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As TymeBank reports that it is registering up to 5,000 new customers a day, its CEO says that more and more people choose to have accounts with more than one bank. Photo: Supplied.
- TymeBank says it is signing up between 3,000 and 5,000 new customers a day.
- CEO Tauriq Keraan says that young adults who open their first bank accounts are willing to try new digital banks.
- On the other hand, customers who have been with incumbents for decades are increasingly choosing to bank with more than one institution.
TymeBank says it is consistently onboarding between 100,000 and 120,000 customers each month, or up to 5,000 new customers per day, which has helped it reach the three million customer milestone in just over two years since its launch in February 2019. .
The Patrice Motsepe-backed challenger bank said in a statement Wednesday that its partnership with Pick n Pay and Boxer proved to be exactly what it needed to be successful in convincing South Africans to join a digital bank given the challenges posed by low levels. of digital literacy. and high data costs in the country.
The bank said the majority of accounts (85%) have been opened at these retailers’ kiosks, while only 15% have been opened online.
CEO Tauriq Keraan told analysts during engagements with JP Morgan that of the three million clients the bank now has, about 60% were currently active.
While other banks say they are not obsessed with the number of customers they sign up, but rather the quality of their customer bases, reaching as many customers as possible is an important goal for TymeBank, which has consistently made it known that the The success of your low-fee banking model depends on scale.
In other words, the more clients you have and the more volumes you process, the lower your costs per client will be, thus allowing the bank to keep its promise of low fees.
Keraan said the bank’s costs have already started to decline. TymeBank, which expects to breakeven in 2022, targets an average 25% retail cost-to-income ratio from 2025, which would be at least half the current ratios of established banks.
Who signs up?
Keraan’s presentation to analysts showed that more than 50% of TymeBank’s customers are over 35 years old. But when it comes to your small business customer base, more than half are under 35.
Keraan said the bank is seeing a disproportionately high level of activity from female clients and appears to attract many low-income women.
“Many of these clients have had a banking relationship for at least 20 years with incumbent operators and are willing to give competing banks a chance,” Keraan said.
He said there is a lot of customer recirculation among South African banks, but he has also observed the upward trend of people who have multiple banks.
But while the theft of market share from each other has intensified in South Africa’s retail banking industry, Keraan said it observed that many young people who recently became eligible to have their own bank accounts are willing to try new banks further. . Also, while SA’s unbanked population has declined substantially, he said some pockets were only joining the banking system now.
“According to our research, we are just over a million new clients entering the banking sector through those two segments alone,” he said.
But while TymeBank was pleased with the number of clients and the new money it was able to attract as a new bank, Keraan admitted that its deposit book growth has been less impressive.
Its total deposit book balance was R 1.7 billion at the end of February 2021. The other challenging bank, Discovery Bank, had R6.3 billion in retail deposits in February 2021.
“We believe that will correct itself as we get more confidence and traction in the market and people start to transfer primary forms of income to us,” Keraan said of TymeBank’s deposit growth.
