By Larry Claasen
SOUTH Africa’s emerging digital banks are increasingly eyeing the business banking sector as a growth driver.
The digital banks have no bank branches and say that because they have no legacy costs, like the more established banks, they can undercut them on costs.
Discovery Bank, TymeBank and Bank Zero were initially launched with the idea of providing basic retail services for consumers but are now expanding their business offerings.
Bank Zero, for example, started offering a completely app-based commercial banking in October 2023. Through the app, business customers can set up business debit cards for staff, changed account details are flagged, and supporting documents can be added to payments for authorisation.
TymeBank, on the other hand, has not only ventured into commercial banking but has also made a strategic acquisition, with its takeover of Retail Capital, a credit provider to small businesses, to further strengthen its business banking services.
Retail Capital, which has dispersed R10-billion since its inception 11 years ago, is key to TymeBank expanding its business banking service.
“The plan was always to have the Retail Capital business form the corner of the TymeBank business offering, and that hasn’t changed,” says Miguel Da Silva, managing executive, Retail Capital. “We are integrating the B2B experience of the Retail Capital team into TymeBank to create a business – not bank – first offering. We have run a successful trial of the Merchant Capital Advance product using the Retail Capital model as the base, and we plan to open it up to all TymeBank business customers in the coming months,” he says.
Under serviced
Da Silva says there is space for a new entrant like TymeBank in servicing the business sector as parts of it are not really catered for.
“Funding small businesses continues to be a gap in the banking industry. The reason Retail Capital was created was to help bridge this gap that’s experienced by SMEs. Traditional banks – and I don’t include TymeBank in this bracket – have failed to understand the speed at which SME businesses need to move so they can carry on business as usual and drive growth.”
Though digital banks believe they can be significant players in the business banking sector, unlike their traditional rivals, they don’t offer credit products – yet.
Da Silva says this is on the cards for TymeBank.
“We are currently working on enabling the Merchant Capital Advance product that Retail Capital offers, so watch the space for this. This will be offered on a pre-approved basis, so it’s important that the business is TymeBank banked and uses the account so we can assess it for eligibility.”
Though TymeBank and Bank Zero clearly see the business banking sector as a market they can find a niche in, it is not a priority for Discovery Bank.
Hylton Kallner, CEO of Discovery Bank, says, “While many of our clients who are sole proprietors are already using the Discovery Bank products across all aspects of their life… for us there are no firm timelines for entry into the business banking space.”
