Digital Banking In South Africa

digital banks south africa

There are almost a hundred million people in Africa that are unbanked. That is a considerable number. Luckily, the African banking market is opening up, and South Africa is not far behind. Traditional banks launched their mobile apps, and digital banks started cropping up as well.

In our search for the best digital banks around the world, we have analyzed, used, and reviewed dozens of banks in recent years. For that reason, we can bring you this overview of the South African digital banking market.

Although established banks all launched their mobile apps, that’s not entirely digital banking as they are traditional model banks with hundreds of physical locations. 

Instead, we’re focusing on independent and completely digital banks that offer the best value to the people of RSA. 

Want to learn more about the differences between digital and traditional banks? Continue reading here.

Bank Zero 

  • Launches in 2021
  • Personal and business account
  • Almost no fees
  • Patented secure credit cards

Set to open in 2019, Bank Zero has suffered a couple of delays, and it still hasn’t been launched to the public. People can join their waitlist as the digital challenger should open any minute now. 

Bank Zero is a phone-driven, 45% black-owned and 20% women-owned digital mutual bank. Once launched, it will offer a bank account with no monthly fees and a unique, patented credit card that should protect customers from skimming, which was developed in partnership with Mastercard. 

They promise to offer “A simple and modern App-driven bank for both individuals and businesses, with a fresh approach towards banking, focussed on solving real banking problems which you struggle with every day.”

Bettr 

bettr
  • Still in beta
  • Targets the new generation
  • Zero monthly fees
  • Budgeting and analytics
  • Savings account
  • Sign up via WhatsApp

Bettr Finance was founded in 2015 by Tobie van Zyl (CEO), Andrzej Stempowski and Angus Brown. It’s a challenger banking app launching this year with a focus on Gen Z and Millennials.

Bettr’s headquarters are in Cape Town, and their goal is “to be the only account you start your financial life with, and, the only account you graduate through life with.”

They apparently already acquired more than 6500 users via its WhatsApp-based sign-up.

Their founder and CEO, Van Zyl, is no stranger to fintech. He has founded a number of start-ups, including financial management apps MoneySmart and Bsavi and credit score improver Credit Crunch.

SOL Wallet

  • Easy to open online
  • No hidden fees
  • SOL card is R25 per month
  • No fees for prepaid electricity or airtime
  • 24/7 chat support

SOL Wallet, SOLmate, or SOL Card is a neobank for South African people that offers a digital account with a physical and virtual card. It’s hundred percent online and enables you to receive your salary, buy prepaid electricity and airtime without fees.

The account has no hidden fees but comes with an R25 monthly fee and R9.99 per card load fee. Transfers between Sol Wallet users are free, as well as swiping in any SA store and EFT deposits to SOL accounts.  

Spot

  • No monthly fees
  • Insurance
  • Loans
  • Cashback rewards
  • Scan any QR code to pay

Spot Money was founded in 2020 and is headquartered in Cape Town. They offer digital accounts with no monthly fees and a free Mastercard that you can order through the app. 

But you can also use your virtual cards to shop online at any retailer in South Africa securely.

You can top-up with EFT, Ozow Instant EFT, or deposit your salary into your Spot account. 

Through its marketplace, Spot also offers loans and insurance from leading financial service providers. Interest rates are based on your credit score and repayment periods vary from 1 month to 7 years max.

You can get life cover, life and funeral cover, and car insurance on the insurance marketplace.

TymeBank

tymebank
  • Easy to open online
  • Low fees
  • No branches but plenty of kiosks
  • Personal and business accounts
  • Get paid early
  • Free Visa card
  • Rewards
  • Up to 8% savings account

TymeBank brought a much-needed simplicity to banking in RSA, where big banks ruled for far too long. More than three million customers have already signed up online or on one of their recognizable kiosks. 

The challenger bank offers an account with no monthly fees; the Visa debit card and the TymeBank app are also free. Transfers from TymeBank to TymeBank, first deposit at a till point, cash withdrawal with TymeCode or card at PnP, and Boxer till points are free as well. 

One of their best products is GoalSave, where you can earn up to an 8% interest rate if your salary is paid into your TymeBank account, and you give a 10-day heads up after 90 days that you’re taking your savings out. 

You can close the savings account at any time and get your money back into the main account.

Benefits of digital banks in South Africa

Mobile banks come with many benefits that may or may not tie into individual banks on the market. As neither bank is ultimately the same, some offer more and some fewer benefits. 

The main benefits that digital banks have are:

  • Low to no fees
  • Convenience
  • Easy to apply
  • Higher interest rates
  • Travel features
  • Cashback
  • Budgeting and analytics

Challenger banks offer their personal and business accounts with little to no fees. Almost all day to day banking fees are gone, and you can go through your day using your card and not paying any fees on the spot or at the end of the month.

Mobile or digital banks in South Africa are also extremely easy to apply for. In mere minutes you can be on your way to using a digital bank account with all the benefits that that entails. 

There’s no need to go down to a bank and stand in line to talk to a bank teller. Do everything from the comfort of your own home. 

By not having physical locations, digital banks save money on expensive overhead, and that saving moves down onto their customers in terms of higher interest savings rates.  

Digital banks are also known to be great for traveling purposes. Take your mobile banking app or card abroad and pay fewer fees for transactions or ATM withdrawals.

It’s easy to earn rewards and points with online banks whenever you shop online or in-store for your groceries and fuel. You don’t have to have an expensive credit card from a traditional big bank to enjoy perks.

And last but not least – budgeting and analytics features. These tools can help you understand exactly where your money is going each month. What category is sucking the most money out of your account. See, understand and adjust to try and save more money each month for the things that really matter. 

Drawbacks of digital banks in South Africa

Nothing’s perfect, and digital banks aren’t as well. There are some negative aspects to digital banks in RSA that include:

  • Customer service 
  • Fewer financial products

Customer service is a critical component that many, even much older institutions, can’t get right. It’s easy to get frustrated by the lack of customer support agents. You can wait for a couple of hours on the phone waiting to get to the front of the queue. 

Mobile banks do have a chat option inside the app, but that is often not a perfect solution as well.  

Challenger banks in South Africa also don’t offer many financial products to their customers. It’s mostly because digital banks are still young, and developing financial products and services takes time, money, and expertise. They also cater to a younger crowd that doesn’t need more advanced products. 

How safe is digital banking?

Many people are still skeptical of digital banks and think they’re unsafe. You’ve got to remember that financial institutions are under constant attack from cybercriminals, and therefore, digital banks often have to stay at the forefront of security and technology. 

They have to employ the best people in the field to stay secure. Digital banks’ hi-tech security methods can be seen in the signup process, where fingerprint scanning, voice recognition, and facial recognition are used to authenticate customer identities before approval.

They also offer instant freeze and unfreeze features that provide customers with peace of mind about their money security.

Your money is kept in a safe custody account in a bank, regulated by the Banks Act and supervised by a Financial Services Compliance Authority (FSCA).

South Africa doesn’t currently have a specific deposit insurance scheme (DIS), although one is apparently being made. It should apparently insure deposits up to R100,000. 

In the past, the government compensated depositors for their losses on a case-by-case basis. But this is problematic for the banking sector as a whole and not just digital banks. 

How to get started with digital banking 

The best thing about digital-only banks is that you can apply for most online accounts in 5-10 minutes or even less. Visit your mobile bank’s website and click or tap ‘Get started’. You can also download the banking app from Google Play or Apple’s App store yourself.

You need to be a holder of a South African ID to get FICA verified so that your account can be activated. You’ll also need to fill in your name, surname, ID number, your job description, and your address. And even before that, enter your South African cell phone number and email address.

Most banks allow only people over 18 to sign up for a digital bank account. But some do allow even 16-year olds as well.  

The bottom line

Although the South African banking market has started to wake up, there’s still a long way to go, and the more competition there is, the more benefits the good people of RSA will get.

We’ve already come a long way from having hefty fees for simply having a bank account. No wonder many, many people still don’t have a bank account. 

Luckily, that started to change when digital banks began cropping up and offering bank accounts that you can open with your phone and that have almost no fees.