For South Africa’s first challenger bank, conversational AI isn’t just a nice-to-have

South Africa's TymeBank has launched Max, an AI-powered conversational assistant designed to help consumers learn about personal finance.

For South Africa's first challenger bank, conversational AI is an important piece of its product roadmap.

"Conversational AI is probably one of those things you can define as 'not urgent but very important'," said Coenraad Jonker, CEO of TymeBank. "We don't think you can grow and scale a bank in emerging markets without a conversational interface."

That's because of what Junker likes to call 'the mystery of missing information'. In the US or the UK, it's relatively straightforward to price risk on a new accountholder. There's generally enough financial information in mature markets to make a risk decision.

That's not the case in South Africa. In addition to helping new prospects learn about the digital bank, TymeBank will use Max to learn more about its new customers in order to fill out a credit profile.

"Max is a little piece of magic for us," said Jonker. "It's the missing link in our ability to scale across channels."

South Africa has high penetration of mobile messaging. WhatsApp is the most popular messaging app in South Africa (and Africa as a whole). Of the 18 million social media users in South Africa, almost half of them spend most of their time on WhatsApp. Facebook Messenger is the next most popular messaging app.

"With Max, we brought a banking experience to consumers with zero learning curve," said Jake Tyler, CEO of Finn AI, the company behind the technology that went into Max. "It's very familiar to people and we brought the conversational assistant to channels where customers already spend time." Max works in Facebook Messenger and Facebook Messenger Lite.

Max was launched as part of TymeCoach, the challenger bank's consumer education app. It teaches customers about credit and the interplay between their financial behavior and their credit scores. Tyme eventually plans to use Max to move from a conversation about financial wellbeing to recommendations about specific financial products and services.

"It looks like a version of Credit Karma," said Tyler. "Access to credit and credit scores is big issue in South Africa. This idea of having a personal banker in everyone's product looking after financial health and wellbeing lines up well."

Emerging markets have ecosystem shortfalls that mature markets don't. Onboarding is a big issue. Consumer behavior and regulation mean you essentially need to get into the physical world. 90 percent of transactions happen in cash, so creating a network to enable cash deposits is key, as well.

Since launching in February 2019, TymeBank has installed 730 automated bank kiosks in supermarkets around the country. The company has opened up over 180,000 new bank accounts via online and offline channels. The bank claims it is opening up 4000 new accounts per day.

"What's unique about Tyme as a challenger bank is that it's a hybrid of online and offline," said Finn AI's Tyler. "When someone walks into supermarket and visits a Tyme kiosk, they can walk out in five minutes with an account and debit card in their hands."

TymeBank's conversational AI is about more than acquisition and digital self service. It's also about scale for Jonker, whose business model supports no more than 200 people on staff. The company already employs 120 people. The challenger bank will need to support customers by funnelling them into a more natural channel for them to help themselves.

"We know we can't scale our costs along with our customer base." he said.