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

Published 5 years ago

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.

African Bank’s CEO Basani Maluleke. Picture: Motlabana Monnakgotla

Phoenix from the ashes   

African Bank’s CEO Basani Maluleke is overseeing the rebirth of a bank that went into administration in 2014.

The revival will allow the bank to start conversations on an exit strategy with its shareholders, the South African Reserve Bank, the Government Employees Pension Fund and six of South Africa’s biggest lenders.

Under Maluleke’s leadership, African Bank is venturing into digital banking. In May, it launched its very first transactional product MyWORLD, offering “the cheapest transactional banking fees in South Africa’s market”. 

MyWORLD operates across African Bank’s Omni-channel digital infrastructure. The bank partnered with Direct Transact, a provider of electronic banking and independent payment processing products, and ebankIT, a Portuguese company that develops Omnichannel digital banking platforms.

The bank took this route, explains the self-aware leader, as it wants “to be able to tap into fintechs and into people who do one thing really well, because there’s no way that we can do everything really well, so we identified the bank in Portugal, as a fintech that’s doing really great work around customer interfaces and as a result, they are a really strong partner of ours and assisting us with the app as well as our online channels”.

Omni will provide the bank’s customers with convenience and seamlessness, reckons Maluleke.

“We know for a fact that one of the things that irritate customers is when you go to a bank and they ask you for the same information over and over. You are giving them your KYC [know your customer] documents five times in three years and the key becomes how do you make sure that irrespective of which channel you engage with us on, you are able to continue seamlessly from one to the end without having to give exactly the same information over and over?”

Maluleke believes the product will be a winner because African Bank doesn’t have the “same legacy issues of the larger banks, we are not protecting massive cost infrastructure that the other banks have and I think it puts us in a very, very good position to be successful. We’re all playing a very similar game and we are all chasing very similar customers, the key to success is going to be who’s going to be able to deliver the best value proposition and right now we think we definitely are well-positioned to do that”. With the change, African Bank hopes to lock in its existing customer base, who predominately earn between $300 and $1,400 and target people on the higher end of the spectrum.

Where does Maluleke see banking in the next five years?

The entrepreneur envisions that banks will move out of their traditional offerings, using data to decide what those should be.

She elaborates: “Investec talks a lot about its travel program because it knows that its customers want more travel but we know that our customers are much more focused on… how do you help me to access education in ways that make sense to me? So, for us it is about understanding what your customers need and being able to provide it to them in a way that is seamless and affordable.”

She imagines that ChatBanking will grow, “everybody wants to be able to bank on WhatsApp or on social media”.

The social-justice advocate also sees the rise of invisible banking.

“You want to be able to wake up and not really have to bank, so you want to be able to wake up and talk to your virtual assistant, say Siri, Alexa or whoever else comes up over the course of the next five years… Banking must come to you as opposed to you having to go to it, that’s where this idea is going. We were talking about the idea of the invisible bank that banking kind of happens between everything else and it’s the glue that holds everything that you do together without you having to deliberately go and log into this thing and move on…”

Peter Matlare, deputy CEO of Absa. Picture: Motlabana Monnakgotla

The rebranding strategy 

Peter Matlare, deputy CEO of Absa, unlike Shabalala and Maluleke, works for a traditional bank. But one that is repositioning itself for the future as it prepares to complete its managed separation from Barclays, in Botswana, Zambia, Namibia, Seychelles, Mauritius, Kenya, Ghana, Tanzania, Mozambique, Nigeria and Uganda, by June 2020. This follows the British parent bank’s decision in 2016 to dispose of its African operation post strategic review (see box-out on the following page for more).

Once the separation is complete, Matlare believes that the bank’s ability to compete will be strengthened.

“We have absolutely no doubt that we have the capabilities and the people, and the strategy to truly become a great financial services group across the continent, having separated from Barclays PLC,” says Matlare.

Absa is one of those traditional banks delving deeper into digital banking.

The offering Absa foresees will be beyond an app, reveals the critical thinker. The technology architecture it is putting in place through the separation will allow it to do things in a more efficient and effective manner, he says.

“Whether it’s where we have had manual processing, we put in automated processing which allows us not only to take costs out but to be more efficient and effective. The other is whether you are creating what we call digital channels so whichever touch channel you are using, whether it is a mobile channel, whether it’s an internet channel being able to have those seamlessly…

“It is critical for us to get there and the important part is that we’re doing that which means you got to take out legacy systems and replace them with these transformative new processes and along that path, you are going to have lots of challenges, ” the realist acknowledges.

Realizing that, when Absa started its separation program from Barclays, dedicated teams were put in place to execute the changes, reveals Matlare.

“The foresight that the board and Maria [Ramos, former Absa CEO] had, that we negotiated in our separation from Barclays, a very good separation settlement which has allowed us to use that 1.2 odd-billion dollars in order to drive that transformation and change.”

Matlare also recognizes that this path to digital banking won’t stop after June 2020. “As part of this change, this digitization is about what should be in your toolbox and how do we change culturally how people interact a) with each other and b) with a customer out there in order to become this agile, digitally-enabled bank that will hopefully succeed.”

Similar to TymeBank and African Bank, Absa is not looking at entering the future alone but with fintech or technology platforms that allow it to compete in the areas it wants to, for example, in Kenya, it has a platform called Timiza.

“Timiza is a saving and lending and payment platform that allows you to get an instant unsecured loan or to make a bill payment or to get an insurance product, you can get all of those. We partnered with a company called Craft Silicon, on the one side, and they’re the kind of tech partner in getting this product up and running but we also partnered Safaricom that owns the M-Pesa [ecosystem], so that we can do the credit vetting and screening, the screening of the individuals who come on to look for that loan and, of course, we use the national credit bureau data. When you put all of those together… you have got to be able to manage all of these partners in this venture in order to deliver this capability so if you are an old-fashioned thinker, who thinks in a linear manner you’re not going to get that right, you have got to be able to think in a distributed fashion.”

Matlare reckons that as these partnerships evolve, “you’re going to find an ability to work together in order to create these opportunities for value and different partners bringing different capabilities to the market so it’s not just about the brand, it’s about deep, deep data analytics, it’s about ensuring that customer data is protected… and it is making sure that the product continues to deliver what the product needs to deliver and when you have to course-correct that this partnership understands you have got to course-correct and it is going to evolve like that for a while”.

Where does Matlare see banking going in the next five years?

“We ultimately have to be an entity that provides a service to customers so that service will have many elements to it, the enablers of that service will change but ultimately we are there to provide  great service to customers and add value to the communities we operate in, obviously but also to our shareholders,” foresees Matlare.

The punctilious dressed banker imagines that “whilst technology might change, whilst the enablers might change, the central function of providing capability, enabling customers to effect that which they need to is absolutely where banking will be. Does that mean you will have investment-banking? Absolutely yes. Does that mean you will have retail banking? Absolutely yes, but it may no longer be bricks-and-mortar retail banking, it could be a combination of bricks-and-mortar and something else”.

Matlare, like his banking counterparts, believes costs will come down.

“I’ve no doubt in my head that as you continue to move away from bricks-and-mortar as a primary area for delivery, you ought to see the cost of providing that service come down…”

He warns however, “that if you do move from manual processing to straight-through-processing and costs come down, there is a human cost to that in the sense that warm bodies no longer do what they used to do. So, you then have to think very carefully about how you repurpose, how you invest in the people who provide those services so they provide a different set of services”.

Like Shabalala and Maluleke, Matlare believes the insights you get from data will be gold. With aplomb, Matlare sees the bank expanding in the next five years, either on its own or with partners.

For example, with Société Générale, which it has just signed a memorandum of understanding with, or partnering a payment platform that is very successful in a particular market, such as Angola or Nigeria.

Who will win the race?

Ultimately, it will be the bank that gives customers what they want. But how the banks do that will differ.