in a physical network,” Keraan said.

“In developed economies where the market is digital-savvy that’s okay, but in a market like ours it’s difficult.”

It might find competition even tougher in the Philippines, where there are about 40 commercial banks all aiming to create their own digital footprint. JG Summit’s Malolos is unfazed though, saying if it wasn’t for its partnership with TymeBank, the conglomerate would have been approached by other SA banks due to its extensive reach and a potentially massive customer base just waiting for the right offering.

Jonker said the bank expected to launch in the Philippines in the first half of 2022 once it obtains a digital banking licence.

TymeBank will be a minority shareholder, with JG Summit holding 60% of the new venture. DM/BM

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