Women-owned SA bank joins entrants tackling the big five

After more than a decade of South Africa’s biggest banks not having to face fresh competition, new rivals are stacking up.

The latest entrant, the Young Women in Business Network Cooperative Financial Institution, is now seeking to become the country’s first bank to be owned by women by converting from being a cooperative institution, which can only offer services to its members, Managing Director Nthabeleng Likotsi, 33, said by phone.

It will target informal traders and black business owners who have been shunned by traditional lenders, she said.

YWBN joins at least three other companies planning to challenge the nation’s five top lenders, including FirstRand [JSE: FSR] and Standard Bank [JSE:SBK].

Between them, those banks control more than 90% of banking assets and dominate the local landscape, with ATMs and branches littered all over the country, offering everything from savings accounts and credit cards to business loans and private wealth management services.

"Competition is healthy and we strongly believe this country needs to have more banks," Likotsi said. "Banks don’t understand black entrepreneurs. Power is sitting in the informal sector, which has not been fully activated, and banks are not giving it their full attention."

Hot competition

After an 11-year absence of new commercial-banking licence applications, the regulator has approved two in the past year and one provisional licence: Discovery [JSE:DSY] plans to start a service within months aimed mostly at middle- to upper-income earners. 

TymeDigital, backed by Commonwealth Bank of Australia and local billionaire Patrice Motsepe, will allow customers to access funds through mobile phones.

Bank Zero, co-founded by the former chief executive officer of FirstRand’s First National Bank, plans a digital offering that will encourage savings.

YWBN is hoping to set itself apart by targeting individuals who fall outside of the formal economy, such as self-employed hawkers and minibus taxi drivers, as well as community-based savings pools known as stokvels, said Likotsi.

"If I want to raise a million quickly I can go to a million South Africans and ask them to each contribute," she said. "That is the power. The power is sitting in the stokvels, the power is sitting in the hawkers, the power is sitting in the taxi drivers. We believe in that informal sector."

Black empowerment

The company will submit its licence application on Friday by marching from the presidency’s offices at the Union Buildings in Pretoria, to the Reserve Bank’s offices in a bid to raise awareness of the need to accelerate black economic empowerment, she said. It is seeking to convert into a mutual bank, which can take money from depositors, who then become members with voting rights in the company.

More than 24 years after the end of racial segregation, South Africa’s board rooms are still dominated by white men, who also earn more, according to a study done by Statistics South Africa.

At least 60% of YWBN’s members are black women, while the cooperative has 550 shareholders with R40m in shared capital, Likotsi said.

YWBN will raise funding from two investors to boost its capital levels, she said, declining to identify them until the application is finalised.

The bank will initially be run from its base in Johannesburg using digital channels, before opening branches in other locations in its third year of operation, she said.