OUR FIVE COMMITMENTS FOR BANKING THE FUTURE: THE TYMEBANK PERSPECTIVE

TymeBank

Tyme stands for 80% of adults regularly using their accounts to meet 80% of their financial needs, simply and efficiently, giving our customers the opportunity to unlock their potential. Our vision is simple – provide financial services that help people embrace their human potential.

To make this happen, Tyme introduces “The Tyme 5” – our commitment to current and future customers, investors, partners, and regulators to:

  1. Build and then re-build your bank – over and over
  2. Partner with openness, technology and humility for best-in-class solutions
  3. Design products and services to make banking simple, efficient, and responsible
  4. Bridge the gap with customers through digitally enabled distribution
  5. Work with ecosystem stakeholders to collaboratively develop our regulations and infrastructure

There is a lot required to make these happen. First, financial services must be designed to deliver value to customers by solving real problems for them where they live, work and transact. It entails meeting the financial needs of the hundreds of millions of customers worldwide that are banked but continue to operate in cash, relying primarily on informal mechanisms to manage their financial lives. Second, it requires a broader product set, extending well-beyond money transfers and airtime purchases – helping customers address liquidity gaps, plan for a better future, manage income gaps in the last week before a paycheck, and hedge against common shocks. Third, it requires a business model that can deliver this value at scale in a profitable way.

The Tyme 5 – Our Commitments to Bank the Future

  1. Build and then re-build your bank – over and over.

“To improve is to change; to be perfect is to change often” – Winston Churchill

Having built numerous digital banks across various countries in Africa and Asia, we now compare building a bank to building a city. People change, businesses change, transport changes and so the optimally designed city needs to evolve. The same is true for banks – in terms of what customers want and what we are able to deliver.

There are multiple implications for how we build our Tyme banks. Below we highlight three:

  • A modular modern tech stack: Modularity means we can continue to evolve, enhancing what we deliver and how we deliver without costly and disruptive technology rebuilds. We don’t need to be the best at everything – but the ability to plug in best-in-class, highly specialized capabilities of others in a seamless manner is core to our success.
  • Remaining close to customers and their evolving needs: There are many ways to do this but our ability to ingest and analyze large amounts of data in real time is critical to this. We need the ability to interpret our customers’ usage behaviours and customer service interactions are telling us. And then incorporate those insights into the evolving design of our products and channels.
  • Willingness to adapt our business model: We need to remain vigilant against the threat of “legacy revenue streams” thinking – a major barrier to innovation in existing banks. One of our key competitive advantages is other institutions’ lack of willingness or ability to cannibalize existing revenue in favour of consistently delivering fair value to customers. Where our costs or risks drop, we must proactively pass on value to customers, consistently choosing long term success over short term profits.
  1. Partner with openness, technology and humility

“Alone we can do so little, together we can do so much” – Hellen Keller

The endless possibilities that new technology brings can be distracting. Remaining focused on delivering against your strategic priorities is critical. Solving one thing really well has been key to the success of many fintechs. But as a digital bank with the ambition to compete head on with more established players to meet the full complex financial needs of the mass market, we believe a more holistic proposition is required.  Rather we leverage the capabilities of fintechs and others in the way we ‘build’ our bank and, critically, in how we deliver the array of products our customers want.

Our goal is a curated platform offering best of breed services to our customers in areas beyond our core capabilities. This is done by partnering with carefully selected partners with aligned incentives to complement our core product set, such as our successful partnerships with AWS, Mambu and Databricks – and joining initiatives such as the Asean Financial Innovation Network (AFIN) APIX platform to quickly understand best in class players globally.  Getting this right means an increased ability to respond to customer needs with enhanced products, shorter time to market, lower costs, and an enhanced ability to pivot.

  1. Design products and services to make banking simple, efficient, and responsible

“A ship in harbour is safe, but that is not what ships are built for.” – William G.T. Shedd

Customers are often either excluded from formal credit markets, or have access to credit at prices that will eventually cause them to default – even if they were initially able to repay a reasonably priced loan. In the absence of an understanding of customers, banks and other lenders charge usurious rates to account for often misunderstood risk. Or push credit to customers that don’t need it.

Data analytics and artificial intelligence allow providers to better understand risk at a customer level, and extend credit to more individuals and businesses, at lower prices. However, Tyme believes there is a gap in the market between fintech and other advanced data analytics companies that are really good at ingesting and analyzing alternative datasets, and more traditional bank credit departments that understand market risks, economic cycles, and broader macroeconomic data. We position ourselves at the intersection of these worlds, with deep data analytics and AI capabilities, access to traditional and alternative datasets, and decisioning that is grounded in economic analysis and understanding.

Moving to this model requires first the commitment to offer products responsibly and simply.  This is done first through an ability to ingest massive amounts of data – proprietary such as account usage, partner such as shopping basket level, and industry data – process it in real time and act on it just as quickly. This includes analysing a broader set of data to help customers demonstrate their credit worthiness; educating and encouraging customers to change behaviour in order to decrease their risk (see Figure  below); and personalising loan parameters in response to an improved understanding of individual customer risk.

Figure 2: TymeCoach gives customers their credit score for free, alerts them when it changes, and provides educational content on the basics of credit, how to improve your credit score, and how to manage debt.

And secondly, by providing products such as GoalSave which incentivizes positive savings through an online tool.  Goal Save provides 10% interest for savings goals helps customers set aside money to specific goals, tracks the savings, keeps it safe, and provides higher interest rates. The longer you save, the more interest you earn.  This is TymeBank working to develop positive financial habits.

  1. Bridge the gap with customers through digitally enabled distribution

“Technology is only meaningful when it reaches the people” – Pranav Mistry

Phone-enabled agent networks that extend well beyond any existing distribution drive the biggest success of mobile money to date in Africa and elsewhere. However, we cannot discount the power of touch either as critical for deepening financial access.  Digital banks, while a significant improvement for customers from the more traditional banks, are simply unable to cater for the needs of most customers in emerging markets.  At the same time, the costs of branch-based traditional business models simply do not allow for outreach beyond higher income, high density areas.  For full inclusion in emerging markets, customers need the high tech – high touch engagement that Tyme Bank offers its customers.

We believe in a world of high tech enabling high touch. In South Africa, Tyme welcomed 1,000,000 customers in ten months, a record among standalone digital banks. We achieved this not just from our mobile app but through a combined effort of TymeKiosks, Tyme Ambassadors and TymeCode integrations at POS, to bring touch back to digital banking.  Our digitized distribution delivered a better user experience and functionality across a broader footprint than our significantly larger competitors from day one.   And South Africans responded positively – we are now fastest growing standalone bank globally!  TymeBank currently signs up 110,000 customers per month, reaching 1m customers within our 10 months of operation.

Tyme Kiosk

Leveraging partnerships with the most trusted retail chains in South Africa, we installed Tyme Kiosks throughout South Africa in our partner retail stores to incorporate digitized customer instore experiences and engagement into Tyme Bank. Customers, using these devices, can open accounts in 3-5 minutes using only their fingerprint and receive a personalized Visa debit card on the spot. Behind the scenes, the Kiosk has embedded a regulator approved eKYC process, assuring for a full eKYC, AML process.

Tyme Ambassadors

Our kiosks are highly user friendly, but as we know, technology can be intimidating for cash-oriented customers. We therefore employ Tyme Ambassadors, young men and women from the local communities, to engage with early adopters and repeat customers to inspire trust and care in the Tyme Bank account and solution.

Tyme Code

Once our customer receives the Tyme card from the kiosk, the account is automatically active.  Tyme Code, a proprietary secure tokenization application that enables easy integration into retailer point-of-sale systems, delivers cash in – cash out at the retail store cash register right near the Kiosk immediately once the account is opened.    At thousands of existing retail locations, the Kiosk enables seamless account opening, while TymeCode enables real-time cash deposits and withdrawals and money transfer. This allows our time-poor Tyme Bank customers to do their banking conveniently for them, rather than having to learn changing bank branch hours.

With Tyme Code in place, cash-in is our second most popular transaction – highlighting the ongoing prevalence of cash and importance of physical distribution beyond account opening and card issuance. TymeCode also integrates into the loyalty points system of our partner – helping to incentive card payments. Our active customers swipe on average 7.5 times per month, gaining loyalty points and helping us understand their needs better.

Our approach works! First, in our pilot test in Indonesia, we opened 7x more accounts from the kiosk than in the branches with 98% of new accounts opened through the kiosk from May 2018 to May 2019, with a reduction of 82% cost of customer onboarding per account for the bank.

And in South Africa, for Tyme Bank, the results have been overwhelming, with 84% of our first 1 million customers signing up at a TymeKiosk.   And equally important, we have been able to launch Tyme Kiosks without losing the cost and experience advantages of digital banks. Our cost of acquisition is 80-90% cheaper than traditional bank account opening processes, but also cheaper than our fully digital customer acquisition process – notwithstanding our 750 Ambassadors.

Through our Tyme Kiosk,  Tyme Ambassador,  and Tyme Code, we have proven that a digitized physical infrastructure in the right location with the right partner and promoter delivers the most cost efficient customer acquisition in South Africa.

Figure 3: TymeBank’s TymeKiosk enables account opening in 3-5 minutes.

Figure 4: TymeBank South Africa’s onboarding points and deposit/withdrawal points compares favourably to the country’s big 5 banks.

  1. Work with ecosystem stakeholders to collaboratively develop our regulations and infrastructure

“One of the things we did … was really making it as easy as possible for those innovative firms to come and talk to us, to dock them with existing regulation where we could, but also being open and prepared to say we would change how we regulated if we did see ideas that were in the interest of consumers…”  – Chris Woolard – Executive Director of Strategy and Competition at the FCA, UK

Customers and technology have not been the only things to change since we started on this journey. In our early days the opportunity for regulatory dialogue and guidance was limited.

Today, however, many regulators around the world are taking a more explicit innovation facilitation role – especially when it comes to innovation that has the potential to drive competition and inclusion. We welcome this development and believe this enhanced level of engagement is already showing benefits for customers, providers and regulators.

We have successfully launched in markets without some of the basic building blocks, like an ID database. But the outcome is better for everyone when some key foundational elements are in place. Below we list a few of these:

  • Regulator willingness to allow cloud competing, which has the potential to increase scalability, security, agility and cost/efficiency for financial service providers. Our risk teams are as risk adverse as any regulator we have come across, but have become excellent at better managing risk within this new realm possibility. By engaging openly with regulators, we understand their concerns, explain how we manage against the related risks and agree on ways of working that can give them (and us) the desired level of comfort, without losing the momentous gains on offer.
  • Query-able ID databases and risk-based KYC regulations. We have the technology to fully KYC customers remotely in a matter of minutes. But this ability relies on risk-based KYC regulations, the existence of a national ID database, and an ability to query that database in order to run basic checks (like whether the person is alive, in the country, a criminal etc). We have successfully worked with third parties to get these queries down from days to a matter of seconds – but some basic infrastructure is still required. There have been great advances in risk-based KYC regulations in recent years, but work is required to ensure these gains are not reversed.
  • Access to data. Open banking regimes are becoming increasingly common, especially where regulators are concerned with the level of competition. In Mexico, the regime also aims to advance financial inclusion. And in Australia there is ambition to move beyond banking data to include telecoms and utility data. Irrespective of whether these moves come from industry or the regulator, we welcome any change that gives customers more control over their data – whom it is shared with and how it is used for their benefit. Of course, there are data privacy and data security concerns which need to be both managed and advocated for.
  • Interoperability that lets suitably qualified new players seamlessly connect with existing players and their customers. All approaches regulators and industry can work to enhance the value from accounts and wallets, especially relative to cash, the better. Real time low value interoperability is one way.

The core of our team has been working on financial inclusion in various forms for over 15 years. We’ve done this from inside one of the largest banks in Africa, through a founder-funded fintech with only 3 months runway, from a development finance institution, as a fully owned subsidiary of an even larger bank, and most recently as a digital bank. We have always had a healthy sense of urgency and impatience which has kept us moving fast – designing, building and operating these different business units, fintechs and banks. This article is our attempt to take a moment to reflect on our vision and to share some commitments we think are key to achieving that.

There is a lot more that is required to successfully achieve our vision. We fully expect our views on these to evolve as we continue to learn. We welcome your views on these and other critical capabilities we may have missed. Share in the comments below or contact us at hello@tyme.com.