In the past few months, three new banks have launched with a leaner, cheaper business model that will change the face of SA banking — TymeBank, Bank Zero and Discovery Bank. They are here to challenge the Big Four - ABSA, FNB, Nedbank and Standard Bank. The fifth largest bank, Capitec, started in 2001. It now has 11.4 million clients, acquired Mercantile Bank, with over 200,000 new clients opening new bank accounts a month. It also continues to develop its financial technologies. At the same time, Standard Bank the largest bank in South Africa announced it woule be closing 91 branches, affecting 1,200 employees. Many face retrenchments, many will be re-trained to be deployed other departments of the bank. Standard Bank points out that its clients use more of its services online via mobile phones, while having less visits to branches. We witness the waves of technology tsunami hitting the banking industry. The three new banks have very similar focus: digital, with no physical branches. Will they succeed? Will they threaten the Big Four banks? Who are their backers? TymeBank is controlled by African Rainbow Capital (ARC), an investment company controlled by the eclectic Ubuntu-Botho group headed by Patrice Motsepe. As the Forbes rich list has it, Motsepe is one of the 1,000 wealthiest individuals in the world, with a fortune of $2.4bn. Before it was bought by Motsepe’s company, TymeBank was owned by the Commonwealth Bank of Australia (CBA), one of the world’s top 10 retail banks. As for Bank Zero, the most entrepreneurially based of the three, it shows how far the Reserve Bank has come that it got the green light. Bank Zero is run by a maverick group of former FNB executives, most of them with strong technology backgrounds, with a few family and friends as shareholders. The chair and figurehead is the former FNB boss Michael Jordaan, based in Stellenbosch. Somewhat ironically, Jordaan is Motsepe’s partner in the data-only telecom network Rain. The Bank Zero CEO, Yatin Narsai (former head of FNB retail), runs the business day-to-day from Bryanston. Discussing the rationale for the bank in an interview with the FM, Narsai says SA ranks among the five countries with the highest bank fees in the world. "This is intolerable in such an unequal society, but then the rest of the bottom five were similarly unequal countries in Latin America," he says. No-one can ignore the competitive threat of cheap banking. Narsai says he personally will save R2,000 a month from his personal and business accounts, when Bank Zero goes live and he can move accounts. "Low fees will become the new normal and I hope that penalty fees will disappear altogether," he says. Discovery Bank is part of the wider group run by CEO Adrian Gore, which began as a health-care company in 1993. Discovery boasts Remgro associate Rand Merchant Investments (RMI) as its anchor shareholder. Discovery Bank is launching a new business model, based on its Vitality principles. If a client can manage his personal finance and credit well, his money in the account will receive a higher interest rate, while he pays lower interest rate on his home loans. Discovery Bank is hoping to use this business model to incentivise clients to modify and improve their financial habits. The question, however, is what the existing big four banks — FNB, Standard Bank, Absa and Nedbank — will do to counter the threat. "The big banks ignored Capitec in the early 2000s, and lost considerable market share. I am sure they will not make the same mistake again." Below is a comparison of bank charges (Source: Business Insider) Source: Businesslive
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