This webinar with Ivo Jenik from CGAP, Linda Appie and Rachel Freeman from TymeBank, looks at the customer impact of digital banking. CGAP has identified three business models in banking that they consider to be particularly promising for financial inclusion. These models are fully digital retail banks, marketplace banks, and Banking-as-a-Service. The hypothesis is based on four dimensions to determine if a product or business model has the potential to deepen financial inclusion (CAFE framework):
- Lowering the cost of financial services;
- Improving access to a greater variety of services;
- Creating services that better fit the needs of various customer segments; and
- Improving the customer experience.
As a fully digital South African bank that disproportionately serves low-income rural customers, TymeBank has created a suite of basic products that cater to the essential financial needs of those customers, namely a low-cost transactional account and a high-yield savings account. They also offer third party integrations allowing for example purchase of airtime or electricity and insurance products. Customers are on-boarded through kiosks placed in key retail store locations and the process can be completed in under 5 minutes using their South African ID. The retail store acts almost as a branch, they can cash in/out and access ambassadors to help with information about products. This approach leverages on the trust built in the retail stores and provides timely access to products and information that fit the various customer needs, from those beginning their journey to the digital savy. Product uptake and client testimonials are showing how these products add to a compelling value proposition that not only resonates with customers but improves their lives.
The case study between GCAP and TymeBank particularly looked at the impact on low-income customers. Most customers reported positive life changes. Importantly, levels of customer satisfaction increase as customer income decreases. 73% of customers reported a positive change in quality of life attributable to TymeBank. The change could be associated with multiple factors. For instance, 80% of interviewed customers reported a decrease in the amount spent on bank fees, which is crucial for low-income segments that have historically experienced cost as one of the biggest barriers to financial inclusion. Nearly a third of customers who reported life improvement said that their access to financial services had expanded thanks to TymeBank. Over half of customers also reported an improved ability to digitally transact and receive money.
These findings support the overall hypothesis that digital banks are well placed to deepen financial inclusion and help individuals with their financial health due to the affordable and targeted products that reach beyond payments and are relevant to improving the lives of low-income customers.
