6 new banks launching in South Africa soon
South Africa is expected to see at least six new banks and
banking services launch in the coming months, including the
likes of Discovery Bank and Bank Zero – a mutual bank
co-founded by former FNB CEO Michael Jordaan.
Others include two names South Africans are already familiar
with – African Bank, which is planning to launch transactional
services, and Postbank, which is the Post Office’s foray into
full service banking – and Tyme Digital and the niche Young
Women in Business Network Cooperative Financial Institution.
Here’s the latest updates on when the banks are expected to
launch:
Discovery Bank
Discovery has offered financial services through FNB for a
number of years, but it is now preparing to launch its own
full-service bank offering.
Group CEO, Adrian Gore, said in February 2018 that the group
was “on track” to launch its bank in 2018, at a cost of R1.5
billion.
The bank will leverage its current services with FNB – of which
it has more than 230,000 primary card holders – and is in talks
to take over those accounts (pending competition approval). It
will compete directly with the big retail banks.
On Monday, it was announced that Home Affairs director-general
Mkuseli Apleni has resigned from the government department to
join Discovery Bank in an executive role, indicating that the
bank was getting closer to a full launch. Apleni said he will
join Discovery Bank from August 2018.
Speaking to BusinessTech, Discovery said that it was still on
track for a launch in the second half of 2018,
as previously indicated. “There is currently substantial
testing underway and we’re excited to bring our offering to
market,” it said.
Discovery had in excess of 3.4 million members according to its
2017 annual report.
Bank Zero
Unlike the other well publicized bank’s entering the market,
Bank Zero will operate as a mutual savings bank and not a
retail bank.
A mutual bank is owned by its members who subscribe to a common
fund while a retail bank is generally owned by shareholders,
who may not be customers of the bank. Because of this model,
these types of banks tend to be smaller and offer limited
services. often focusing on savings, rather than credit.
Bank Zero follows this trend and will not offer credit. It will
be entirely digital and handle all of its services and
communications via an app. It is going against the traditional
banking grain, and targeting a younger, more tech savvy market
that wants to do their banking the same way they interact with
other digital media.
When Bank Zero was first announced, co-founder Michael Jordaan
said the ‘hope’ was that Bank Zero would launch at the end of
2018 – however in subsequent posts to social media, the banking
exec indicated that this had moved to “early
2019“.
In response to emails asking about the launch, Bank Zero said
that it has gone to ground with all its teams working on
creating “the Google of banking”, and no correspondence would
be given.
Tyme Digital
It was reported earlier in July that the Commonwealth Bank
of Australia (CBA) – which owns 90% of Tyme Digital – is
reviewing its position in the local market, and may sell its
stake in Tyme to its local partner, African Rainbow Capital.
Despite the talks of shareholder changes, the bank is still
expected to launch. The group has already been operating in
South Africa with a money transfer service, and said it plans
to launch its full banking services in 2018.
Tyme Digital is targeting retail customers and small, medium
and micro enterprises within the low to middle income class.
It has not committed to any specific launch date, with the last
message in June 2018 being that “we’re excited to be officially
launching towards the end of this year“.
African Bank
African Bank has steadily built up its deposits following
a well documented curatorship, and is gearing itself towards
again offering a transactional banking account, called the My
World account.
Earlier in the year, the My World account was being tested
internally among African Bank employees, with an expected
launch date “later” in 2018.
Speaking to BusinessTech, the bank said it is progressing well
with its plans to launch a transactional banking product into
the South African market with a phased approach expected in the
last quarter of 2018 and continuing into 2019.
“The concept of family or community banking is what will
differentiate this product and African Bank. This product is
priced and structured in a way that will definitely appeal to
South Africans,” it said.
“Customers will be able to manage their My World account
through the African Bank website, the app, or their cell phone
24/7. The fees on My World will also be extremely competitive.
As with our market-leading savings and investment rates,
African Bank will continue a trend where additional value is
offered to our customers.”
Postbank
Postbank already provides savings accounts and allows for
fixed-term deposits and simple transactions, however it has
much bigger plans, including extending its services to become a
full service bank that can accept deposits and offer cards and
other products.
However, to get there, the Post Office first needs to get a
banking licence – and at the end of April 2018, it was
reported that no decision has yet been taken to
grant one, despite hopes that the process would have been
completed by then.
According to Telecoms and Postal Services minister, Siyabonga
Cwele, the bank should ultimately meet the Reserve Bank’s
requirements and be able to conclude its transition to a full
bank by March 2019.
Postbank will not compete with the commercial banks, Cwele
said, and would hold a more developmental role in the financial
services industry.
Young Women in Business Network
The YWBN is a far more niche banking group that is not
targeting ‘big bank’ success. The women-led bank currently
operates on a stokvel model of co-operative banking, but is
building itself up to becoming a fully-fledged, registered
co-operative bank.
Co-operative banks are wholly-owned by their members, who carry
the risk. YWBN, specifically, is targeting black entrepreneurs
and the informal economy – a sector largely neglected or
ignored by the big South African banks.
Executive chair, Nthabeleng Likotsi, said the bank is
targeting 1,000 members by February 2019,
which is the minimum required by the Reserve Bank for the group
to qualify as a co-operative bank.
People can already apply to be a part of the bank, though there
is a R10,000 minimum share capital deposit fee, and an annual
membership fee of R550. The group gives out loans of up to
R100,000.
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