Barely two years since it was launched and with over 2.8 million customers, South Africa’s TymeBank is ready for fierce competition with traditional banks. In a record-breaking deal for an early stage fintech startup in Africa, the bank has announced it has raised $110m in private capital and that it has also teamed up with JG Summit, one of the biggest conglomerates in the Philippines, to apply for a local digital bank licence.
“We believe that the future of digital banking in emerging markets is multi-country, to actually build a banking group where there is enough critical mass of customers,” said Coen Jonker, co-founder and executive chairman of Tyme.
Here Is What You Need To Know
- The latest funding came mainly from private equity fund Apis Partners, with participation from JG Summit.
- TymeBank plans to use the latest funding to expand its services across South Africa.
- It also plans to use part of the investment to finance JG Summit’s launch of digital banking operations in the Philippines. Last November, Philippines’ central bank approved a set of new rules permitting digital banks to set up.
“For us, Philippines represents the best fit in terms of our business and operating model to expand, and JG Summit the best partner in terms of the retail capacity that they have and their loyalty programmes,” said Jonker.
- Tyme also plans to fund its digital banking license as well as expansion to Malaysia which recently announced plans to issue up to five digital banking licenses after it issued a policy framework for online-only banks.
- Following the new investment, the stake of South African billionaire Patrice Motsepe who is a majority owner in TymeBank (and who invested through his investment vehicle African Rainbow Capital) has been diluted, although he still remains the startup’s biggest investor.
Why The Investors Invested
Investment by Apis Partners in TymeBank aligns with its previous investments and geographical focus. The firm supports growth stage financial services and financial infrastructure businesses in Africa and Asia by providing them with growth equity capital. A majority of the firm’s portfolio companies are mainly fintech companies which are based in South Africa, Kenya, India, Malaysia, Singapore and other parts of Asia. In 2020, one of its portfolio companies, Kenya’s DPO Group, a leading, high-growth online commerce platform in Africa operating across 19 countries, was acquired by Network International, a leading enabler of digital commerce across the Middle East and Africa (MEA). The deal was a landmark for the African payments space.
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“Apis focuses on driving financial services, with the help of innovation and technology, as a cornerstone of building better lives for people across the world. This was the key driver that pushed us to start Apis,” said Apis Partners founders Matteo Stefanel and Udayan Goyal.
On its part, JG Summit is one of the largest and most diversified Filipino conglomerates. The company owns Universal Robina Corporation, one of the fastest growing snack-food and beverage companies in the ASEAN region; Cebu Pacific Air, Philippines’ first budget airline and its largest domestic airline carrier with a growing international network reaching Asia, Australia, and the Middle East; real estate company. Robinsons Land Corporation; petrochemical manufacturing company, JG Summit Petrochemicals; a commercial bank, Robinsons Bank, among others.
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Digital banks — and fintech generally — in Africa have been booming. Last year, Nigeria’s Kuda broke a continental record when it raised $10m in seed funding round. Kuda’s feat came in the wakes of the acquisition of its fellow country payments startup Paystack, in a deal reported to be worth more than $200m. Kenya-based Sendwave was also acquired earlier the same year by WorldRemit for $500m.
The high-growth potential of the startup must also have inspired investors in the latest round. With a customer base of 2.8 million acquired within a space of two years, TymeBank seems to have witnessed massive adoption in South Africa. As at June 2018, South African bank Capitec with 10.2 million customers topped the country’s entire banking industry in terms of number of active customers. This was followed by FNB at 8.15 million and the country’s largest bank by assets, Standard Bank at 8.12 million (this is despite the fact that Standard Bank, for instance, has been in existence since 1862).
A Look At What TymeBank Does
Launched in 2019 by founders Coen Jonker, Rolf Eichweber, Tjaart van der Waalt, TymeBank is South Africa’s first digital bank. In February 2019, the bank launched its EveryDay transactional account bundled with a savings tool called GoalSave, its MoneyTransfer solution, and its TymeCoach App, which gives consumers free access to their credit report, supported by tips on how to make better decisions about the money.
Essentially, below are what the TymeBank product is bringing to the table:
The Bank Is Relying On Partnership As Its Strength Both For Money Deposit Or Withdrawal
TymeBank has created a network of partners including Pick n Pay and Boxer, with the former’s Smart Shopper program now fully embedded into TymeBank’s technology stack.
“We’ve partnered with companies whose business ethos aligns with what we want to do in the market, which is to do good. The customer will always be at the centre of our banking practices and going forward we will be doing some really exciting things with our partners, it will go way beyond just occupying floor space,” said Sandile Shabalala, TymeBank’s CEO who resigned in June, 2019.
The implication of joining forces with Pick n Pay and Boxer stores is that TymeBank now has access to a relatively significant distribution edge.
South Africa’s data-only mobile network Rain had also entered into a partnership deal with Tymebank to test the distribution of its SIM cards at Tyme kiosks, making it easier for its clients to sign up for a new service.
TymeBank’s Strategy Is Also To Make It Simple and Cheap For Customers
Indeed, signing up to the digital bank could cost little or nothing. No documents are required and no charges demanded.
To open an account, you need a South African ID number and a South African cellphone number, which the bank verifies through several questions and a One-Time PIN (OTP).
If the process is done at a kiosk, biometric data will be captured and compared to the data with Home Affairs, which is connected to the Tyme systems, and a free Visa debit card is issued immediately.
If done online, you will have access to your account, but it will be limited in how much you can transact until you go to a kiosk and “upgrade” your account (for free) to a full account through capturing biometric data and registering your residential address.
Getting a debit card is free and immediately.
Service Fee for new registration is free. There is no monthly account or withdrawal at Pick n Pay and Boxer stores, only R2 at other major retailers.
By July 2019, Customers Could Borrow From TymeBank Without Collateral
The digital bank also started piloting its unsecured term lending in July, 2019 and a credit card in partnership with consumer lending company RCS later in 2019. However, the Covid-19 pandemic and associated lockdowns put paid to the bank’s original plan to launch a standard unsecured lending product to customers in 2020
Instead, it has recently launched MoreTyme, a product which offers “interest-free shopping”, with customers paying half the price at the till point of partner retailers and the rest in two equal instalments over two months.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer
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