Michael Jordaan, co-founder and chairman of Bank Zero, and his team are working around the clock to launch their digital-only bank, which will provide competitive fees and savings rates for consumers.
Global Finance (GF): Why do you see the South African banking market as ripe for disruption?
Michael Jordaan: The South African banking market is ripe for disruption as banking fees are significantly higher than they should be, especially for digital transactions such as mobile banking and card swipes, which should all be free. These charges are particularly high for businesses, which is a focus segment for Bank Zero.
GF: Why is now the right time to launch a new kind of bank in South Africa?
Jordaan: South Africans have become comfortable doing banking on their smartphones. Banking in South Africa is still far too expensive and there is a big opportunity to bring material benefits to consumers.
GF: What are the key advantages of a digital-only bank over other models?
Jordaan: We will offer a range of functional benefits that old tech systems cannot accommodate, and our bank fees will be low or zero.
GF: What are the operational advantages of a start-up over incumbent players?
Jordaan: Start-up banks can build their businesses using the latest, sophisticated technology which is faster, more flexible and far less expensive. For example, the entire development team of Bank Zero consists of five competent Java developers. Using open-source software resources, they can build a modern, sophisticated banking platform with new feature sets at low cost and at high speed. Moreover, start-up banks are not addicted to legacy revenue streams like high monthly fees or charging for every electronic transaction. Finally, the lack of expensive head offices or costly branch structures means that their overheads are very low.
GF: How does the mutual bank model feed into this?
Jordaan: The mutual bank is capital efficient and allows us to share benefits with customers. Our best customers will earn shares in the bank.
GF: What were the main challenges in the process of being granted a banking license?
Jordaan: The process to obtain a banking license from the South African Reserve Bank was rigorous and highly professional. Apart from an in-depth business plan, we had to persuade the regulatory authorities that the team was fit and prudent and that our capital base was more than adequate to cover any potential risks. Right now, we have to integrate with the South African payments systems, which is sophisticated and requires negotiations with more than 30 existing banks.
GF: How do you see Bank Zero nurturing a savings culture in South Africa?
Jordaan: The elimination of many bank fees will hopefully persuade South Africans to move idle cash to bank accounts. Competitive interest rates will incentivize savings, and intuitive financial management features on the Bank Zero app will put customers in control of their finances to nudge savings.
GF: What do you see as the key attractions in Bank Zero’s offering to individuals and business customers?
Jordaan: While I cannot disclose our features before launch, we have some world-firsts that will make banking with us as easy as using WhatsApp or Google. The savings on bank fees will be significant for businesses and individuals who are comfortable making electronic transactions and card swipes.
GF: Any update on the official launch date?
Jordaan: We are still aiming for a beta launch by the end of 2018 and a full launch early in 2019. The team is working around the clock to integrate our app and banking system into the national payments infrastructure.