Michael Jordaan's digital bank edges closer to launch
Full end-to-end beta testing is "well under way" at digital-only bank, Bank Zero, in preparation for its launch in the second half of 2019.
Co-founded by former First National Bank CEO Michael Jordaan and banking innovator Yatin Narsai, Bank Zero is described as "a unique and fresh approach to banking without any legacy systems", and is expected to offer added banking control and transparency.
The bank says it has officially implemented its robust electronic funds transfer payments capabilities and is now processing payments and debit orders, as well as facilitating purchases of prepaid items such as data, airtime and electricity.
The bank's beta testing, currently run only among its employees, comes five months after its licence was granted by the South African Reserve Bank.
Bank Zero's key differentiator is its advanced payments infrastructure, which provides more security from fraud than competitors, making activities like card-skimming near impossible, according to its founders.
"SA is a world leader in electronic payments yet customers seldom experience this power, as it requires a modern core banking system to leverage," explains Jordaan, who is also chairman of Bank Zero.
"After successful staff beta testing, external beta customers will be invited gradually from a database of individuals and businesses who have volunteered."
Bank Zero does not have entry-level accounts, offering a "segment-agnostic" approach, which provides customers with access to all features, such as low banking fees, free rogue debit order protection and seamless integration with Xero accounting software for business clients.
The bank also promises to provide individual and business clients with a higher degree of protection from being defrauded, through its patented card technology.
"Bank Zero will bring advancements and convenience by focusing specifically on security and control. The trauma of card-skimming and other rogue methods of recording card details will be a thing of the past at Bank Zero. The alarming trend of rogue online stores bypassing OTP-based security will also be prevented," explains Narsai, CEO of Bank Zero.
"The 16-digit card number no longer needs to change each time a card is replaced. This means card details for digital services (such as Netflix or Uber) don't have to be reset."
Disruptive innovative banking
According to experts, the local retail banking industry is set for a shake-up as 2019 sees the rise of digital banks.
Other digital banking newcomers are Discovery Bank, owned by financial services company Discovery Group, and Patrice Motsepe-owned TymeBank, which both promise substantially lower cost-to-income ratios than the big five banks, giving them scope to disrupt the pricing of retail banking products in SA.
Discovery Bank soft-launched this week, with CEO Adrian Gore saying he expects to sign up around 2 000 customers in the first month. TymeBank, which soft-launched in November last year, says it already has 80 000 customers.
In addition, this week Apple announced it will offer financial services to its customers, with its new credit card, called Apple Card.
The Apple Card, issued by Goldman Sachs, will be simple to sign-up to, have zero fees, high levels of security, and a rewards programme that gives users cash back, it said.
"Simplicity, transparency and privacy are at the core of our consumer product development philosophy," says David M Solomon, chairman and CEO of Goldman Sachs. "We're thrilled to partner with Apple on Apple Card, which helps customers take control of their financial lives."
Traditional banking in SA typically comes with legacy IT systems and operations that are expensive to maintain, leading to high banking fees for consumers. The new innovative players are expected to bring healthy, disruptive competition to the local financial services sector.