picture: 123RF/ldprod
picture: 123RF/ldprod

Since 1999, no new banks have launched in SA. The big four — Standard, FNB, Nedbank and Absa — have operated as a cosy cartel. Even the one entrant to grow to large-bank status in that time, Capitec, has adopted a traditional branch-based distribution model. Only Investec has operated without branches — but to a slim spectrum of high net worth clients.

Yet in 2018, three banks launched, all on a branchless model but aiming at the universal target market of the large banks. They are TymeBank, Bank Zero and — the most eagerly anticipated of all — Discovery Bank.

TymeBank started as a subsidiary of the Commonwealth Bank of Australia (CBA), which has a larger market cap than the entire SA banking sector. Even before registering as a bank, it offered money-transfer services through Pick n Pay. Though it doesn’t have any branches, TymeBank will have 750 points of sale through the Pick n Pay and Boxer stores. Most transactions are free if they are carried out at Pick n Pay, and only R2 if done elsewhere. For depositors, the bank offers up to 10% on positive balances. CEO Sandile Shabalala says the bank will start offering loans in 2019. It will be able to offer even keener prices since, like Capitec, it will be able to cross-subsidise its transaction and deposit books from loan-based income. Patrice Motsepe’s African Rainbow Capital has taken full control of the bank, as CBA pulled out suddenly.

Click to enlarge.
Click to enlarge.

This pits Motsepe against Michael Jordaan, the former FNB CEO who is the chair of Bank Zero. The CEO, Yatin Narsai, was head of FNB Retail and even more deeply entrenched in IT processes than Jordaan. As a mutual bank, Bank Zero will be confined to deposits and transactional banking and will not be allowed to offer loans — though Narsai promises a "creative" solution for clients who might go modestly into the red. But he also hopes to nurture a savings culture by offering attractive returns.

Discovery Bank’s model, typically, is the opposite of simple. The launch included a 70-page "thought leadership" document with chapters on shared value, behaviour change and people-centric design. CEO Barry Hore promises that the app will be simple to use, once people get used to it. Unlike the other two banks, Discovery is already a household brand. It has a good chance of capturing most of its credit card clients and a sizeable minority of its insurance and medical aid clients. Its Vitality programme has cult status among some, and if you believe its reports, physically fit people are less likely to be financially irresponsible.

DOWNLOAD FINANCIAL MAIL NEWSMAKER OF THE YEAR

The FM has produced its annual 'Newsmakers of the Year' for 2018, which is available as a digital-only e-edition. Download the FM app for either Android or IOS on either your iPad, phone or computer, and read about who scooped the most headlines, who just missed out, who was responsible for the scandal of the year and the deal of the year.

Plus, read about why populism is on the rise in South Africa, our exclusive investigation into how SA firms are dodging R7bn in taxes by shifting profits offshore, and the top books of the year. Also, your favourite columnists too: Justice Malala, Fred Khumalo, Ann Crotty, Sikonathi Mantshantsha and Rob Rose.

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