(Bloomberg) -- Shortly after being appointed South Africa’s Registrar of Banks in 2015, Kuben Naidoo asked his colleagues where the banking license division was. He was told that there wasn’t one because the registrar hadn’t received an application for 11 years.
After Naidoo received his first application from TymeBank that year, the activity hasn’t stopped. The regulator has received applications from 27 commercial and mutual banks, as well as insurers and foreign representative offices of international lenders. Billionaire Patrice Motsepe’s TymeBank and Discovery Ltd., the country’s largest health-insurance administrator, were among those.
“We think that this is very positive, we think it signals the dynamism of the South African financial sector,” said Naidoo, who is also a deputy governor at the central bank and is now CEO of the Prudential Authority, which oversees the sector. “We think it will promote competition and it will promote financial inclusion.”
The sector is dominated by five large banks, which held 90.5% of the country’s banking assets at the end of March, Prudential Authority’s data show. The threat posed by new digital entrants has triggered price cuts and “zero-fee” account offerings by traditional players such as FirstRand Ltd.’s First National Bank and Nedbank Group Ltd.
African Bank Holdings Ltd., in which the central bank is shareholder, has also joined the rush into digital banking as it rebuilds after its former parent went into administration in 2014. The central bank aims to dispose of its stake in the next year or two, Naidoo said.
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