South Africa's digital banking conflict

South Africans who wish to create a bank account without having to visit a branch have numerous options.

Bank Zero, Discovery Bank, and TymeBank are the three biggest banks in South Africa with digitally oriented offers that operate without physical locations.

TymeBank is by far the most popular alternative in terms of raw numbers, with over 5 million subscribers in the country by June 2022.

That is an incredible accomplishment given it was started in 2015, with an average of roughly 714,300 users added per year.

In comparison, Standard Bank, South Africa’s largest bank, had 11.73 million clients by the middle of 2022. It was, however, established in 1862.

TymeBank’s rapid growth is most likely owing to its low entry barrier in terms of cost, eligibility, and sign-up procedure.

It has no monthly fees and the majority of transactions are free. Only a few transactions incur costs of R3.00, R7.00, or R10.00.

Furthermore, consumers are not required to have a minimum monthly income and can open an account using the website or mobile app.

At this time, new clients are only permitted to have a maximum amount of R40,000 in their accounts.

They may then go to a TymeBank kiosk to verify their information, which will need an ID, thumbprints, and residence address, raising their maximum possible amount to R700,000.

Their first TymeBank Visa debit card will be issued at no cost at the kiosk.

While Bank Zero also provides a no-fee bank account, it did not arrive until late 2021, six years after TymeBank.

It has not disclosed any information regarding its client base, although MyBroadband recently predicted that it was likely to be between 13,000 and 67,000 people.

Bank Zero, like TymeBank, does not impose fees for most transactions, albeit clients must pay a one-time cost for their customised card.

In most places, the bank costs R119 for the card and delivery, but individuals in less populous areas may have to pay R159.

If you want to pick up your order at a Clicks Store, the fee is reduced to R69.

Bank Zero’s distinguishing features include security and ease.

Discovery Bank, the world’s first behavioural bank that is also totally digital, was established in 2019.

It features a wide choice of accounts that users may sign up for using its banking app or website.

However, its costs are often higher than those of TymeBank and Bank Zero, indicating that it serves a distinct market.

Its strategy is consistent with that of the Discovery Group as a whole, in that it incentivizes customers to engage in particular healthy behaviours identified by the company’s experts through scientific research.

Customers that accomplish specified criteria are rewarded with Discovery Miles for purchasing healthy food and healthcare goods, utilising Uber, and refuelling at specific gas stations.

The characteristics and ratings of Bank Zero, Discovery Bank, and TymeBank are compared in the table below.

Banking fees will be the most crucial element for many South Africans in determining which of these institutions best meets their needs.

We chose a set of common transactions and assessed how much it would cost to carry them out with each digital bank.

Our transaction mix included the following items:

• 5 payments
• 2 cash deposits of R1,000 at point-of-sale
• 3 cash withdrawals of R500 at point-of-sale
• 3 prepaid airtime purchases
• 1 instant payment of R1,000
• 3 debit orders
• 1 debit order dispute
• 1 emailed statement
• Monthly fee

The table below summarises the costs of this combination of transactions using a Bank Zero, Discovery Bank Gold, or TymeBank EveryDay Personal account.