TymeBank wants to add 150,000 clients a month with its digital platform and hopes to snatch half of them from other lenders with its low-fee model.
Branchless and paperless, Tyme is pushing its product through retailer Pick n Pay's footprint - 730 Pick n Pay and Boxer stores where clients can make cash deposits and do free withdrawals at till points.
So far Tyme has signed up 80,000 clients and is performing ahead of its own expectations, founder Coen Jonker told Business Times this week.
Jonker and fellow-founder Tjaart van der Walt retain a stake in the business, but the lion's share is held by Patrice Motsepe's African Rainbow Capital (ARC) Investments as part of a sprawling financial services portfolio. ARC paid R317m for 10% of Tyme two years ago, with Commonwealth Bank of Australia the senior partner at the time.
But after the Australian lender decided last year to cut its exposure to emerging markets, ARC emerged with a 73% stake.
"It really worked out well," said ARC CEO Johan van Zyl, who also called the deal a "windfall", but declined to give details on the amount paid.
"It gave us the opportunity, at a good price, to go back to the original model," he said. That means skin in the game for the founders, managers and a staff trust, which together hold the remaining 27% of Tyme Bank's shares.
The group has lofty ambitions. Tapping into the steady stream of first-time banking clients that have been flooding to Capitec for years is part of the strategy.
Capitec's method of disruption has been to take it to the traditional banks on their own turf - it now has more than 800 branches, more than any other lender. And more than 10-million clients, about half of whom have their main source of income deposited into these accounts. Unsecured loans remain the most important revenue stream for Capitec.
Tyme sees 2-million clients as its break-even point if it manages to lend to 6% of that client base. Its goal of adding 150,000 clients a month would get Tyme there within two years. Being new has its advantages, said Jonker, as Tyme was designed as a digital-only bank from the start.
"No bank employee ever touches cash," he said, adding that managing cash and handling paper are a massive part of the cost basis for any financial institution.
Jonker and Van der Walt, who had been mulling the idea of a digital bank over weekends, started the business seven years ago with the help of a Deloitte start-up incubator. They have since bedded down systems and pulled in partners to scale the business.
With ARC as majority stakeholder, Tyme has the opportunity to cross-sell other financial services once it has enough clients, which will be an important added revenue stream as its low transaction fees will contribute very little to profits.
The bank's development tracks Richard Brasher's tenure as CEO of Pick n Pay.
Before taking the reins at the retailer, he was an executive at Tesco in the UK, where he had a big hand in developing its loyalty programme and a banking division.
And with Pick n Pay's Smart Shopper data - more than 7-million customers belong to the loyalty programme - Tyme has a mountain of data to trawl through to map behaviour and understand clients.
It offers Smart Shopper points to banking clients wherever they swipe their cards, but more for purchases at Pick n Pay.
"You need as many data points as possible," said Jonker. And even if Tyme is not the client's primary account, the new bank will probably have enough data to sell other services to them and know how to cater to their borrowing needs.
Tyme has a 10-year relationship with Pick n Pay, but it is not an exclusive one. Though forming partnerships with competitors in the Shoprite group and Woolworths are off limits, other retailers such as Clicks and the likes of Game and Makro in the Massmart stable are fair game.
This is not Pick n Pay's first foray into banking.
In the late 1990s Pick n Pay made a go at accepting cash at its tills with its own financial services business, using Boland Bank's banking licence at the time. Boland, as part of the BoE group, was later swallowed by Nedbank, which continued the relationship for several years as Go Banking.
But big data and analytics and artificial intelligence and machine learning have arrived in the meantime.
These are tools that innovative traditional banks such as Capitec and First National Bank have used to their advantage, trimming bureaucracy and speeding up banking.
But for a digital bank such as Tyme, speed and ease of use are vital to succeed.
"Other people might get bonuses for shaving five minutes off an hour-long process. We had to approach it differently and make it possible to open an account within five minutes," said Jonker.
strydomt@sundaytimes.co.za..