Bank Zero may soon be open for business

JORDAAN’S BACK: MAY OFFER SOME FREE SERVICES

Former FNB CEO Michael Jordaan, who moved to his wine farm in 2014, is preparing to launch a digital bank at year-end.

The bank won’t lend money; it’ll encourage South Africans to save through attractive interest rates.

thing that’s your passion.”

Bank Zero, which in January said it got a provisional licence from the central bank and has 10 staff, won’t lend out money. Instead it will encourage South Africans to save through attractive interest rates. With a mutual bank structure, funded by its members, the Johannesburg-based Bank Zero is entirely backed by its founders and will offer customers with smartphones an app and a card.

Competitive space

Bank Zero joins several new entrants encroaching on a space dominated by South Africa’s four biggest lenders. Discovery plans to start this year, while Patrice Motsepe is backing Tyme, which will allow customers to access funds through their mobile phones. The SA Post Office also has a provisional banking licence.

“I’m the chairman, so it’s more of a non-executive role with some interaction with the regulators,” said Jordaan. “Bank Zero is very independent, it’s not linked to FNB. It’s possible to start a new bank with very few people and great software and costs at 1% of my FNB budget.”

Yatin Narsai, who was FNB’s CIO, is Bank Zero’s CEO. Together they face “world-class competition” from more than 30 registered banks in SA, Jordaan said, but with no canteen, no art collection, no legacy technology systems to wrestle with and some staff not yet taking a salary, all resulting in a low cost base, the two plan to shake up the local industry.

“We have vociferous debates. For Bank Zero, we’ve explored everything.”

Business banking

While banks traditionally make money by lending, Jordaan’s start up will rely on other revenue streams. He pointed out that some lenders profit from the different rates on wholesale versus retail funding, charging interchange fees or taking a commission on the sale of certain products, such as airtime for mobile phones.

“I’m involved with 21 start ups and I’ve realised how expensive banking fees are — businesses pay too much,” Jordaan said. “There’s billions of rand in over-payment for bank fees. Imagine if we could help save those billions.”