Tyme Group Co-Founder & Executive Chairman Coenraad Jonker
The year 2023 was significant for Tyme Group, according to Co-Founder & Executive Chairman Coenraad Jonker in an email interview with e27.
The Singapore-based digital banking group announces that its flagship operation in South Africa, TymeBank, has joined the five per cent of neobanks globally to be profitable—which it managed to achieve in just four years.
“Yet our Philippines operation, GoTyme Bank, is currently onboarding over eight times more customers daily and almost four times more cumulative customers than TymeBank, further demonstrating the model and the huge potential for its application in Asia,” says Jonker.
“This has helped us to achieve US$162 million in annualised run-rate and amass 10.8 million customers across the Group, with 2.2 million of those new customers located in the Philippines.”
Jonker says that the digital bank is currently onboarding over 250,000 customers in the Philippines every month, where we also achieved 1,400 cash-in/cash-out points, installed 400 new kiosks, and launched an SME merchant cash advance with PayMongo in November.
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How does the company plan to further expand in Southeast Asia, particularly the Philippines? What insights can they share with us about the future of digital banking in the region? Find out the answers in this interview.
The following is the edited excerpt of the interview.
What lessons do you learn from the milestones you made in 2023? How do you plan to implement it in your strategy this year?
Based on our learnings, Tyme has committed to current and future customers, investors, partners, and regulators. These include partnering with openness and humility with best-in-class technology solutions and third-party financial solutions; designing products and services to make banking simple, efficient, responsible and affordable; bridging the gap with customers through digitally enabled distribution in retail ecosystems; and working with ecosystem stakeholders to collaboratively support progressive regulations and strong financial infrastructure.
We also understand the importance of the basics in business. Human relationships and good old customer service still remain as important as ever and universal across geographies and cultures. In this regard, there are more similarities between markets than dissimilarities.
Finally, our mantras have remained constant since day one, allowing us to gain customer trust through consistency.
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The first of these mantras is ‘You can only walk from where you stand’ because we walk the digital journey with our customers to help them achieve digital financial literacy.
The second is ‘No one gets up in the morning and says I want to get a bank account’ because it reminds us that you must manufacture the interaction with the customer.
Can you explain the significance of the Southeast Asian market for your business? What strategy do you use to win this market?
After successfully launching in South Africa, we looked for structurally similar markets with a larger addressable market and lower cost efficiency, which were ripe for disruption.
A recent report from Bain and Company estimated that around 70 per cent of the adult population of Southeast Asia is either unbanked or underbanked. That is 70 per cent of 400 to 500 million adults.
The Philippines has a sizable underbanked population with lower account penetration than regional peers, providing a strong runway for primary bank acquisition and a large addressable market for lending growth, particularly for underbanked SMEs.
It also has huge growth potential for fee income due to high GDP growth, high levels of interchange fees, high industry cost-to-income ratios, and no low industry profitability. This would provide structural cost advantages to digital banks. And it is governed by a progressive regulator.
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Our strategy for winning in markets like the Philippines is to take a high-tech/high-touch “phygital” approach that combines digital banking channels with the human touch of kiosks and bank ambassadors in partnership with nationwide retailers.
In the Philippines, we partnered with the Gokongwei Group and its 4,300 retail stores and eight million-strong loyalty programme to quickly scale our customer base, offering 1,400 kiosks and ambassadors in Gokongwei stores nationwide in the Philippines. These physical locations have also allowed a unique market-disrupting “bank where you shop” approach, where cash deposits and withdrawals are available to the physical store cashiers.
We have also deployed a globally-recognised, award-winning app and user experience focused on the human-led approach of the customer. By investing heavily in the user experience in both the physical and digital channels–with a focus on intuitive experiences, customer education on each touch point, and self-service customer resolution–GoTyme Bank has achieved a much lower cost-to-serve for its banking operations and customer service, even at scale.
We also enter with the goal of creating the most affordable banking offering in their market, with a cost structure of ~10 per cent of the incumbents. This enables us to provide financial access to the underbanked and still be on the path to profitability.
We set ourselves apart through consistent innovation in tech, product and customer experience, as well as the launch of regular “firsts”. These have included opening a full bank account, securing a personalised debit card in under five minutes and offering the first merchant cash advance product in the Philippines.
What is your strategy to compete with existing local players in the Philippines?
GoTyme Bank is on track to revolutionising banking in the Philippines and competing with existing local players by leveraging and applying Tyme Group’s track record of ‘firsts’, industry-leading offerings, and ability to solve industry-wide problems.
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For instance, digital-only banks often struggle with the high cost of customer acquisition and the high cost of offering a nationwide physical cash-in/cash-out network.
Tyme solves this through our high-tech/high-touch approach. We create ease and simplicity through immediate account opening via a personalised debit card released through kiosks in shopping malls throughout the Philippines. We build trust through our physical presence in retail ecosystems with kiosks and Ambassadors, but we also offer the power of self-serve financial solutions accessible through an intuitive ‘all in one’ banking app. This hybrid approach enables Tyme to serve both traditional and digital native-customers.
Digital banks also often struggle to build consumer trust and credibility to develop primary banking relationships. Tyme’s partnership model provides physical distribution channels and access to proprietary data for lending while leveraging on the existing brand equity of local partners.
Lack of quality data and infrastructure gaps, such as a national ID in the Philippines, can lead to high loss rates and poor unit economics. Tyme has created lending models that are tailored for problems like these in emerging markets specifically, such as our unsecured cash flow lending product, the merchant cash advance. These products offer customer-focused solutions that are high-frequency in nature and lend themselves to the types of smaller SMEs regularly found in emerging markets. All of this localisation is also significantly amplified by our global capabilities.
Having a common banking platform for multiple countries allows our multiple Tyme banks to be scalable, easy to build, and able to deploy products and learn lessons quickly and rapidly. Deep in-house product knowledge drives innovation and lowers unit costs through high release frequencies, allowing the cost-to-operate to continue to drop and enabling bulk discounts in best-in-class technology.
Global data analytics capabilities drive optimization through constant feedback loops and product iterations across the markets.
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What other major plans can you share with us for 2024?
In 2024, we plan to enter the Vietnamese market with our SME cash advance product and double our retail customer base in the Philippines. Our successful track record to date indicates we are likely to succeed in both pursuits.
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Image Credit: Tyme Group
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