From Africa to the Philippines: can digibank Tyme find cross-border success?

In The Top Up this week, we look at how Tyme signed up millions of customers in South Africa and why it chose the Philippines as its next market. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every fortnight via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we look at: - [How an African digital bank found its way to the Philippines]( - The latest developments at GXS, Grab’s digital bank with Singtel - [A serial entrepreneur’s experience building a fintech startup that failed]( --------------------------------------------------------------- Hello {NAME} I’ve never been to South Africa, but it's on my list of countries to visit in the near future. Daydreaming about going on safaris, savoring wine in Stellenbosch, and taking in the views of Table Mountain keep me smiling, even as I type this out under the fluorescent lights of my office in Singapore. When I do go there, I won’t see any branches for TymeBank, which is the country’s first digital bank. What I might see is a kiosk bearing its logo when I drop into a local Pick n Pay to buy groceries. TymeBank used this hybrid model to sign up millions of customers in South Africa. Now, it is setting up its stall in Southeast Asia. The first stop is the Philippines, one of the region’s fastest-growing economies. Tyme found itself pushing on an open door: Large parts of the country are unbanked or underbanked, and the regulators recognize the importance of broadening financial inclusion. In the first of a two-part series, I take a closer look at Tyme’s story, which includes being acquired - and then sold - by Australia’s biggest bank. The focus on digibanks continues in this week’s Hot Take, which takes a closer look at recent developments at GXS, the digital bank owned by Southeast Asian tech major Grab and telco Singtel. -- Simon  --------------------------------------------------------------- THE BIG STORY [Tale as old as Tyme: How a successful African digital bank landed in the Philippines]( Born in Africa and headquartered in Singapore, Tyme Group hopes to replicate its success in its new market, the Philippines.  --------------------------------------------------------------- THE HOT TAKE GXS gets US$101 million top up from Grab Here’s what happened: - The digibank, which is a joint venture between Grab and telecom major Singtel, received [US$101 million]( in capital from the Southeast Asian super app last week. - This comes as the bank announced that it had [increased]( the maximum deposit amount for its savings account from S$5,000 (US$3,759) to S$75,000 (US$56,385). - The move suggests that the Monetary Authority of Singapore (MAS) may have raised GXS’ [S$50 million (US$38 million) deposit cap](. Here’s our take: Grab is doubling down on its financial services business, even as DBS analysts [downgraded]( the company’s Nasdaq-listed shares from “hold” to “fully valued” this week. In a report, DBS analyst Sachin Mittal highlighted how Grab’s fintech segment is expected to experience peak losses this year due to the firm’s digibank launches in Malaysia and Indonesia. The lifting of the deposit cap is an important step in putting GXS on a level playing field with established bank players and other newcomers like Trust, the joint venture between global bank Standard Chartered and NTUC, which runs Singapore’s largest chain of grocery stores. See also: [SG digibank GXS trails Trust in adoption as deposit cap hampers growth]( However, GXS and MAS have declined to reveal to press queries what the new deposit cap is. The digibank is paying up to 3.48% per annum in interest to customers who place their funds in its “saving pockets.” Meanwhile, it offers its FlexiLoan product at an [effective interest rate]( of as low as [5.65% per annum](. The more deposits GXS has, the more loans it can make. The difference between the interest it charges on loans versus the interest it pays on deposits (or the net interest margin) contributes to its income. That’s the theory at least. In practice, digibanks face a whole range of challenges. These include how robust their credit scoring systems are, especially given the continued macroeconomic uncertainties. Questions remain over the direction and consequences of inflation and interest rates on the ability of borrowers to repay their loans. Digibanks are also competing against established players. In Singapore, the big three local banks are making [record profits]( and have the brand recognition and resources to dwarf fintech upstarts. These smaller firms also face competition from fintech companies that are not banks but are in the business of providing credit. This past week, TikTok Shop [signed a deal]( with buy now, pay later firm Atome in Malaysia, allowing consumers to defer payment for purchases over three or six months. Meanwhile, products like earned-wage access (EWA), which allow workers to collect a portion of their salaries before their regular payday, are gaining traction. Such products may be a good alternative to taking out a loan for those who just need a small sum of money to tide over a tight period. Vietnam-based Gimo, one such EWA player, [raised US$12 million]( just this week. As we [pointed out previously]( the growth prospects of GXS, along with Sea’s MariBank, will remain limited until these firms can progress into a fully functioning digital bank. As the regulator, MAS is [prioritizing]( the digibanks’ ability to ensure that “their technology and risk management systems are robust,” as opposed to allowing a free-for-all expansion. However, this cautious approach also brings real trade-offs in enabling the banks to scale up and make the most of any first-mover advantages. Currency converted from Singapore dollar to US dollar: US$1=S$1.33.  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Vietnamese EWA startup Gimo adds $12m to series A round]( Gimo aims to cater to 2.5 million underbanked workers in Vietnam by 2025. 2️⃣ [Ant Group appoints new president of international business]( Peng Yang, previously the general manager of the international payment business at Alipay+, will report directly to Eric Jing, Ant Group’s chairperson and CEO. 3️⃣ [TikTok Shop signs deal with BNPL major Atome in Malaysia]( The partnership allows consumers in Malaysia to defer payment for their TikTok Shop purchases over three to six months. 4️⃣ [China’s XVC leads $20m round of Indonesian BNPL fir]( Finture, which operates the brand Yup, recently rolled out a “remote repayment” credit card for foreign domestic workers in Hong Kong.  --------------------------------------------------------------- FYI [Serial entrepreneur opens up about failed fintech firm]( Muhammad Aditriya Indaputra began his entrepreneurial journey with AgenKan, a fintech startup that focused on secured lending. But the company shut its doors in December 2020 because of the pandemic.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preferences center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you in a fortnight! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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