Former FNB CEO and angel investor Michael Jordaan and former FNB executive Yatin Narsai have announced plans to launch an “app-driven bank” called Bank Zero before the end of 2018. Bank Zero won’t have any physical branches, though customers will be able to get physical cards for transacting at stores and at ATMs, and all communication and interaction with the bank will be done using digital channels, with a particular focus on mobile devices like smartphones and tablets. The founders have also hinted at competitive fee structures for both individuals and businesses and promise “added control and transparency, and a fresh take on banking”.
Bank Zero won’t be a commercial bank like Absa, Standard Bank, or the founders’ alma mater, FNB. Instead, it will operate using a mutual bank licence. Speaking to Michael Avery on Classic FM on Tuesday, Jordaan explained the reasoning behind the decision. “[A mutual bank] is a conservative vehicle and we like that,” Jordaan said. “As a new bank we have to convince customers we’re a safe bet.” He added that Bank Zero will not engage in lending “because there are already enough lenders out there” and that it will offer “very competitive deposits and transactions” which will allow it to “share the benefits of mutuality with customers”.
Under the mutual bank structure, once Bank Zero has broken even its depositors will become shareholders. “This sort of community sharing is what Facebook, Instagram and WhatsApp are all about,” Jordaan explained. He says Bank Zero hopes to, by stimulating savings, be seen as a safe place to deposit money and — eventually — pay dividends on mutual bank shares to its customers with applicable accounts.
The new entity also promises to employ “cutting-edge technologies” while delivering “state-of-the-art security”. Narsai says Bank Zero is part of “the new frontier of banking which has arrived through smartphones and associated digital technologies”. What does that mean? Easy and rapid on-boarding, no paperwork, and visibility of the progress of processes and the status of accounts at all times.
So, with no branches, how will customers access their cash? Bank Zero cards will work with local and international ATMs and will allow for cash withdrawals at tills in big-name South African retailers. In its press release, the company also hinted that its unlikely to use call centres for customer support. Instead, with such a heavy focus on digital channels, we expect chat bots and email to be the primary ports of call.
Bank Zero is also clear about its intentions to pursue business owners. Banking for businesses tends to be far more expensive than that for individuals. Jordaan says the
SME segment is “very important” and that Bank Zero has considered the “arbitrage between what businesses and individuals pay” and designed “very competitive” offerings in response.
There’s little more than a holding page on Bank Zero’s website for now, so we’ll have to wait until later in the year for more details, but if Jordaan’s attached his name to it you can bet it’s going to be worth paying attention to.