Latest news with #Westvig


Daily Maverick
2 days ago
- Business
- Daily Maverick
TymeBank's R750m lending leap via acquisition of SanlamTyme JVCo
As the Competition Tribunal approval clears the way for TymeBank's acquisition of SanlamTyme JVCo and the SPL loan book, CEO Karl Westvig's commitment to fair lending faces its biggest test yet. The last time TymeBank CEO Karl Westvig spoke to Daily Maverick, he made bold promises about the digital bank's approach to loan books. 'The mission has always been to be able to profitably bank an entry-level customer… And it's not through the cross sell. It's through core banking,' he insisted. This is banking philosophy 101 from someone who clearly reads the right textbooks, but the market has a way of testing such noble intentions. TymeBank is paying R31.5-million for the 50% JVCo stake, plus approximately R400-million for half of Sanlam's loan book, plus another R320-million for a reference share entitling it to half of the credit life insurance profits from the JVCo loan book. That's a R750 million bet on an expanded lending business for a bank that has built its reputation on being different. 'These are some of the most abused people in the world,' Westvig acknowledged when previously discussing his predominantly low-income customer base. It's rare blunt honesty from a banking executive about the vulnerable position of South Africa's unbanked and underbanked population. Walking in Capitec's shadow Westvig was quick to draw a comparison with the titan of Techno Park that lords over SA's banking sector. 'Capitec fundamentally was a lending business… We've built our business as a transaction-led and savings-led bank.' It was a fair point, but also slightly disingenuous. Capitec's lending-first approach has made it one of South Africa's most profitable banks, particularly among lower-income customers. TymeBank's transaction and savings model might sound more palatable, but profitability in banking, especially when serving entry-level customers, typically requires some form of credit extension. Which brings us to the elephant in the room: this SanlamTyme acquisition is precisely about getting into lending in a bigger way. The question becomes whether TymeBank can maintain its 'fair and reasonable and competitive' lending promise while dealing with the realities of default rates and collection challenges that come with unsecured lending to financially vulnerable customers. Playing the loan game Here's the challenge: TymeBank is inheriting an existing loan book from Sanlam Personal Loans. The collection practices, interest rates, and terms of these existing loans were set by Sanlam, not TymeBank. How the digital bank handles this transition, particularly any customers who may be struggling with repayments, will be the first real test of Westvig's non-predatory commitment. The broader South African lending market is notorious for aggressive collection practices, astronomical interest rates on unsecured loans, and terms that can trap borrowers in cycles of debt. TymeBank's entry into this space, regardless of good intentions, puts it in direct competition with established players who have built profitable businesses on precisely the practices Westvig claims to oppose. What this means for you Expect TymeBank to launch more personal loan options soon, but without the exploitative hooks. If you've been excluded from formal credit before, this deal could open the door. For South Africans tired of tiered fees and opaque charges, TymeBank just got a lot more powerful. The numbers will tell the story The transaction's longstop date is 31 March 2026, with Sanlam planning to reinvest the proceeds into its broader growth strategy. That gives TymeBank roughly 18 months to prove that its approach can work at scale in the lending business. The success of this venture will ultimately be measured not by Westvig's well-intentioned statements about financial inclusion and fair lending, but by TymeBank's loan loss provisions, default rates and, most importantly, customer complaints about collection practices in the quarters ahead. If TymeBank can indeed provide competitive, fair lending to South Africa's underbanked population while maintaining profitability, it would represent a genuine breakthrough in financial inclusion. But the graveyard of financial services is littered with good intentions that couldn't survive market realities. DM


Daily Maverick
5 days ago
- Business
- Daily Maverick
Sanlam merger to test TymeBank's no predatory lending promise
As the Competition Tribunal approval clears the way for TymeBank's acquisition of SanlamTyme JVCo and the SPL loan book, CEO Karl Westvig's commitment to fair lending faces its biggest test yet. The last time TymeBank CEO Karl Westvig spoke to Daily Maverick, he made bold promises about the digital bank's approach to loan books. 'The mission has always been to be able to profitably bank an entry-level customer… And it's not through the cross sell. It's through core banking,' he insisted. This is banking philosophy 101 from someone who clearly reads the right textbooks, but the market has a way of testing such noble intentions. TymeBank is paying R31.5-million for the 50% JVCo stake, plus approximately R400-million for half of Sanlam's loan book, plus another R320-million for a reference share entitling it to half of the credit life insurance profits from the JVCo loan book. That's a R750 million bet on an expanded lending business for a bank that has built its reputation on being different. 'These are some of the most abused people in the world,' Westvig acknowledged when previously discussing his predominantly low-income customer base. It's rare blunt honesty from a banking executive about the vulnerable position of South Africa's unbanked and underbanked population. Walking in Capitec's shadow Westvig was quick to draw a comparison with the titan of Techno Park that lords over SA's banking sector. 'Capitec fundamentally was a lending business… We've built our business as a transaction-led and savings-led bank.' It was a fair point, but also slightly disingenuous. Capitec's lending-first approach has made it one of South Africa's most profitable banks, particularly among lower-income customers. TymeBank's transaction and savings model might sound more palatable, but profitability in banking, especially when serving entry-level customers, typically requires some form of credit extension. Which brings us to the elephant in the room: this SanlamTyme acquisition is precisely about getting into lending in a bigger way. The question becomes whether TymeBank can maintain its 'fair and reasonable and competitive' lending promise while dealing with the realities of default rates and collection challenges that come with unsecured lending to financially vulnerable customers. Playing the loan game Here's the challenge: TymeBank is inheriting an existing loan book from Sanlam Personal Loans. The collection practices, interest rates, and terms of these existing loans were set by Sanlam, not TymeBank. How the digital bank handles this transition, particularly any customers who may be struggling with repayments, will be the first real test of Westvig's non-predatory commitment. The broader South African lending market is notorious for aggressive collection practices, astronomical interest rates on unsecured loans, and terms that can trap borrowers in cycles of debt. TymeBank's entry into this space, regardless of good intentions, puts it in direct competition with established players who have built profitable businesses on precisely the practices Westvig claims to oppose. What this means for you Expect TymeBank to launch more personal loan options soon, but without the exploitative hooks. If you've been excluded from formal credit before, this deal could open the door. For South Africans tired of tiered fees and opaque charges, TymeBank just got a lot more powerful. The numbers will tell the story The transaction's longstop date is 31 March 2026, with Sanlam planning to reinvest the proceeds into its broader growth strategy. That gives TymeBank roughly 18 months to prove that its approach can work at scale in the lending business. The success of this venture will ultimately be measured not by Westvig's well-intentioned statements about financial inclusion and fair lending, but by TymeBank's loan loss provisions, default rates and, most importantly, customer complaints about collection practices in the quarters ahead. If TymeBank can indeed provide competitive, fair lending to South Africa's underbanked population while maintaining profitability, it would represent a genuine breakthrough in financial inclusion. But the graveyard of financial services is littered with good intentions that couldn't survive market realities. DM


Daily Maverick
01-07-2025
- Business
- Daily Maverick
‘We want this resolved properly' — TymeBank CEO decries Home Affairs' ID verification fee hike
TymeBank CEO Karl Westvig has come out swinging in response to the Department of Home Affairs' identity verification fee increase When TymeBank CEO Karl Westvig says, 'I ultimately got to pay the bill in South Africa for it,' he's not just talking about rands and cents. He's talking about what he sees as a missed opportunity to build a world-class, fair and inclusive digital identity system that doesn't sabotage the very banks trying to serve the country's unbanked masses, just like the one TymeBank is building in the Philippines. Westvig, who oversees TymeBank's South African operations, has come out swinging in response to the Department of Home Affairs' (DHA) identity verification fee increase, which has sparked boardroom grumbling and public confusion. From 1 July, the DHA will charge R10 per real-time identity verification, up from a nominal 15 cents. In a late Friday evening conversation with Daily Maverick, Westvig unpacked why TymeBank, known for its *sigh* 'phygital' (physical + digital) model, feels blindsided and why he thinks the process failed the very people it claims to protect. Ghost letters and digital dead ends Unlike Capitec, which publicly backed the DHA's upgrade ambitions and promised to absorb the costs for now, TymeBank insists it never got a fair shot at the conversation. 'We were explicitly told to go through Sabric [South African Banking Risk Information Centre], not directly with DHA. It was a clear instruction,' said Westvig. Then came the phantom communication: an email, apparently sent to all bank CEOs in South Africa, which never reached him. 'We've checked our email servers. We've got no record. It didn't go to spam. It didn't go anywhere,' he said. This is why Tyme Group CEO Coenraad Jonker went on media platforms last week to say the bank was caught on the back foot while the new pricing snuck in through the front door. And while the DHA might see a universal fee structure as a necessary cost of securing South Africa's ID ecosystem, Westvig sees it as a blanket approach that ignores the nuances of a digital-first bank serving people on tight margins. Broken systems and surprise invoices The problem isn't just the price, it's the system behind it. TymeBank depends heavily on real-time online verifications to onboard customers in under five minutes, printing cards on the spot in retail kiosks. It's a model designed to bring people in from the 'margins' (think: social grant recipients who can't afford the steady wealth leak of bank fees), not push them out with costs they can't carry. 'The [DHA] system is down half the time,' said Westvig, pointing to the irony of people paying more for a service that regularly leaves them hanging. TymeBank's internal calculations show that if they had to pay R10 per internal database lookup, as they now face with the DHA, they'd 'be bankrupt a hundred times over' within a month. Even more frustrating to Westvig is the lack of clarity about how DHA arrived at its pricing. 'We don't understand if it's just for the online verification service or whether this is to fund something else. We don't know,' he said. 'We do not believe it's fair.' The offer they wouldn't take TymeBank offered to help build a new ID verification system for the DHA. 'We said, 'Let us help you. We'll build it for you,'' recounted Westvig. It's not a hollow boast. TymeBank has built a similar system from scratch in the Philippines, and Westvig says they're now costing it out to show the government just how lean a digital ID verification service can be if designed right. 'It's not a competitive structure,' he responded when asked whether they would sell it to the government and allow other banks to use such a system. 'We'd happily support a system available to all banks on the same basis, and it could run completely independently on cloud infrastructure like AWS [Amazon Web Services].' Fighting for the R370 grant recipient Westvig's frustrations aren't purely technical or corporate. They cut to the heart of TymeBank's mission: to bank the unbanked profitably, from day one. A grant recipient receiving R370, he argues, should be able to access 'free banking' (read: zero monthly fees), free payments and withdrawals that don't chip away at already strained budgets. 'We want that money in their pocket, not eaten by fees,' he said. Unlike some banks that reward big balances with higher interest, TymeBank pays one rate for everyone. It's a small but potent gesture in a country where financial inequality still tracks along apartheid-era lines. Capitec's marketing flex Meanwhile, Capitec has adopted a different strategy: take the hit on fees, call it a marketing expense, and move on. With its massive scale and traditional footprint, Capitec can afford to play the long game. TymeBank, still scaling up its digital-only model, doesn't have that luxury. 'Capitec can just absorb it,' said Westvig, hinting at the unequal playing field between incumbents and disruptors. No hard feelings, just unfinished business Despite the clash, Westvig insists TymeBank supports the DHA's intention to modernise and secure the population register. He praised the progress under Home Affairs Minister Dr Leon Schreiber, calling him 'a great leader' with a positive track record. But intent, he argued, doesn't pay the bills. And in this case, it could undermine the very goal of financial inclusion South Africa so desperately needs. 'We have no tainted views on the DHA,' said Westvig. 'We just want this resolved properly.' For now, the bill lands on TymeBank's desk. DM