South African digital bank hits major milestone – 5 months ahead of schedule

African Rainbow Capital-backed digital bank, TymeBank, has hit a significant milestone – onboarding 2 million customers by the end of July 2020, five months ahead of schedule.

In ARC’s integrated annual report, published on Wednesday (7 October), the group noted that it had added 100,000 customers in the month since its last reporting (end June 2020), taking its customer base from 1.9 million to 2 million by the start of August.

When the bank launched in November 2018, it said that it aimed to be at break-even by 2022, with a customer base of around 2.2 million.

Such has been it’s growth that the group has increased its ‘stretch-target’ to 3 million customers by the end of December 2020. The group said previously that it was adding between 3,000 and 3,500 new customers daily.

“In this regard we are pleased to report that the number of customers who transact regularly using their TymeBank cards is growing consistently.

“We are also pleased to report that although initial implementation with the Zionist Christian Church initiative ground to a halt as a result of the national lockdown regulations, initiatives are underway to re-ignite implementation plans to onboard a large portion of the church’s six million adult members,” it said.

In line with its faster-than-expected growth in clients, the group said that growth in deposits also remains strong and well ahead of plan. Customer deposits breached the R1 billion mark in April 2020 and the bank attracted aggregate deposit flows for the period of R10 billion.

ARC Financial Services contributed R750 million to TymeBank, of which it owns 70.5%. The ARC Fund owns a 49.9% share of ARC FS, which makes the ARC Fund’s interest in TymeBank 35.3%. This forms part of scheduled capital injections into the bank.

Product changes

Given the current economic environment, which has seen the country’s economy decimated by the Covid-19 pandemic and national lockdown, and consumers under severe stress, TymeBank was forced to adjust its product release plans.

Notably, the group’s management took the decision to postpone the launch of unsecured credit products, on the grounds that suppressed economic activity may impact on customers’ ability to service debt.

“While this is a defensive measure to reduce risk and conserve capital during the economic downturn, it also has the advantage of bringing the break-even point closer. In the meantime, the bank’s management is considering alternative credit products that do not present the same long-term risk,” it said.

Meanwhile, the group’s transactional account for small businesses introduced in January – but only actively marketed until July to obtain key learnings in customer behaviour – has been well received by sole proprietors, TymeBank said.

“These clients represent a large component of entrepreneurs in South Africa who are under-served by the traditional banking system.”

The group indicated that it would make more inroads into broader financial services, following the bancassurance partnership with Hollard. It said it is in “advanced negotiations” with another potential partnership, which if successful, will enable it to provide a broader suite of products to customers.

Read: TymeBank is signing up between 3,000 and 3,500 customers each day

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South African digital bank hits major milestone – 5 months ahead of schedule