Bank Zero sees a rise in business banking

Michael Jordaan Bank Zero Chairman.

A year after it officially went live, Bank Zero will maintain its ‘zero fee’ regime for its services in 2023 – with the chairman, former ETF CEO Michael Jordaan, surprised by the increase in the number of customers of the services business banking.

However, the digital bank does not yet disclose the number of customers it has onboarded to date.

Yesterday Bank Zero released its pricing guide for 2023, saying: “The big question was whether Bank Zero would be able to maintain its zero-to-zero fees.

Yatin Narsai, CEO of the digital bank, says that “all zeros are indeed always zeros”. He adds that “our other low fees have either remained the same or have been further reduced. It’s a great story of fighting inflation, at a time when the cost of living is rising beyond what is acceptable. »

The app-focused bank began its alpha testing phase with staff members in October 2018, followed by its beta testing phase in 2019, when it launched its card online and executed retailer readiness among a small group of citizens.

Described as “a unique and novel approach to banking”, Bank Zero says it has no entry-level accounts.

Instead, it offers a “segment-agnostic” approach, which gives individuals and businesses access to all services, such as zero fees for EFT payments and debit order services, and no charges for airtime purchases and payments made to other Bank Zero customers. .

Digital-only banks – or neo-banks as they are also known – are becoming increasingly attractive in South Africa, due to their approach of delivering innovative solutions at scale without the frictional processes of traditional retail banking.

Over the past three years, the retail banking industry in South Africa has been revolutionized by the rise of digital-only banking, with the launch of TymeBank, Discovery Bank and Bank Zero.

In September, Be Mobile Africa became the latest digital bank to to come down in the South African market to compete with incumbents.

Bank Zero said in a statement: “Cash deposits are new and have been prioritized due to customer demand. Customers can deposit at any PnP or Shoprite cashier location. The fee is set by the retailer and customers must confirm this with the cashier before making the deposit. These deposits are immediately available in the account once the card and PIN are confirmed. »

Michael Jordaan, President of Bank Zero, shares the following view: “Bank Zero’s current customer base consists of a high percentage of early adopters, which is reflected in our higher than expected account activity.

“While early adopters were expected, the high percentage of business banking customers joining Bank Zero was somewhat surprising. This clearly reflects the current gap in the business banking market, both in terms of fees and solutions.”

In an email interview with ITWeb, Lezanne Human, co-founder of Bank Zero, says, “Because of our low costs, our break-even point is around 100,000 customers. We are not yet revealing our customer numbers, but we are seeing good growth, which is particularly promising in the current economic climate. »

Describing how the bank will make a profit with its zero pricing model, Human says, “Like all banks, we earn an interest margin on deposits and homing/interchange fees flowing between banks on transactions.

“It’s more than enough income for us because we have very low internal costs by using innovative technology and being careful with our expenses. Another cost saving is that we offer simple products with innovative features, which solve real customer problems. Often it’s the offering of all the unnecessary bells and whistles that becomes costly.

According to Human, the bank’s model has already disrupted the South African banking industry.

“Just when we announced we were launching and hinted at zero fees, and then also when we first announced our real zero price guide, a number of other banks dropped their accounts from entry level at zero cost.

“That’s a huge benefit for customers. We also believe that our all-digital offering has helped shake up all banks to be as digital as possible. There’s a reason why our slogan is ‘be the change – we have always had this intention.

She reveals that in the future, Banks Zero will be offering new products through a marketplace (i.e. partnerships with other vendors) “and not ourselves – we want to stay as focused as possible while delivering future customers a complete offer”.