TymeBank and digital peers thrive in online shift prompted by coronavirus

With 1.6 million customers and 850 000 active accounts and counting, TymeBank’s growth in the first year of its launch surpassed its own projections. But can the bank maintain this momentum as the novelty of trying new things wears off for digitally savvy early adopters?

The bank, which is owned by Patrice Motsepe’s African Rainbow Capital, started off its second year on a bumpy ride as the coronavirus lockdown caused new customer acquisition through supermarket kiosks to slide 20{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} in April, said CEO Tauriq Keraan on Tuesday.

“It’s quite difficult with what’s happening now in the market, because we have an unprecedented health crisis which has led to people’s movements being severely restricted. But not withstanding that, we’ve seen certain transactions shoot up,” he said.

TymeBank was just warming up to the possibility of mass customer acquisition at the Zion City Moria in Limpopo following a partnership with the Zion Christian Church (ZCC) that the bank announced in February. It was also in the middle of rolling out kiosks outside Moria to serve the congregants in other provinces before South Africa went on lockdown.

But while the tragedy of the Covid-19 pandemic has seen fewer people opening bank accounts through branches and kiosks, it has proven to benefit banks that can issue new accounts without needing people to visit branches.

Spike in digital banking transactions

Keraan said TymeBank, which saw value-added services like airtime and electricity sales shoot up 50{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} in April, will now be aggressively promoting online registration of new bank accounts, something that the bank has had for a while. Motivating the bank is the fact that when people were locked indoors in April, it saw average balances per active customer increase 25{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} and send money transactions climb 20{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}.

The other new banks, Discovery Bank and African Bank’s MyWorld also have the same capability, and so do the big four incumbent banks, which Avior Capital Markets analyst, Harry Botha, says will set winning banks apart in this period of physical distancing.

“I wouldn’t dismiss the other banks’ digital capabilities though,” he said. “Capitec will probably shift more transactions to digital channels fairly soon, like account opening, because of the lockdown conditions,” he added.

He said TymeBank was probably gaining so many customers because of its low fees, but most banks most likely observed a similar shift away from cash.

Discovery Bank, which is now exactly a year old, also said it had recorded “an uptick” in digital accounts opened lately. The bank, which last reported that it had 78 000 clients and 180 000 accounts in mid-February 2020, will be releasing its own updated numbers soon, it said.

Meanwhile, African Bank, which launched its transactional account, MyWorld, in May 2019, said it had 214 000 account holders at the end of January 2020. But the true test for MyWorld and TymeBank is yet to come in the current low-interest rate environment, as they are forced to review interest rates that have been a selling point in some of their savings accounts.

African Bank has opted to keep the 13.33{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} compound interest it offers customers at maturity of their five-year investments, but it has reduced the interest rate for money kept on MyWorld’s saving pocket by 100 basis points to 5.5{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}. Keraan said TymeBank will review its current rate of between 6{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} and 10{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} on its GoalSave accounts in June.

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