IT in Banking

Bank Zero’s public launch hits snag amid COVID-19 interruptions

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Bank Zero has delayed its public launch and has instead focused on a “closed rollout” of the digital-only bank’s services, as SA grapples with the second wave of the COVID-19 pandemic.

This after SA’s newest digital bank previously confirmed to ITWeb that it would officially launch to the public before the end of 2020 after rolling out end-to-end live beta testing in the fourth quarter of 2020.

In an e-mail interview with ITWeb, CEO Yatin Narsai says due to the upheaval caused by the COVID-19 crisis, the launch was delayed and general public operations have now been planned to “hopefully” commence before the end of June 2021.

As a risk mitigation measure, the bank continues to operate in a closed rollout, with employees working from home.

“Our biggest challenge is the pandemic, as everything changed. We continue with our closed rollout as this works best under the work-from-home conditions. Customer volumes are kept low to ensure smooth operations and to allow us to continue improving our banking platform. Trying to make changes in full flight is much more difficult. Notwithstanding the severe conditions, we managed to retain our full value proposition,” says Narsai.

The current closed rollout is part of the bank’s final stages of the live beta testing, where a group of customers are selected from the bank’s large database of people who have indicated interest in being part of the testing phase, he adds.

“Beta testing is powerful and we have gained great insights. Given the closed rollout, we are able to incorporate these insights into our platform so others can enjoy [better services].

“For example, we are on our third generation of customer on-boarding, with each generation bringing further improvements in customer experience. Another example is our preparedness for large volumes and scale. After significant volume testing, we have upgraded our IBM mainframes in readiness for general public operations.”

The bank will continue with a closed rollout, gradually adding more waves of customers each time, adds Narsai.

Bank Zero is co-founded by seven investors, including former First National Bank CEO Michael Jordaan, who is chairman, and banking innovator, Narsai.

Described as “a unique and fresh approach to banking”, the bank says it does not have entry-level accounts, but offers 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.

In October, it revealed its pricing guide, which is expected to trigger an intense price war among local financial institutions. The bank bills itself as the first bank in SA to charge zero fees for EFT payments. It also offers free debit order services and there is no charge for payments made to other Bank Zero customers.

Bank Zero CEO Yatin Narsai.
Bank Zero CEO Yatin Narsai.

The local retail banking industry is set for continued shake-up as SA sees the rise of digital banks. TymeBank, which bills itself as SA's first digital-only bank, controlled by billionaire Patrice Motsepe's African Rainbow Capital (ARC), launched to the South African public in 2018.

During the same time, insurer Discovery unveiled what it describes as the “world's first behavioural bank”, starting its Discovery Bank operations from March.

ARC revealed in its December trading update on the Johannesburg Stock Exchange that it had faced some hiccups with TymeBank during the COVID-19 lockdown.

The company noted it was tracking slightly behind its projections to attract clients, largely due to the national lockdown and the sustained financial pressure on consumers.

Nonetheless, ARC pointed out that as at 30 November 2020, TymeBank had acquired 2.5 million clients, of which approximately 1.5 million were actively using their accounts. It continues to on-board an average 100 000 customers per month, or an average of 25 000 customers each week.

As of 13 September, Discovery Bank had garnered close to 500 000 clients.

The bank was first announced in November 2018 and launched in March 2019, when it touted the new offering and a fully digital bank that can be joined by anyone with a smartphone.

Announcing its full-year results for the year ended June 2020, Discovery Bank revealed to the market that it managed to shrug off the negative impact of the pandemic, after implementing several strategies to ensure the successful migration of clients and ensuring rapid learnings from the shared-value model to constantly improve the bank's user experience and value proposition.

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