Digital bank TymeBank and conversational banking technology provider Finn AI have teamed up to bring a low-cost, AI-powered experience to underserved consumers as well as small and micro businesses in emerging markets.
TymeBank, which was awarded the first full banking license in South Africa in about two decades, signed up over 100,000 customers within the first few days of its formal launch in February. The bank has been adding 3,000-4,000 customers a day since, according to Coenraad Jonker, co-founder and CEO of Tyme, and chairman of TymeBank in South Africa.
Jonker told Bank Innovation that keeping operational costs down as the bank scales up is critical to its long-term viability.
“We put a lot of effort into collecting more data on our customers so that we can truly understand our customers and, by understanding our customers, do proper expense pricing and, thereby, drive the cost of lending down,” he said.
AI can also help the bank provide jargon-free financial literacy services to customers, who are often unfamiliar with basic banking concepts and terms, Jonker said. The trick is to teach customers these principles without being heavy-handed about it.
Financial literacy coach Max, which resides within the bank’s TymeCoach app, is meant to serve as that conduit for customers, without great expense to the bank.
Jonker said Tyme currently has 120 employees, including its bank in South Africa.
Jake Tyler, co-founder and CEO of Finn AI, told Bank Innovation the bot is all text and no voice, for the time being, as text messaging is by far the preferred method of communication in South Africa and elsewhere.
He said a big part of the financial literacy effort entails meeting the customers where they are, namely on messaging channels like Facebook Messenger and WhatsApp.
Tyler said the ultimate objective is to have a personal banker in everyone’s pocket and to make it a product where the bank and its partners, rather than the customer, are doing the legwork.
Jonker said low-cost banks can’t afford to spend hundreds of millions of dollars building their own AI. But, because banking is so specific, and has such specific requirements, he also said these banks can’t just take a general chatbot from off the shelf, use those algorithms and expect them to work properly. He said working with Finn AI offers a “best-of-both-worlds” solution because of the firm’s focus on AI for banking and its work with other partners in the industry.
Jonker said Tyme’s ambition is to take its low-cost digital banking model to other emerging markets across Africa and Southeast Asia. In addition to South Africa, it already has technology deployed in New Zealand and Indonesia.
In South Africa, the bank uses a network of automated kiosks located in stores where customers can open new accounts and walk away with a personalized debit card within minutes, or replace an existing card. It also uses partnerships with local retailers to allow customers to deposit and withdraw cash through cashiers at the stores they’re already doing business with.
Jonker said other markets may call for different levels of physical presence, as the bank aims to be agnostic to consumer behavior when it comes to preferred methods of payment and other quirks.
As originally published on Bank Innovation.