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As a newcomer, TymeBank’s biggest challenge is to convert those of its 6.2 million customers who use their TymeBank account as a secondary account into primary account users.
Apart from charging interest, the real money for banks is in transaction fees, which are a combination of customer and merchant charges. Currently, transactions make up 43% of TymeBank’s revenue, so the more people who use it as their primary bank, the better.
Interest-free loans
Apart from offering a credit card and, more recently, a personal loan, TymeBank was also the first bank to move into the buy now, pay later space with the launch of MoreTyme in 2021.
Buy now, pay later is a new form of lending that allows consumers to repay a purchase from a retailer over several months with no interest or fees – a fee is charged to the merchant for immediate settlement by the provider.
This is a rapidly growing market and one that could threaten banks that rely on consumers using their credit cards or revolving credit lines for shorter-term purchases.
TymeBank offers consumers instant funds for a purchase with any one of its partner merchants. The amount the bank provides is based on the customer’s profile with the bank. This can be up to R25 000 and is repaid in three monthly instalments.
READ: TymeBank is now signing up over 200 000 customers a month
In an interview with City Press, TymeBank CEO Coenraad Jonker said the bank had developed AI tools to predict a customer’s credit worthiness through monitoring patterns such as grocery spend.
Through its partnership with Pick n Pay, TymeBank can track what groceries a customer purchases at which time of the month. A change in behaviour, such as switching from fresh vegetables to frozen, can be an indicator of financial stress.
The bank also offers salary advances through TymeAdvance. This is done through the employee’s company, where the employee can apply for an advance on their salary without any interest or fees. So far, 21 employers have signed on.
TymeBank has also partnered with The Foschini Group to allow customers to open a TymeBank account in store. Since the launch of this offering at the end of last year, 250 000 The Foschini Group customers have opened a TymeBank account.
Improved banking app
One of the criticisms of TymeBank has been its lack of full integration into the banking system. For example, it was initially unable to complete local and international online purchases.
Its banking app has also been clunky, in comparison with competitors. Despite this, Jonker says the app is the third most used banking app, according to a recent RMB Morgan Stanley report.
Jonker said the challenges with the integration of the app came down to the banking landscape in South Africa, which is tightly controlled by the dominant banks. A new bank must have agreements with 13 different payment switch systems, all controlled by the large banks.
READ: TymeBank gets new SA CEO
He assures that, by the end of this year, the app will have features and functionality that match those of any of the large South African banks, as they have been working on improving its operability.
Small business banking
TymeBank’s acquisition of Retail Capital was a smart move into small business banking. Retail Capital offers turnover-based loans to businesses in the restaurant and retail sector. Repayment of the loan is linked to the business’ turnover. The company has 40 000 customers.
Although it has not aggressively advertised its small banking offering, the bank has 135 000 small business account holders. Currently, the account is only available to sole proprietors, but another will soon be launched for private companies. Jonker, however, says the focus will remain on small businesses.
