Bettr enters SA – a zero-fee transaction platform

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“In the age of the Internet, the world is exponential...Banking is necessary. We need to give people fair access to affordable, transparent financial services that they can actually afford.” – Tobie van Zyl

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Bettr founder and CEO, Tobie van Zyl, got a call from Bruce Whitfield – host of the award-winning business radio programme, The Money Show. Find out exactly how Bettr’s business model differs from traditional banking, why it’s the way of the future, and how to fund a challenger fintech in South Africa’s highly competitive, highly regulated market.

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Listen to their conversation 👂

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Read the full interview👇

 [Bruce Whitfield]

When last did you go to the bank? I don't have anything against banks, but, I really cannot put a date on the last time I actually went into a bank branch. It's fundamentally unnecessary to do it, and it's one of the great revolutions, of course, in financial services. 

And that is how digital transactions make transacting so easy. You do go to an ATM from time to time if you want some cash, but that's about as close as your physical interaction gets with the bank. And that's why digital technologies are making such a compelling case for standalone digital-only banking products and providing new ways – and in some cases – free ways to do banking. 


Tobie van Zyl is the co-founder at Bettr, that's B-E-T-T-R. You seem to have lost a letter in there somewhere, Tobie 😀 Welcome to The Money Show. Are you a bank?


[Tobie van Zyl]

Hi, Bruce...thanks for having me on the show. Straight up. We are not a bank. If we wanted to be one, we wouldn't change anything. But we're a technology company that aims to do banking differently. When we talk a little bit more about our commercial structure, it will be evident why the traditional banking model is not the way forward in our view. And why digital banking through technology companies as a tech-first company is going to address quite a lot of needs of the 21st Century consumer.

[Bruce Whitfield]

A zillion years ago, 2020 said, “Banking is necessary. Banks are not.” They were ahead of their time in many, many respects, and the huge innovation they brought in with early digital banking. I mean, you were describing that, I suppose.


[Tobie van Zyl]

Yeah, sure. If I can comment on that, I think if we look at the 21st Century [and] where we are right now, you know: traditional banks are primarily brick and mortar, but traditional business models, right. And you've got these digital banks that are entering the market, but they also – fundamentally – are running a traditional business model. And in the age of the Internet, the world is exponential. So the traditional linear kind of price business model is going to evaporate. 

And I’ll tell you why. 

Banking is necessary. We need to give people fair access to affordable, transparent financial services that they can actually afford. And right now in South Africa, the average bank account costs a consumer at least half a day's minimum wage, and it's quite unfair. It's a conflict of interest in terms of how traditional banks are making money, and how young people are supposed to be treated like the working class, which makes it unaffordable and unattainable. ✊


[Bruce Whitfield]

Hold on a second...I get it, but when it comes to banking in South Africa, you need a banking licence, the Reserve Bank regulates who can and who cannot take deposits. So you're a bank, but you're not a bank. You're an app, but you provide banking services. Explain to me, practically, what would happen if I got myself a Bettr account? 🤔


[Tobie van Zyl]

So we've opted for a different commercial structure, because we're not a lending institution. We don't aim to take deposits – for that we partnered with a sponsor bank. We will take deposits through the banking system like Bankserv does for electronic transfers.


[Bruce Whitfield]

So you are piggy-backing on somebody else's banking licence, as has happened in the past, as happened with 2020, for example, all those 20 years ago.


[Tobie van Zyl]

That is correct, Bruce. 


[Bruce Whitfield]

Okay, good. Now I understand that. So you would go to a commercial bank that already has a banking licence? I mean, has that model not been seen to be tried and failed?


[Tobie van Zyl]

Yeah, I suppose it has – and it depends what the cheque is of the institution. If it's remittance, it's one thing. Bettr is about helping consumers bank freely. And then in exchange, our model is we offer an interest rate in exchange for the commercial bank to obtain low-cost deposits. And one hand washes the other. 

We also ensure that we partner with a responsive bank that aligns to our values of our customers as well as our business model. In our case, we didn't choose a commercial bank that has a retail lending arm. We're very focused on food security and ensuring that every deposit being made through Bettr with our sponsor bank goes towards sustainable agricultural development and farming. In a sense, you know, you're putting food on the table plus being rewarded for it. 


[Bruce Whitfield]

I'm forgetting their name now, but I know exactly who you're partnering with. 😏 You've kind of given the game away on that particular front. So you have partnered with GroBank, correct?  


[Tobie van Zyl]

There are discussions. 🤐


[Bruce Whitfield]

That's, again, the commercial arrangements between yourselves and GroBank. It's going to be interesting to see how it plays out – this idea of being able to offer free services. And again, it's this Great Race To Zero. It's what Bank Zero has promised. We are waiting for their great launch. When you get to zero, you're still going to add value to people's lives. How are you going to do that?


[Tobie van Zyl]

Well, those are really good questions. So first of all, we've got a marketplace banking model, where – number one – we are enabling our consumers who we call the next generation of money-makers to really start entrepreneurial ventures within our banking ecosystem. 

👟 Something for young people, essentially, is that they're big into alternative asset classes.📱👛 The assetization of personal goods – like your mobile phone – that you can swap or trade. Or students who want to sell books, or trade books, or any old clothing in your wardrobe that you might want to sell on to someone to thrift  again. We’re enabling the ability to start making money, and facilitating such a transaction with a small fee.

🤝🏿 Secondly, the interest rate is shared between us and the customer. 

The interest rate that we earn is predominantly the majority product to the customer to attract the deposit. Our commercial model is so lean, that we literally can survive off two revenue streams: that is a positive bank account balance, which will of course help a young individual to manage the money and stick within a budget so that they make it through the month. 

🔄 And at the other end of it is an interchange [fee] through the card rails. So every time there's a transaction, we make a change fee, and that offsets our cost. 

Now, on top of that, it's really weird. And new financial services could be enabled – like no-fee, no-interest credit advances could be given to someone who wants to buy, maybe, a Macintosh for the students or for the studio...or an entrepreneur who wants to buy a piece of equipment for any other venture that they have. That would be a kickback from a retailer, and if insurance is embedded in that there would be a margin in the product as well.


[Bruce Whitfield]

So you couldn't get any funding for this idea. Nobody was interested in backing you. What was the reluctance do you think?


[Tobie van Zyl]

Yeah, that's a really good question. First of all, we wanted to fund the business ourselves – the founders. Then over 25 of us in the team came together. We've had some previous success as well. We first wanted to fund the business ourselves to be independent. We didn't want to compromise on our vision, and the way that we wanted to build the business. We want to take our time of birth, we want to make sure that we've got the right structure for success. Secondly, we did obtain funding actually from very prestigious, early-stage venture capital backers. But we ran into multiple challenges in building this business – regulatory ones. It's very high barriers. It's a very capital-intensive business to set up. And it's just pure persistence in the vision and the dream and the faking the strategy that we have. And I think at the time, when we started about 3 or 4 years ago, it was ahead of its time even. 🔮

And these new, larger competitors were coming in, and they were very well backed. But I think what unlocked the capital for us is the desire by the industry and the ecosystem seeking an alternative. That secured us quite a lot of distribution deals, that eventually convinced the financiers to take a risk and take a bet on us. And I think the team, first of all, has just been dedicated to the vision, uncompromised, and we stuck it through. Our partners have also invested and contributed to discounting the services and even in some cases in their own money to make this a success because they believe this needs to exist. ⚒️


[Bruce Whitfield]

Tobie van Zyl – he is the co-founder of a fintech app called Bettr – B-E-T-T-R. And the reason I know it's GroBank? Well it's just the clues that he dropped. I suspect it's GroBank. It's interesting because you go to GroBank’s website and they talk about “creating an open trustworthy financial marketplace for corporates and fintech startups to operate in. Through integration with GroBank we provide an open gateway for businesses to reliably co-create unique banking products and value added services bringing unconventional banking solutions to meet a growing unconventional banking need.” 

You tell me it's not GrowBank. I'm sure it's GroBank.🕵️‍♂️

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