Bank Zero announced that it has been integrated with the national payments system of the SARB, and has begun trials in preparation for the launch of its banking platform.
The alpha testing phase will see a small team validating the bank’s end-to-end live systems and processes.
In recent interviews, Bank Zero co-founder Michael Jordaan has made it clear that the bank will offer new, innovative banking at low costs – and high interest for savings.
The bank will not rely on traditional banking structures like head offices or branches, rather the bank will be run entirely on an app that the company has built.
He further indicated that this coupled with the use of the open source-based LinuxONE servers – which comes from a partnership with IBM – helps dramatically cut the costs of starting up the bank in the country.
This is why Bank Zero will be able to offer low fees for customers.
“I have been pleasantly surprised at the costs that one can now save when starting a new bank – the things that are available in open-source software now, for example, or the fact that the cost of hardware has fallen so dramatically,” Jordaan said in an interview with Radio 702.
Speaking to BusinessLive, Jordaan said that the IT costs of Bank Zero work out to “1% of 1%” of what it cost to run an IT system, which allows the bank to charge lower fees and “survive on smaller margins”.
Considering the low-cost nature of the bank, a major question to ask is how the bank aims to make its money to keep itself going – especially if it is offering customers very low fees and – as Jordaan has alluded to – zero transact costs for digital payments.
Jordaan said in the interview with Radio 702 that the aim of the business model for the bank is to offer a service that will improve the banking sector of South Africa, which is likely an indication that the company will bring in a large customer base – generating viable revenue even at low costs.
Speaking to MyBroadband, bank Zero said that it being all digital makes “sizing” the bank difficult – as there is no limit to onboarding customers.
“Having said that, our planned projections remain humble. We would be thrilled to far exceed these budgets and are scaling our systems accordingly. It is vital to us that each customer gets to experience our wow service,” it said.
The bank also has its sights set on changing the banking sector and offering better services to customers than existing banks in South Africa.
Bank Zero told MyBroadband that it can do this not only by offering low costs, but by also offering better and more comprehensive functionality through great products and services.
They said these will be “a totally different ball game” to what is available now.
“We believe that both businesses and individuals require significantly more functionality than what is currently available to solve their daily banking problems,” the bank said.
It added that although most banks are starting to address the needs of individuals, there hasn’t yet been a bank offering the required banking functionality to businesses.
This will all be backed by Bank Zero’s innovative app and back-end design that provides enhanced security by “using the latest thinking and cutting-edge technology”, it added.
“Bank Zero’s smart ecosystem will enable true financial connectedness in an already digitally and socially connected world,” the bank said.
Another element in Bank Zero’s innovation is through its partnerships with Mastercard – more specifically, its “new generation of card” aimed at providing cutting-edge security and powerful features.
When asked for more information on this new card, the bank said it would only provide details once patents are completed.
“It is however exciting and powerful, and our hope is to bring “peace of mind” when customers use our card, be it online or any other way,” said Bank Zero.