Competition in small business lending is heating up, with Patrice Motsepe-backed TymeBank the latest to enter the fray with the acquisition of fintech SME funder Retail Capital.
TymeBank CEO Coen Jonker said the acquisition will enable TymeBank to expand its offering to entrepreneurs to include working capital finance.
“Retail Capital has acquired significant risk management experience over the past decade. They have an experienced team in place and their risk models and operational processes have been battle-tested and optimised to a significant degree for small business funding.
“Together, we look forward to providing access to innovative solutions to ensure business owners can fuel their growth, drive job creation and contribute to the broader economy,” he said.
TymeBank is one of the fastest-growing banks in SA, adding about 130 000 new customers a month. However, the bank is struggling to add customers with active accounts.
Jonker said in the last 10 years Retail Capital has provided more than 43 000 business owners in South Africa with more than R5.5-billion in working capital.
News of TymeBank’s takeover of Retail Capital was quickly followed by an announcement from Old Mutual that it had bought a minority stake in Preference Capital, a specialist provider of funding solutions to the SME market.
African Bank in May also entered the business banking sector with the acquisition of Grindrod Bank. African Bank said at the time Grindrod Bank will provide an entry into the business banking market, which will be grown off African Bank’s strong capital levels.
Capitec is also playing in the business banking space after it purchased Mercantile three years ago in a deal worth R3.5-billion.
Jonker said Retail Capital will launch new products for SMEs in the coming months. This will include TymePOS, a mobile point-of-sale app that turns an NFC-enabled cellphone into a tap-and-go payment device.
“Retail Capital already powers many industry-leading partners in the acquiring, retail and payments space to support their SME customers, and the tie-up with TymeBank will further enhance this offering to our partners’ customers,” said Retail Capital CEO Karl Westvig.
In South Africa the SME funding gap is estimated at more than R335-billion, according to a report by the International Finance Corporation, a division of the World Bank.
