Brazilian fintech giant Nubank, renowned as the world’s largest digital bank by market value, has announced a $150 million investment in Tyme Group, a South African digital banking pioneer. This move positions Tyme as one of Africa’s exclusive “unicorns,” with a valuation surpassing $1.5 billion. Alongside the investment from UK fund manager M&G, this development underscores a growing trend of collaboration and knowledge transfer between emerging markets in Africa, Asia, and Latin America.

This capital injection not only boosts Tyme’s international expansion ambitions but also signals Nubank’s growing global influence outside its Latin American roots. Nubank’s acquisition of a 10% stake in Tyme is part of a $250 million Series D funding round, which includes $50 million from M&G Catalyst, M&G’s sustainability-focused investment arm, and another $50 million from Tyme’s existing shareholders.

Tyme’s Evolution: From South Africa to Southeast Asia

TymeBank, launched in 2019 with backing from South African billionaire Patrice Motsepe’s African Rainbow Capital, was initially designed to serve South Africa’s low-income communities. Its model quickly gained traction due to its zero-fee banking services and easy-to-access kiosks located in major retail outlets like Pick n Pay and Boxer. This unique approach allowed Tyme to onboard customers efficiently while reducing traditional banking costs.

Building on its success in South Africa, Tyme expanded its operations to Southeast Asia. In 2022, it launched GoTyme in the Philippines through a strategic partnership with the Gokongwei Group, leveraging the latter’s extensive retail presence. The bank plans to open its next digital venture in Vietnam in 2025, where it already employs 300 technology professionals. Tyme aims to establish a robust foothold in the region, reflecting its ambition to be a major player in the global digital banking landscape.

By mid-2024, Tyme had achieved a customer base of 10 million in South Africa and an additional 5 million in the Philippines. The firm has set an ambitious target to grow its user base to 33 million by 2027, with a mix of retail and corporate clients across its operating regions.

Nubank’s Global Vision

Nubank’s investment in Tyme is a testament to its commitment to expanding its footprint beyond Latin America. Since its founding in 2013, Nubank has grown exponentially, boasting a market capitalization of $56 billion as of 2024. Known for its innovative, customer-centric approach to digital banking, Nubank has transformed financial services across Brazil, Mexico, and Colombia by eliminating bureaucracy and offering accessible, low-cost solutions to underserved populations.

Nubank’s decision to invest in Tyme reflects a recognition of the latter’s potential to replicate its innovative business model in other emerging markets. Nubank has consistently championed financial inclusion, aligning with Tyme’s mission to serve unbanked and underbanked populations.

“Nubank’s investment is an endorsement from the most successful digital bank in history,” said Coen Jonker, Tyme’s co-founder and CEO. “Their confidence in our vision reaffirms the transformative impact we aim to achieve in the financial services industry globally.”

Challenges and Opportunities in Tyme’s Growth

Despite its success, Tyme faces several challenges as it aims to scale its operations. While its initial focus on low-income customers in South Africa proved effective, critics have raised concerns about its ability to attract wealthier clients and generate sustainable profits.

Sim Tshabalala, CEO of Standard Bank, South Africa’s largest bank by assets, questioned whether Tyme could build a broader customer base and monetize its services effectively. He described Tyme’s marketing efforts as “guerrilla tactics,” emphasizing the difficulty of competing with established financial institutions in a highly competitive landscape.

Another challenge lies in converting depositors into “quality credit customers.” Tyme has made strides in addressing this by introducing tailored credit products and leveraging its AI-driven analytics to assess customer creditworthiness. However, the path to profitability requires a careful balance between customer acquisition, credit risk management, and operational efficiency.

International Expansion and Strategic Partnerships

Tyme’s partnership with Nubank and its foray into Southeast Asia represent a significant shift for African fintechs, which traditionally focus on local markets. The digital bank’s expansion aligns with a broader trend of African start-ups scaling internationally. Examples include Nigerian mobile money platform Paga, which has entered markets like Mexico and the Philippines, and Swvl, an Egyptian mass-transit app operating in Africa, Pakistan, and Saudi Arabia.

Tyme’s strategy in Southeast Asia mirrors its South African model. In the Philippines, for instance, it has partnered with Gokongwei Group’s Robinsons retail outlets to establish kiosks for account opening and banking services. These partnerships have allowed Tyme to gain rapid traction in new markets, underscoring the scalability of its model.

In Vietnam, Tyme plans to build on its experiences in South Africa and the Philippines by offering localized services tailored to the needs of the Vietnamese population. With a young, tech-savvy demographic and a rapidly growing digital economy, Vietnam presents a promising opportunity for Tyme to expand its customer base and establish itself as a leader in digital banking.

The Unicorn Milestone and Future Prospects

Achieving unicorn status is a significant milestone for Tyme, highlighting the growing prominence of African tech companies on the global stage. Leslie Maasdorp, CEO-designate of British International Investment, emphasized that Tyme is “demonstrating that African companies can go global.”

Tyme’s management has expressed optimism about the company’s future, with plans to become one of South Africa’s top three retail banks within three years. Beyond that, Tyme is eyeing a potential public listing, most likely in New York, by 2028. While Jonker did not rule out the possibility of an acquisition, Nubank remains a natural contender should such an opportunity arise.

The bank’s long-term strategy focuses on expanding its portfolio of services, including wealth management and insurance, to cater to a broader demographic. By leveraging its partnerships and investments, Tyme aims to create a comprehensive ecosystem of financial products that address the diverse needs of its customers.

The Bigger Picture: A Shift in Global Fintech Dynamics

Nubank’s investment in Tyme is part of a larger narrative about the evolving dynamics of the fintech industry. Emerging markets like Africa and Southeast Asia are increasingly seen as fertile ground for innovation and growth, with start-ups like Tyme leading the charge.

This collaboration also highlights the symbiotic relationship between African and Latin American fintechs, which share similar challenges and opportunities in serving underserved populations. By sharing expertise and resources, these regions can drive financial inclusion and economic development on a global scale.

As Tyme continues its journey, it serves as a shining example of how African companies can leverage technology and strategic partnerships to compete on the world stage. The investment from Nubank and M&G not only validates Tyme’s business model but also paves the way for other African start-ups to follow suit.

In an industry defined by rapid change and relentless innovation, Tyme and Nubank’s partnership marks a new chapter in the global fintech story. Together, they are poised to redefine what is possible in digital banking, creating a future where financial services are more accessible, inclusive, and impactful.

With its eyes set on ambitious growth targets and a commitment to making banking easier for millions, Tyme is not just a unicorn—it is a trailblazer.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

17th December, 2024