TymeBank is considering ditching an expansion into unsecured loans due to the coronavirus crisis, its owner African Rainbow Capital Investments (ARC) said on Friday.
TymeBank, one of the digital banks launched in South Africa in recent years in a challenge to traditional business models, was already piloting its unsecured term loan product.
“The bank is considering alternative credit products which do not carry the same longer-term risk as an unsecured loan,” ARC said in a stock market update. TymeBank’s low-cost model targets lower-income consumers.
Unsecured lending is not backed by any collateral, making it riskier than loans backed up by an asset such as mortgages.
Two of South Africa’s big four banks have warned that bad debts could surpass the level seen during the global financial crisis as the impact of the coronavirus outbreak takes its toll on already struggling businesses and consumers.
It has also accelerated a shift to
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