Black-owned digital TymeBank reached its first month of profitability in December, the first digital bank in South Africa and on the continent, to break even, CEO Coenraad Jonker said yesterday.

Locally the bank managed to continue to grow in terms of the number of customers since its launch in February 2019, and now with 8.5 million customers, has set itself a “cheeky” target of being among the top three retail banks in South Africa within three years, Jonker said in an interview with Business Report yesterday.

“In good months we can get up to 500 000 new customers, 200 000 in South Africa and 300 000 in the Philippines,” he said.

He said they also planned to expand further into South-East Asia in the second quarter of 2024, by introducing the Merchant Cash Advance product in Vietnam.

This product had grown by 30% last year in South Africa, where it was used mainly by some 50 000 small and medium sized businesses.

He said the fact that they had broken even less than five years since launching, also made them one of the fastest growing digital banks globally.

A recent study found that less than 5% of all neobanks (banks that operate online) worldwide had reached profitability. Of those that were in the black, most had taken a lot longer to become profitable;

“Globally, less than half of the top 100 digital banks are profitable. Notable examples being Latin America’s Nubank and London-based Monzo, which took eight and seven years respectively,” said Jonker.

He said their three-year target for the local market meant they wished to be in the top three retail banks in terms of customer service; to achieve a return on equity of 30%; to be in the top three banks according to the number of customers; to be among the top three in terms of compound annual growth; and to be among the top in terms of efficiency, with a cost-to-income ratio of 40%.

In terms of customer numbers, TymeBank has some way to go, as for example, Capitec Bank has some 21 million customers, Standard Bank about 18.2 million, while Absa and FNB each have about 11.5 million customers.

Jonker attributed their growth so far to the combining of digital channels with in-store kiosks at retailers, long-standing relationships with Pick n Pay and Boxer, The Foschini Group and Zion Christian Church, rapid growth of its lending portfolio, the confidence of its shareholders, and innovations including the most affordable banking offering in South Africa, and the ability to open a bank account in under 5 minutes.

TymeBank’s anchor shareholder is African Rainbow Capital (ARC). Other shareholders include Apis Growth Fund II, Tencent, British International Investment, the Gokongwei Group, the Tyme Management Investment Vehicle, Norrsken22 and the Ethos AI Fund.

ARC founder and chairman, Dr Patrice Motsepe said in a statement: “TymeBank continues to digitally disrupt and transform the banking sector. And as the business evolves, we are seeing it gradually appeal to more affluent consumers who appreciate its unrelenting innovation, customer-centric transparency and accessibility.”

Jonker said they believed they were now perfectly well place to achieve their three year goal.

“This ambitious target is our next measurable benchmark for success, one that will require strategic focus across all areas of our business.”

BUSINESS REPORT