Three banks that primarily operate in the online sphere have recently been introduced in South Africa. TymeBank, owned by entrepreneur and businessman, Patrice Motsepe, had its soft launch in November, and is being touted as a digital-first bank without any monthly account fees. Insurance company Discovery also announced the launch of Discovery Bank early in 2019, while Bank Zero was first introduced to the media in January this year, but has now started its first trial run for staff, after being granted its banking license by the South African Reserve Bank.
Bank Zero calls itself “South Africa’s newest bank” on its website, and is built around an app-only model. Founder and CEO Michael Jordaan spoke to Fin24 earlier this year, explaining the need for a bank that functions entirely on its mobile app.
“The opportunity we see is to start an app-only bank, in other words do all banking from a mobile phone. Much in the same way as would use WhatsApp instead of SMS. We think the future of banking will be mobile. Obviously, there will be a card as well because people want access to cash.”
“It is a transactional bank, an app-based bank supported by card. It will provide a great user experience, it will give customers more control over finances, there will be more transparency. We certainly hope to come with very competitive fees and very competitive deposit rates,” said Jordaan.
Jordaan calls this “banking 2.0”, and Bank Zero hopes that its exceptionally low transaction fees (says Jordaan: “Fees… we haven’t disclosed what they would be, but there’s a hint in the name”) will lure clients looking for an alternative to high banking costs.
TymeBank is the first bank of its kind in South Africa, and does not have traditional branches where customers can join or conduct transactions, although one needs to collect a Visa debit card at TymeBank kiosks in selected shopping centres (Pick n Pay’s Rosebank, Bedfordview, Kensington and Kenilworth branches, as well as Boxer West Street and Boxer Alexandra) after registering an account with the bank.
TymeBank debit cards can be used for transactions or for withdrawing cash from the ATMs of other banks. Withdrawing money at said ATMs does come with an R8 transaction fee – the most expensive transaction fee charged by the bank.
TymeBank prides itself in its low transaction fees in general, saying, “TymeBank is a new kind of bank that’s digitally smart. The money we save by not having branches benefits you, it means you pay a lot less for banking. We have no monthly fees, many everyday banking transactions are free, and there are very low charges for other transactions”.
South Africans can open an account with TymeBank via the bank’s Android app or its website.
Discovery announced the introduction of Discovery Bank to its product offering in mid-November, and said that the bank would be almost entirely digital, with a range of money management and other behavioural tools. In fact, Discovery calls Discovery Bank the first “behavioural bank” in the country, utilising digital tools to help correct behaviours that lead to poor financial outcomes.
The bank is set to function seamlessly with other existing Discovery platforms, and includes the option of monetising Discovery Rewards and having them paid into a Discovery Bank account. Current Discovery members will be able to access better life insurance premiums and interest rates, as well as a gamified rewards system similar to the company’s existing rewards systems.
Speaking to MyBroadband, Discovery said: “[Discovery Bank] can also be integrated with other Discovery products, resulting in more affordable life insurance, faster growing investments, smarter insurance, and convenient health payments.”
Discovery believes that this new approach to banking could well lead to better financial management overall, but has emphasised that the bank has been designed around people, not for them. Just like TymeBank, Discovery Bank will not have any physical branches, and interested users can register an account with the Discovery Banking app. The beta version of the bank will be operational in South Africa until March, after which it will be available to the public.
One can speculate that the introduction of banks that are breaking away from the traditional banking mould is more than likely to have an influence on the products and services that more established banks offer to their clients, and the fact that not one, but three banks are opting to go the app-only route should be exciting for tech-savvy users who despise queues.
Keep an eye on Smartcom’s blog for the latest digital and mobile banking news.