Here Are The 3 Disruptors Looking To Launch ‘Digital Banks’ in South Africa

As technology continues to disrupt industries in the 21st century, disruptors are betting on mobile penetration in Africa as the driver of the next frontier in the 4th industrial revolution. South Africa is ripe for innovation in the mobile space, according to research by Word Wide Works, there are 29 million smartphones in use in South Africa with an estimated 22.5 million internet users by the end of last year.

Banking is one of the sectors significantly transforming through mobile app development and moves to digitize customer experience and engagement. As the South African big 4 deal with legacy issues while rapidly building their digital platforms, a number of new innovative players are entering the market.

The digital economy is effectively redefining customer service, governance processes and cost to serve in how banks operate. Here are the new entrants in the South African digital banking space;

TymeDigital by Commonwealth Bank SA, issued the first new banking license by the Reserve Bank since the introduction of Capitec 1999 was first off the grid in September last year. Headed by former Nedbank Business executive Sandile Tshabalala, the bank is looking to introduce a new approach to banking through its 10-year strategic partnership with Pick n Pay.

“We will offer South Africans the ability to open accounts and transact securely, within minutes. Through our innovative technology and financial education we aim to get more people using banking services to enhance their lives and increase economic participation”, Sandile told Fin24 at the time.

Billionaire Patrice Motsepe’s African Rainbow Capital holds a 10% strategic empowerment share in TymeDigital.

The country’s first 100% black owned digital bank, Azar, was launched by serial entrepreneur Lebo Gunguluza at the end of 2017. Azar will use near field communication (NFC) software for customerr transactions.

Interestingly, Azar co-founder Thabang Kekana told ITWeb that customers will be able to deposit money into their Azar mobile accounts through EFT, direct deposit at any Absa ATMs, peer-to-peer, e-top-ups and wallet top-ups at mobile wallet agents.

“We will allow a customer to open a bank account on a mobile device in real-time, get access to a digital card that they can start using right there and then. We’ve developed a number of payment instruments that would allow customers to pay in stores, we’ve our NFC stacker, we’ve our Halo Ring and we’ve got our prepaid card which hosts over 30 currencies” said the 22 year old co-founder.

The latest introduction to the world of digital banking is Bank Zero, backed by Michael Jordaan, widely regarded as the driving force behind FNB’s success during the time it was regarded as the most innovative South African bank. Bank Zero has a 45% black ownership share and has been awarded a provisional banking license by the Reserve bank.

“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.” co-founder and chairperson Michael Jordaan told Fin24 this week.

All three banks are looking at launching this year, with TymeDigital set for mid 2018, and Bank Zero set for a late 2018 launch.

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