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The Big Bank Theory: South Africa’s Banks Of The Future

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Three bankers who are shaping how banking will look in the next five years — one runs the new kid on the block; the other a bank that has risen from the ashes; the third is spearheading a traditional bank’s transformation in 11 African countries. A glimpse into the future of banking.

They are the bankers of the future. They toss around words like simplicity, invisible banking, personalization, customer centricity, data analytics, digital banking, fintech, distribution, partnerships and seamless banking. This is the future they are reimagining and creating.

TymeBank’s CEO Sandile Shabalala. Picture: Supplied

New kid on the block

TymeBank, owned by Africa’s eighth richest billionaire Patrice Motsepe’s African Rainbow Capital (ARC) Financial Services Holdings, launched its EveryDay transactional account in February that has a savings tool called GoalSave, a MoneyTransfer solution and the TymeCoach App.

Its entry into the market has turned banking on its head. The bank has no branches and its core banking system is hosted in the cloud, reducing overheads that allowed it to undercut the other players in the market. The bank’s transactional account has no monthly fees and charges among the lowest bank fees in the market.

Through a distribution partnership with retailers Pick n Pay [a South African supermarket chain] and Boxer Superstores, TymeBank has kiosks located in stores across South Africa.

TymeBank’s CEO Sandile Shabalala reveals this 10-year partnership has given it approximately 730 physical points of presence.

He says: “It gives us roughly about 10,000 cash till points where people can deposit and withdraw money, which is way ahead of what the current players have in terms of reach.”

The relationship, he reveals, allows TymeBank to cover about 80% of its target segment, ie, the underserved customer and provides access to data, which is a differentiator from a digital banking point of view.

It also points to where the future of banking is headed. The banker visualizes that banking will be an everyday kind of thing, “you will be doing banking wherever you are, in environments that you never thought you would do banking, like in a Pick n Pay store”.

The newcomer plans to replicate its partnership model with Pick n Pay and Boxer with other retailers.

The kiosks allow customers to open a Financial Intelligence Centre Act compliant bank account in under five minutes. No documentation required. Once signed-up, customers can automatically become members of Pick n Pay’s rewards program – Smart Shopper.

Shabalala believes these partnerships are the way of the future.

“We are very clear that there are things we want to do ourselves and there are things that we will never want to do, we will then partner with competent partners to provide those services. For instance, the Smart Shopper program.”

Shabalala believes the bank’s back-end technology is what has given it the edge in forming such partnerships.

“We’ve got technology… APIs [application program interfaces] which allows us to interface with any other platforms out there.”

The relationship with Pick n Pay has an added benefit; it allows TymeBank to access Smart Shopper data to understand its customers better.

 The more data the bank has access to, reveals Shabalala, it’s better able to offer propositions that speak to what its customers want. Since launching in February, TymeBank, “South Africa’s first digital bank”, has signed over 330,000 customers. Of that, 26% are between the ages of 36 and 45, and 14% aged 46 to 55.

 Shabalala believes this is an indication these people already have an existing bank account and see value in the bank’s offerings.

The bank’s utilization/activity rates are at about 37%. The fledging bank’s CEO enthuses that it was not expecting those figures at this stage.

“We thought we would reach those figures five years on, the fact that we are currently sitting at that level is good and a testament that people are finding value in the proposition,” says the banker.

By 2022, the bank wants to break even and have 2.3 million customers.

But the self-driven banker says the newcomer has big ambitions to grow its customer base beyond that figure. “We didn’t come into banking to be a second-tier player,” he says. “We have ambitions to take this business banking model outside of South Africa five years from now.”

Where does Shabalala see banking in five years?

He reckons traditional banks will still be there but become more digital.

“It definitely won’t be easy because of the investment needed and the costs, and risks associated with that, but you will see banks actually responding.”

In fact, in March, Nedbank opened its API to partners, and Capitec lowered its digital banking fees.

Shabalala imagines that you will see more partnerships. One that he foresees is a possible tie up with ARC’s insurance arm. Also the newcomer is currently doing a pilot with data-network Rain, around distributing SIM cards.


Starting from scratch

In 2016, when Sandile Shabalala was at the height of his career, as managing executive of business banking at Nedbank, he decided to walk away. It wasn’t to take a cushy job at another large traditional African financial services company but rather to join TymeDigital, to build a bank from scratch.

The main reason he joined, says the banker, “was because I really felt banking was evolving, there were more discussions around digital banks and what they would do to transform banking, but I also felt banks could play a bigger role in empowering communities and bringing more people into the economic sector, so the vision that was presented to me of Tyme, appealed to me from that perspective”.

When Shabalala was headhunted to work at Tyme, it was called TymeDigital and predominately owned by the Commonwealth Bank of Australia (CBA) with South African billionaire Patrice Motsepe’s African Rainbow Capital (ARC) Financial Services Holdings owning the balance. Its main focus was operating money transfer services in partnership with Africa’s telecommunications multinational, MTN, retailers Pick n Pay and Boxer Superstores.

In September 2017, CBA secured a banking licence from the South African Reserve Bank, less than a year later, it decided to dispose of its stake in TymeDigital to ARC Financial Services Holdings. With a new owner and Shabalala at the helm, it changed its name to TymeBank.
The vision of the bank, says the open-minded entrepreneur, who likes to look at things differently, is about empowering communities and financial inclusion.
Elaborating on the journey from his office with a stunning view of one of the most wooded cities in the world, Johannesburg, the 52-year old with an infectious laugh, says, “I think you will find very few bank executives who will say they have built a bank from scratch. That for me has been very enriching, to be part of that experience and with my team here to actually start the bank from scratch, roll out the bank and then move from building the bank to running the bank. It has been fantastic from that perspective, from a growth perspective, and also just from an exposure perspective.”

The jazz pianist, wearing a light blue shirt with jeans, reveals that by the end of the year the digital bank will enter the business banking space, starting with a sole proprietorship offering and then complex entities next year.

To avoid the trap of complexity, the banker says TymeBank has made a conscious decision to focus its energy on emerging entrepreneurs and early mid-sized small and medium enterprises.

KwaZulu-Natal-born Shabalala, who plays golf in his spare time with his wife, started his life in banking in 1984 and has been in financial services his entire working career. He has a master’s degree in business leadership from the University of South Africa.

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These Are The Biggest Givers On The Forbes 400

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This has been a year of record-setting in billionaire philanthropy. In September, Stewart and Lynda Resnick, owners of POM Wonderful and Fiji Water, pledged $750 million to the California Institute of Technology for environmental sustainability research.

In June, Blackstone cofounder Stephen Schwarzman donated $189 million to the University of Oxford—the largest single gift to the school since the Renaissance—to fund its work on humanities. The same month, Broadcom billionaire Henry Samueli pledged $100 million to UCLA’s engineering school, the largest gift ever to the department. 

Forbes tracks gifts and pledges like these as part of our ongoing coverage of charitable giving by the country’s richest people.

READ MORE | The World’s Most Generous Billionaires Outside Of The US

For the second year in a row, Forbes tracked the philanthropic giving of the richest 400 individuals in the U.S. and gave each member of The Forbes 400 list a philanthropy score. The score ranged from 1 to 5,  with 5 being the most philanthropic. List members for whom we could find no charitable giving information received an N.A. (not available).

Philanthropy Forbes 400
FORBES

Though the number of the biggest givers—those who scored a 5—stayed flat in 2019, those who received scores of 4 and 3 increased compared with a year ago.

The changes reflect two things: The country’s richest have gotten somewhat more generous, and Forbes had more information to work with this year. Some billionaires were willing to share information on charitable giving for the 2019 list who didn’t in 2018. As a result, four dozen people got higher scores this year than a year ago. 

This year, Warren Buffett led the list of top givers with $38.8 billion in lifetime giving, which is 32% of his net worth, and earned the top score of 5.

He was followed by last year’s biggest giver, Bill Gates, who has donated $38.5 billion so far. Two people who scored a 5 last year—Paul Allen and David Koch—passed away.

READ MORE: Forbes Africa | 8 Years And Growing

Billionaires like DreamWorks Pictures founder David Geffen and WhatsApp cofounder Brian Acton moved up to the top score after each scored a 4 last year. According to the latest tax filings, Geffen gave $38 million to his foundation in 2017, which brought his lifetime giving to about $1 billion.

Acton and his wife Tegan, on the other hand, have been expanding their philanthropic network, Wildcard Giving, which they founded in 2014 after Acton sold WhatsApp to Facebook. The couple has given away more than $1 billion to charitable causes.

2019 Forbes 400 Giving
FORBES

Forty-one billionaires, including Netflix cofounder Reed Hastings and software billionaire Philip “Terry” Ragon, got higher scores this year than last year. Some, like Stephen Schwarzman, earned a higher score thanks to giving in the past year.

Others scored higher because we were able to find more information about their lifetime giving, through new public documents or details provided to us by Forbes 400 members or their spokespeople. In September, a Los Angeles Times report revealed that B.

Wayne Hughes, cofounder of self-storage behemoth Public Storage, had anonymously donated about $400 million to the University of Southern California in his lifetime. Hughes, who scored a 2 last year, jumped up to a 4.

Private equity tycoon Robert F. Smith’s pledge in May to wipe out the student debt of the entire 2019 graduating class of Morehouse College generated lots of headlines but did not end up changing his score because the gift wasn’t big enough to move him up a notch. In many cases, fortunes grew faster than lifetime philanthropic giving. 

READ MORE | Noëlla Coursaris Musunka The Trailblazer In The Congo

To come up with the information on which we based our score, Forbes reporters looked at tax filings for charitable foundations, annual statements, SEC filings and news about new gifts. When possible, we interviewed Forbes 400 members and executives from their foundations. Some Forbes 400 members said they have chosen to donate anonymously, citing religious or privacy concerns. 

Our score is based on total lifetime giving and what percent of their fortune members had given away. We weighted these two factors equally. Some individuals were then bumped up or down based on several other factors, including whether they had signed the Giving Pledge, whether they had pledged significant donations, how personally involved they were in their charitable giving, and how quickly and effectively their private foundations distributed dollars. We didn’t count pledges or announced gifts that have yet to be paid out, but we took commitment to philanthropy—or lack thereof—into account.

Forbes has been tracking the wealth of the richest Americans since 1982. “Some of [the members] told us to drop dead,” James Michaels, veteran editor of Forbes, told the New York Times in a 1982 story about the list’s debut. “They said they wanted no part of it, that they’d sue us.

This happens in reporting.” At times, our reporting on philanthropic giving received a similar response. “The new philanthropy ranking is fundamentally flawed, in that it is biased in favor of those who make their gifts widely known, and against donors who choose to make their charitable contributions anonymously,” one current Forbes 400 member (who did not wish to be named) wrote to us last year.

-Deniz Çam; Forbes

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Cover Story

Mastercard: Diligent About Digital In Africa

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Mastercard knows only too well that technology can drive inclusive financial growth with simpler and more efficient ways to do business and life. And Raghu Malhotra, the man spearheading this trajectory in Africa, is also focused on social progress.


In many ways, Raghu Malhotra is like the brand he works for, leaving his footprints in different parts of the world, and in some cases, the most unlikely corners.

On a scorching summer’s day in June 2016, Malhotra traveled 100km east of Jordan’s capital city Amman, to a camp with white tents named Azraq built for the refugees of the Syrian Civil War.

In the desert terrain and hot, windy conditions, people had to queue for hours on end for plates of food handed out of visiting trucks. But some of them, displaced and homeless overnight, expressed their gratitude to Malhotra, President for Mastercard in the Middle East and Africa (MEA).

Mastercard, a technology company that engages in the global payments industry, had distributed e-cards, as part of a global collaboration with the World Food Programme, to the refugees that they could now use to purchase food and other supplies from local shops.

READ MORE | The Big Bank Theory: South Africa’s Banks Of The Future

 “I spoke to the people myself and saw what their lives were… Even those who were doctors with their families and were displaced… They said to me ‘you have restored dignity to our lives; you have no idea how demeaning it is to queue up to be given food’… We actually digitized how that subsidy for food was given. Some of these things go beyond economics,” says Malhotra. 

Beyond economics.

That very simply sums up Malhotra’s mandate for Africa as well.

The New York-headquartered Mastercard, ranked No. 43 on Forbes’ list of the World’s Most Valuable Brands, with a market cap of $247 billion, which connects consumers, financial institutions, merchants, governments and business, is fostering key partnerships across the African continent to help drive inclusive economic growth.

The idea, Malhotra says, “is to get our global skill-set to operate in its most efficient form in every local economy, at the same time, we must do good, and it must be sustainable.”

He calls Africa the next bastion of growth for various industries.

“As a company, we have stated we are going to get 500 million new consumers globally. And Africa plays a big part of that whole story… We want to be an integral part of various economies here,” says the man responsible for driving Mastercard’s global strategy across 69 markets.

Raghu Malhotra President for Mastercard in the Middle East and Africa. Picture: Motlabana Monnakgotla

“It probably took us over 20 years to get the first 50 million new consumers, in my part of the world, which is the Middle East and Africa (MEA). It took us probably five years to get the next 50 million, and last year alone, we put over 50 million consumers [in the formal economy] in MEA. That is part of our whole African story, so this is just not rhetoric; we are actually building our business on that basis.”

Home to four of the world’s top five fastest-growing economies, Africa has the fastest urbanization rate in the world, the youngest population, and a rapidly expanding middle class predicted to increase business and consumer spending.

It’s a continent of opportunity for global players like Mastercard with an eye on the potential of a booming consumer base and small and medium entrepreneurs, most of whom are still not a part of the formal economy. A large proportion of Africa is still unbanked. There is enough business opportunity in offering people digital tools so they can lead respectable financial lives.

READ MORE | The Monk Of Business: Ylias Akbaraly Talks About Secret To Success And Plans To Take Africa With Him

But it is in knowing that financial inclusion is not just about technology, but more about solving bigger problems, as the World Bank says in its overview for Africa: “Achieving higher inclusive growth and reaping the benefits of a demographic dividend will require going beyond a business as usual approach to development for Africa. Going forward, it is imperative that the region undertakes the following four actions, concurrently: invest more and better in its people; leapfrog into the 21st century digital and high-tech economy; harness private finance and know-how to fill the infrastructure gap; and build resilience to fragility and conflict and climate change.”

And in order to enable financial access, Mastercard has a balanced strategy in place, with the right partnerships for inclusive growth on the continent, Malhotra tells FORBES AFRICA.

“Every emerging market has different segments of people and you need to get the right product for the right segment. What we do is a balanced growth strategy across the continent based on timing, opportunity etc… Of course, because the bottom of the pyramid is much bigger, I think what we need is to adapt things differently; that is where the inclusive growth story comes from. That is where the opportunity is, but there is a second part to it…” And that, he summarizes, is advancing sustainable growth, doing good and bringing more transparency and efficiency.

The new pragmatic dispensation of governments in Africa towards ideas, technology and innovation has surely helped open up the stage to newer segment-driven products, especially as Africa already has such global laurels as Safaricom’s mobile money transfer and micro-financing service M-Pesa that took financial access to a whole new level. Also, sub-Saharan Africa remains one of the fastest-growing mobile markets in the world.

READ MORE | Feisty And Fearless Pioneers Thandi Ndlovu & Nonkululeko Gobodo

Malhotra says he finds African governments consistent in how they are rolling out their digital vision, and in trying to collaborate towards creating better ecosystems for their economies, though each is unique with its own dossier of problems.

“When I speak to various governments around Africa, I see a commonality of what their needs are and I also see a commonality in how they are trying to respond. So I think a lot of them realize running cash economies is a very inefficient way of doing things… Also, the consumer base is much more open to new technology because there is no bedded infrastructure or legacy infrastructure. I think where governments need to start thinking a bit more is how much do they want to do completely on their own.”

Part of this transformation on the path to financial progress is alleviating the burden of cash. Cash still accounts for most consumer payments in Africa. Mastercard, which started out as synonymous with credit cards, continues its efforts to convert consumers from cash to electronic transactions, and move beyond plastic.

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Business Intelligence For Dummies

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Sorry, Ph.D.s! Dean Stoecker’s analytics software, Alteryx, can turn almost anyone into a data scientist. And it’s turned him into a billionaire


Sun Tzu meets software in mid-August at downtown Denver’s Crawford Hotel. The floors are terrazzo. The chandeliers are accented with gold. And Dean Stoecker, the CEO of data-science firm Alteryx, has summoned his executives for the annual strategy session he calls Bing Fa, after the Mandarin title of The Art of War. “Sun Tzu was all about how you conserve resources,” says Stoecker, 62. “How do you win a war without going into battle?”

Stoecker knows something about conserving resources. He cofounded Alteryx in 1997, when the data-science industry scarcely existed, and spent a decade growing the firm to a measly $10 million in annual revenue. “We had to wait for the market to catch up,” he says. As he waited, he kept the business lean, hiring slowly and forgoing outside investment until 2011. Then, as “big data” began eating the world, he raised $163 million before taking Alteryx public in 2017. The stock is up nearly 900% since, and Stoecker is worth an estimated $1.2 billion. 

“People ask me, ‘Did you ever think it would get this big?’” he says. “And I say, ‘Yeah, I just never thought it would take this long.’ ”

Alteryx makes data science easy. Its simple, click-and-drop design lets anyone, from recent grads to emeritus chairmen, turn raw numbers into charts and graphics. It goes far beyond Excel. Plug in some numbers, select the desired operation—say data cleansing or linear regression—and presto. 

There are applications in every industry. Coca-Cola uses Alteryx to help restaurants predict how much soda to order. Airlines use it to hedge the price of jet fuel. Banks use it to model derivatives. Data analysis “is the one skill that every human being has to have if they’re going to survive in this next generation,” says Stoecker. “More so than balancing a checkbook.”

Libby-adams-alteryx
Libby Duane Adams, cofounder and chief customer officer of Alteryx.ETHAN PINES

Alteryx’s numbers support that forecast. The company, based in Irvine, California, generated $28 million in profit on $254 million in revenue in 2018, and Stoecker expects to hit $1 billion in annual sales by 2022. 

Stoecker grew up the son of a tinkerer. His father built liquid nitrogen tanks for NASA before quitting his job to sell “pre-cut” vacation homes in Colorado. He made them himself. “It was literally just him nine months of the year, and he would cut wood for 50 buildings,” Stoecker recalls. As a teenager he joined his father, and by the time he arrived at the University of Colorado Boulder to study economics, he was able to pay his own way.

After graduating in 1979, Stoecker earned his M.B.A. from Pepperdine, then took a sales job in 1990 at Donnelley Marketing Information Services, a data company in Connecticut. There he met Libby Duane Adams, who worked in the firm’s Stamford office. Seven years later, the pair founded a data company of their own, which they cumbersomely named Spatial Re-Engineering Consultants. (A third cofounder, Ned Harding, joined around the same time; Stoecker, who came up with the idea, took the lion’s share of the equity.)  

SRC’s first customer, a junk mail company in Orange County, paid $125,000 to better target its coupons. “We were building big-data analytic cloud solutions back in 1998,” says Stoecker, when many businesses were barely online and terms like “cloud computing” were years away. 

SRC was profitable from the outset. “We didn’t spend ahead of revenue. We didn’t hire ahead of revenue,” says Adams, sitting in a remodeled 1962 Volkswagen bus at Alteryx headquarters, theoretically a symbol of the company’s journey. “We never calculated burn rates. That was a big topic in the whole dot-com era. We were not running the business like a dot-com.” 

In 2006, as part of a pivot away from one-off consulting gigs, SRC released software to let customers do the number-crunching themselves. They named the software Alteryx, a nerdy joke for changing two variables simultaneously: “Alter Y, X.” Stoecker made Alteryx the company name, too, in 2010. 

The market was still small. To grow revenue, “we just kept raising the price of our platform,” Stoecker says. In the beginning, Alteryx sold its subscription-based software for $7,500 per user; by 2013 it was charging $55,000. The next year, as Stoecker felt demand growing, he slashed prices to $4,000. Volume made up for the lower rate. Today Alteryx has 5,300 customers. “We immediately went from averaging eight, nine or ten [new clients] a quarter to north of 250,” he says.

Although data mining and data analytics is a long-established field, encompassing a slew of startups as well as giants like Oracle and IBM, “we see almost no direct competition,” Stoecker insists.

“It’s a pretty wide-open field,” says Marshall Senk, a senior research analyst at Compass Point Research & Trading. “The choice is you buy a suite from Alteryx or you go buy 15 different products and try to figure out how to get them to work together.”

Inside Alteryx’s offices, Stoecker pauses in front of a time line depicting his first 22 years in business. “The good stuff hasn’t even occurred yet,” he says. “I’m going to need a way bigger wall.”

Cover Photograph by Ethan Pines for Forbes.

-Noah Kirsch; Forbes

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