Affordable, inclusive banking for the masses is a personal mission for TymeBank's Tauriq Keraan

The new CEO lays out his long-term growth plans for the digital bank.

Tauriq Keraan (pictured) sees his recent TymeBank CEO appointment as a personal mission to transform South Africa’s financial services industry, which has remained the same for decades.

“It’s about giving ordinary South Africans proper access to financial services in a way that meets their needs. We cannot continue, as a country, to drive social and economic prosperity if this cog of the wheel is not working properly,” Tauriq said in an interview with M&A Africa.

South Africa has a large population of unbanked or underbanked people – estimated to be at around 11 million people, comprising mostly of low-income consumers – according to research firm Intellidex.  They remain unbanked for various reasons, among them, high banking fees and banking products being too complex and not serving the needs of customers (mostly LSM one to five – those earning less than R6,000/month).

This is something Tauriq knows too well, growing up in Bo-Kaap, which he describes as a "bilingual and coloured community" in Cape Town.   

"In those days, even though the area was impacted by gangs and drugs, the community was tightly-knit and worked together on its challenges.  Culturally, funerals were very important and many families had burial (not funeral) cover from local burial societies," said Tauriq. 

"Other than that and bank accounts, very few had broader access to financial services.  Most families struggled to save formally but would help each other out during times of financial need. Access to vehicle finance was very scarce.  Back then, families lived in municipal houses and very few owned their homes (since then the municipality sold the homes to occupants).  We were one of the first families to be impacted by gentrification and moved to the Cape Flats." The Cape Flats, or known simply as the "The Flats", is situated to the southeast of the central business district of Cape Town. 

Financial hardships and lack of access to tailored financial services products meant that people in the community couldn't retire comfortably or have savings to absorb shocks such as unexpected emergencies or retrenchments. They didn't even have home loan products to guarantee them the security and dignity that comes with homeownership. 

Passion for banking

This is a conundrum that Tauriq has attempted to address during his financial services industry, which spans more than ten years. He made a foray into banking when he was the executive lead at Deloitte’s global innovation practice, where he worked closely with executives of listed companies. It is through this association that he first gained exposure to financial inclusion and digital banking when he was assigned to Standard Bank in 2007 to help build Community Banking, later known as AccessBanking.

Tauriq later joined co-founders Coen Jonker and Tjaart van der Walt to help more South Africans gain access to affordable financial services products. This led to the creation of TymeBank in 2012 (initially as the fintech company Tyme Digital), which was bought by Commonwealth Bank of Australia in 2015 and subsequently led to the formation of TymeBank.

Today, TymeBank is owned by Patrice Motsepe’s investment holding firm, African Rainbow Capital. On 6 August 2019, Tauriq was chosen to take over the reins at the bank after the sudden resignation of his predecessor, Sandile Shabalala, in June for personal reasons.

Emboldened by his CEO appointment, Tauriq believes that the timing is now opportune to transform the banking landscape.

“My appointment will focus on giving ordinary South Africans proper access to financial services in a way that meets their needs. Never before has that opportunity been this ripe to fulfil that dream,” he said.

“The market is ripe for disruption even though there are tough economic times. The banks, even with their good intentions and resources, they battle to do things differently because they move too slow as an organisation or the risk of doing something new is too disruptive. Or they have legacy revenue streams that they are trying to protect. All of that works in our favour.”

Diversifying into new markets

Since its official launch in February 2019, TymeBank has attracted about 640,000 customers (transactional and money-transfer users) – focusing on customers underserved by traditional banks.

TymeBank operates via kiosks at South Africa’s leading retailers, Pick n Pay and Boxer Superstores. Its banking model is premised on low banking fees, having branchless and app-only operations. It’s a unique model because more than 25 years since the internet opened to the public, the big five banks still distribute most of their banking products and services through brick-and-mortar branch networks.

Tauriq will now drive TymeBank’s strategy of diversifying from transactional banking into South Africa’s lending market, which is worth R4.2-trillion. Over the next 12 months, his focus will be to grow TymeBank’s loan book, which will comprise unsecured lending, a credit card product, and small businesses funding.

About small business lending in South Africa, he said: “lending to consumers is not oversubscribed. It’s safe to say that it is massively undersubscribed. We will be focused on simplified lending for small businesses with low fees and easy access.”

The bank wants to have a loan book that is worth about R2-billion by 2022, which represents nearly one percent of South Africa’s total lending market. And in the next eight years, it wants personal and business lending to make up half of its revenues.

By the second half of next year, Tauriq said the TymeBank will be aggressive in promoting its unsecured lending and small business loan products. But it will responsibly do this, extending loans to qualifying customers.

But how will it grow its lending business in a fiercely competitive banking environment where the likes of Capitec still dominate the unsecured lending market?

“We will focus on the speed of access. We will be able to administer a loan if you are already a banking customer of ours, in two minutes. If you are not a banking customer, it will be seven minutes,” said Tauriq.

TymeBank is targeting two million customers in three years. It will only break even in 2022 because growth in its customer base will likely translate to more income. TymeBank needs to grow its customer base to 2.3 million and sell unsecured loans to about 60 percent of these customers to break even.