Now that the Reserve Bank has taken a more relaxed approach to approving new banks, the recent trio — Discovery Bank, TymeBank and Bank Zero — will not be the last.
There is talk of an Outbank, from the Outsurance group, which would work off the considerable data the short-term insurer has collected. Like Discovery, Outsurance offers life, short-term and investment businesses. Logically, a bank should come next.
Herman Bosman, head of Outsurance’s controlling shareholder, RMI, admits such a project is often discussed. He says it wouldn’t duplicate Discovery Bank, as Outsurance serves a much wider income base. But it isn’t imminent and will have to find a different name anyway, as Outbank is an established digital bank in Germany.
As it is, the new banks will challenge some existing players that seem rather sleepy right now. The most old-fashioned of them all is Postbank. It still charges R12.60 for cash withdrawals at the counter, whereas TymeBank does not charge for withdrawals at Pick n Pay or Boxer stores, and just R2 for withdrawals elsewhere. The only thing free at Postbank is cheque deposits at the branch counter — and not many will be making use of that. Postbank MD Shaheen Adam says his mandate is to advance financial inclusion for the unbanked and underbanked sectors. Adam, helpfully, is not a career Post Office employee. In his previous incarnation, he helped Standard Bank and African Bank reshape their customer strategies.
In theory, Postbank should be a formidable competitor. Its biggest advantage is its network of 2,300 points of sale, between full post offices and agencies. Already, the bank has 6-million traditional savings and transactional accounts, but only about half of those are active. It plans to launch an app in the second half of the year and roll out its first ATMs at the same time.
It all seems part of an effort to revive a company that has seemed confused about its role for years. In spite of its name, Postbank is not yet a bank. It can take deposits, as it is allowed to do under the legislation governing the Post Office, but Adam says when it is registered as a bank it will start to offer loans too.
Adam says as a state-owned bank, Postbank can help the government meet its objectives and focus on servicing sectors not covered well by private sector banks, such as rural customers, the informal sector and savings groups such as stokvels. For more than a year, Postbank has provided an SA Social Security Agency (Sassa) card, which allows the government to pay social grants into 2.8-million Sassa accounts. But to protect grant beneficiaries, these Sassa cards do not allow debit orders or prepaid purchases.
Another potential banking competitor is African Bank. The bank, which collapsed into curatorship in 2013 before being revived, previously focused on lending. But it has now designed a transactional facility and has 1.5-million customers.
Its transactional product MyWorld (echoing the branding of Capitec’s Global One) is designed to cover whole families or even communities with six accounts for the price of one. African Bank CEO Basani Maluleke says the rights of each secondary account holder are determined by the primary account holder through "Power Pockets".
Maluleke tells the FM that African Bank’s business model is not intended to be purely digital, but rather "omnichannel", which would allow customers to use the app, branches or call centres.
"Our customers still seek and enjoy human interaction," says Maluleke. "Our new loan and credit card business grew by 21% to R9.7bn in the year to September 2018. The 388 branches contributed R9.1bn of that."
Now that Old Mutual no longer controls Nedbank, there must be more scope for it to turn Old Mutual Finance (OMF) into a fully fledged bank.
It forms part of the Mass & Foundation Cluster (MFC), by far the most successful part of Old Mutual. Right now, MFC is happy to piggyback off the Bidvest Bank licence, and has 218,000 active customers of its OMF Money Account.
The biggest advantage of this account is that when Old Mutual pays out a funeral policy, it is in the customer’s hands faster than through any other channel — often within two hours. Unlike the new banks, OMF already has 80 ATMs and is planning more, and it already offers personal loans.
New banks are gearing up to challenge some rather sleepy existing players
— What it means
Another option is Hello Paisa, which operates under the licence of small banking group Sasfin. Like TymeBank, Hello Paisa cut its teeth in the relatively unregulated money transfer business, but is now moving into transactional services.
Sasfin CEO Michael Sassoon says Hello reaches people through tablet-toting agents — who sign up customers and help them transact — or through Hello stores in SA, elsewhere in Africa and Asia. At least 350,000 people in SA used Hello at least once last year.
After money is transferred, it is almost always picked up in cash. Sassoon says across the continent, only three out of 1,000 transactions are not in notes and coins, and this must change if banking is to become more efficient.
In the meantime, Hello is profiting from Africa’s favourite pastime: the infrastructure is also used to sell airtime, and it is already one of the top three distributors for Cell C, Vodacom and MTN.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.