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How does Tyme bank compare to traditional banks?

By Athenkosi Sawutana

The South African banking industry is slowly moving into the digital space. In 2001, Capitec Bank opened its doors, changing the way banking had traditionally been done, ensuring that customers can access their accounts digitally.  

Today there are new players like Tyme Bank that are pushing the envelope even further with branchless banking, going fully digital. But does this bank stand a chance against the traditional banks?

When Tyme Bank joined the market, it saw an opportunity in that customers were looking for a bank account that would be affordable and convenient. This is according to Cheslyn Jacobs, head of sales and service at Tyme Bank.

But is it affordable? The table below compares Tyme Bank’s prices with two of the biggest banks in South Africa.

 

Tyme Bank

Capitec bank

FNB

 Monthly fee

 Free

R5.00

R5.75

 Deposit fee

 R4.00

R1.00/R100

R0.95/R100

 Withdrawal from own ATM

 Free

R6.00/R1,000

R1.90/R100

 Withdrawal from another ATM

 R8.00

R8.00/R1,000

R9.00+R1.90/R100

 Withdrawal from Point of Sale

 Free

R1.00

R1.60

 

According to Jacobs, the reason that the bank has zero to low transaction fees is because the bank doesn’t have any branches. There are no costs associated with bricks and mortar, and traditional operating models. This allows the consumers to save.

With Tyme Bank, customers can perform various transactions through retail stores such as Pick n Pay, Boxer, the internet banking platform, and the Android Banking App.

“Being a digital bank means that we are able to innovate much faster in order to meet the needs of our customers,” says Jacobs.

What is Tyme bank doing differently?

The bank does not have any physical branches. Customers can open a FICA-compliant bank account at kiosks located at retail stores and online.

When Justmoney tried to open an account online, we received a few error messages before succeeding. Not only did it take longer than the promised five minutes, but opening the account required a significant amount of data.

When you open your account online you have to go to a kiosk to print your free personalised Visa debit card, and you need to bring your documents (ID and your proof of residence) with you to ensure that your account is FICA-compliant.

The bank gives you an opportunity to open 11 additional accounts, including your main transactional account.

According to Jacobs, GoalSave is a savings account that offers an interest rate of 6% per annum from day one, 7% per annum after 30 days, and 9% per annum after 90 days.

If you give 10 days’ notice when withdrawing you can earn 10% interest per annum on your savings. You can create up to 10 different savings goals and give each a name. For example, Wedding, Emergency Fund, or Family Holiday. You can earn interest with no restrictions, fees, or penalties, and you can also access your funds immediately.

Capitec Bank also allows you to name your accounts and, depending on your deposit, you can earn up to 9% interest if you invest your money for a period of up to 60 months. Whereas with FNB you can earn up to 8.7%.

Can Tyme Bank outperform established banks?

The emergence of digital banks brings more challenges for the big five banks because it allows more customer choice.

According to Dominique Collett, a senior investment executive at Rand Merchant Investment Holdings (RMI), we are going to see more value propositions and innovations come into the market in the future.

She says that this new banking phenomenon forces traditional banks to improve their offerings. 

“Big banks are going to respond to the new challenges. They are going to come up with fresh offerings and they are going to focus more and more on their digital platforms. Digital banking is a real game changer,” she explains.

Are consumers ready for digital banking?

South Africans are becoming more comfortable with mobile banking and they are becoming more educated about using cellphones, says Collett.

She says with the use of mobile and smart apps, banks can increase consumer education. Even though digital banking offers lower transaction fees, the catch is in the consumer information.

“If the product is free, you’re the product. A lot of these digital banks are going to use customer data to sell other products,” says Collett.

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