Friday,14 June 2024

TymeBank becomes South Africa’s first profitable digital bank

5 min read

Interviewed By Chris Kapfer

The bank achieved profitability in less than five years, with co-founder and CEO Coen Jonker highlighting the company’s success in South Africa and the Philippines while outlining its expansion strategy in Vietnam and Indonesia

South Africa’s TymeBank reached its first month of profitability in December 2023, less than five years since its launch in February 2019. It is the first digital bank in South Africa to achieve profitability, and qualifies as one of the world’s fastest-growing digital banks, securing 8.5 million customers since its launch. In 2023, it achieved 30% growth in its lending portfolio for small and medium-sized enterprises (SMEs). 

It’s parent company Tyme, a Singapore-based global digital banking business, reached a yearly revenue run rate of $215 million in 2023.

TymeBank also emerged as the leading digital-only bank in Africa based on TABInsights Global Top 100 Digital-Only Banks Report 2023

Tyme's co-founder and CEO Coen Jonker said: “We are proud of our growth in emerging markets, as we bring critical financial access to individuals and businesses. These markets are significantly underserved compared to more established markets, representing enormous growth opportunities for Tyme Group.”

TymeBank attributes its success to a business model that combines digital channels with in-store kiosks, securing around 150,000 new customers every month. It does this through partnerships with large shops and institutions such as Pick n Pay, Boxer, The Foschini Group, and Zion Christian Church. Its Merchant Cash Advance lends to 50,000 SMEs. 

It has the lowest banking rates in South Africa and a quick account opening process. Physical kiosks in retail locations coupled with a digital platform onboards new customers with account opening and Visa debit card issuance in under five minutes at a cost-effective $4 per acquisition.

The bank offers 11% (as of November 2023) on fixed deposit savings, interest-free advances for social grant recipients, healthcare insurance (TymeHealth) in collaboration with the National Healthcare Group, and the buy-now-pay-later product MoreTyme. 

At the Singapore Fintech Festival 2023, Jonker shared insights on its success in South Africa and the Philippines, launched in 2019 and 2022, respectively. Both markets now boast a combined 10 million customers, growing by a million every eight to 10 weeks, with 70% active over a 30-day period.

More than 50% of the bank’s revenue comes from lending, although it had initially focused on transactions.

The expansion from South Africa to the Philippines was guided by similar market structures and a preference for a progressive yet predictable regulatory environment. According to Jonker, Tyme emphasises a developed retail infrastructure, strong retail partnerships, and favourable unit economics in target markets. He stressed the importance of strong retail partners in building trust in a digital brand, advocating for a multi-country digital bank with minimal customisation as a viable expansion strategy.

He advised recognising global customer similarities through a data-driven approach, showing humility and respect for market nuances, and prioritising learning from customers over instructing them.

Jonker revealed that the board recently approved Tyme’s entry into Vietnam, with Indonesia cued for some time before 2025. The group’s expansion model involves bringing its team to occupy core positions and recruiting top local talent. The company aims for a new market entry every 18 months to two years.

In Vietnam, Tyme will deploy the same hybrid model, focusing on accelerating small business lending ahead of consumer banking. Tyme Group has secured total funding of $260 million over four rounds, including a recent tranche of $78 million in May 2023.

Jonker acknowledged fundraising challenges in the current environment, citing increased costs of capital and high expectations. He emphasised the delicate balance between growth and profitability, recognising investor preferences for founders who understand market requirements and are willing to navigate trade-offs, rather than adhering to a singular “growth at all costs” or “profit at all costs” approach.

Keywords: Profitability, Digital Bank, SMEs, Fixed Deposit Savings, Lending, Kiosks, Debit Card
Institutions: TymeBank, Tyme Group, Pick N Pay, Boxer, The Foschini Group, Zion Christian Church, National Healthcare Group
People : Coenraad Jonker
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