TymeBank an outlier among online lenders

TymeBank is a rising star in Africa as well a key player in the Philippines’ fintech sector. It is one of the few online banks of note to emerge from Africa thus far. TymeBank claims to be one of South Africa’s fastest growing banks and recently reported reaching 10 million customers. While many digital banks highlight rapid customer acquisition, TymeBank appears to be an outlier with its presence in several emerging markets and a strong balance sheet.

Tyme launched in 2019 after securing the first commercial banking license issued in South Africa since 1999. It quickly accrued customers by undercutting incumbents on fees and signing up customers through in-store kiosks in a large supermarket chain. That business strategy has since been named “phygital,” and focuses on collaborations with major retailers such as Pick n Pay, Boxer, and TFG.

On Oct. 1, TymeBank announced several milestones. First, it said that it now holds close to R7 billion (US$402.5 million) in customer deposits. Second, it said that it has disbursed more than R12 billion (US$600 million) to more than 80,000 small businesses. Its SME lending business has been boosted by the acquisition of Retail Capital in, a fintech company focused on that segment. That deal was announced just over two years ago and closed in late 2022.

Another distinguishing aspect of TymeBank’s business model is the strategic overseas expansion by its parent company Tyme Group. This expansion has been highly targeted, to date being best known for a digital bank it set up in the Philippines. As of August 2024, GoTyme Bank – a joint venture with local partners in the Philippines – had roughly 3 million users and PHP 17.3 billion in deposits. While profitability is likely several years away, the Philippine market is widely underbanked – with lots of opportunities for savvy online lenders to grow market share.

That said, there are certain risks that must be managed carefully. “Digital banks prioritize lending over deposits. But lending poses significant challenges in markets like the Philippines due to prevalent identity fraud and the absence of a well-coordinated credit bureau, making it a high-risk endeavor,” Tyme Group CEO Coenraad Jonker told DealStreetAsia in April.

Looking ahead, Tyme Group, is eyeing expansion to Vietnam and Indonesia. Jonker said that expansion to Vietnam would come first. In both countries, it plans to launch its merchant cash advance solution for small owner-managed businesses, a product that has reportedly been successful in other markets.

TymeBank is also planning to go public, but not for several years. Jonker expects that by 2028, the bank will have reached a certain maturity, with profitability in its initial markets. “At that point, it will make sense for us to no longer rely on private equity funding,” he said.