Frequently Asked Questions
What is Bank Zero?
We are a modern App-driven bank fully aligned to the banking needs of both businesses and individuals, offering control and transparency within our fresh approach towards banking.
That’s a mouthful – but so is the range of powerful features and innovations we offer to both individuals and businesses, many of which are currently not available in the market. What you need to know about us:
- Our focus is on providing solutions to real banking problems both individuals and businesses struggle with every day.
- We are all about being digital and leveraging the power of a smartphone.
- Connectedness is a key principle. In today’s digitally connected world, financial connectedness is even more crucial.
- We are passionate about customers having full view of their finances at all times –
whether as a business or as an individual. Lack of such visibility leads to wrong
decisions, as well as fraud. We will reveal more about how we will be addressing
this later, but some examples are:
- Providing smart financial control – customers will know what’s happening in their accounts at all times.
- Fast and easy processes with no manual paperwork – everything will happen digitally and, at all times, customers will be aware of progress within a process.
- Great clutter-free experience – really easy for customers to join and get going.
- We are fixated on security. From our back-end infrastructure through our FICA processes to how customers use our App. The latest thinking in biometrics and encryption play a key role in our offering.
- We believe that South African bank customers currently pay too much for basic banking services – and we want to change that.
Bank Zero will be App-driven. But don’t most banks have Apps?
There is a difference between a bank with an App and an App-driven bank.
Bank Zero will offer all services through the App whilst other banks tend to offer their App as an additional channel. Typically, such an “additional channel” App will not have all banking functionality available, still forcing customers into the branch or onto the internet for certain activities (for example FICA activities, giving notice, closing an account, replacing a card, etc).
This is because existing processes typically demand manual interventions and complex user interfaces, being built on legacy systems. Trying to retrofit these processes to a newly added App is difficult (and in some cases impossible). This explains why banks are starting to spend billions replacing their legacy systems in support of such new channels…
In an App-driven bank like Bank Zero all our functionality is designed with our App in mind. Our core banking platform also directly supports our App.
What products will Bank Zero offer?
We have specifically chosen to be a dedicated savings bank paying decent interest – our driving force is to empower South Africans to save. We will provide transactional accounts (with a linked debit card) along with savings and other cash investment accounts.
Why is Bank Zero not offering credit?
We believe there is an oversupply of credit in South Africa. And we believe that through innovation we can start a process of reducing the credit burden of our customers. Certain types of long-term credit, when carefully applied, can lead to growth and we appreciate it when banks offer that facility. However, what we want to change is the typical instant gratification mindset (which perpetuates a culture of expensive, enslaving debt) to a more longer-term goal-orientated one. But banks need to support their customers through this process – and we believe that the way in which we will be supporting our customers will go a long way towards achieving our goal of reducing customers’ debt burden. Some of the ways in which we will do that is
by creating easy ways for financial communities like clubs, families, groups of friends, and businesses to save individually or together,
enabling customers to become Bank Zero shareholders, thereby generating further savings,
using our inherent capital efficiency to pass the cost savings back to customers, thereby enabling more disposable income to be directed towards savings, and
other innovations which we will be revealed once we launch.
Who is part of the Bank Zero target market?
Anybody with access to a smartphone can join Bank Zero! This applies to both individuals and businesses.
We are solving for a range of real banking problems experienced by both individuals and businesses within our single App. Since we want to keep our App simple and uncluttered, we are not catering for listed companies – their needs are too diverse and it will complicate our App too much. We will also not bank any government entities.
When it comes to individuals, we are segment agnostic and will not be prioritising one segment over another. We believe that our value proposition will resonate across all segments, although each sub-segment will have their own favourite features within our App.
Customers who currently bank at other banks have much to gain by joining Bank Zero. The fee savings that we give back is valuable, but by far not the most valuable feature. The fresh and innovative offerings of Bank Zero which solve real world customer problems in a simple way, will be the main attraction.
Customers who are underbanked, mostly due to not being able to visit a bank branch during office hours, can now satisfy all banking needs, services and account opening processes through the App. Our focus is also not on selling underbanked customers more products, but rather on making customers more financially aware and educated through transparency and a focus on savings.
Previously unbanked customers with access to a smartphone will be able to easily join Bank Zero because we are removing the typical barriers – of exorbitant fees (especially penalties) and forcing customers into branches – as well as making it easy to join.
Will Bank Zero have a physical customer-facing network?
Because we want to save our customers the hassle of using unfriendly branches and/or call centres, we have designed all our processes from the ground up with digital interaction in mind. There will be no physical Bank Zero branch network nor any call centres. All communication will be App-driven and/or via email.
Customers can use any ATM – both locally and internationally – to access cash with their Bank Zero debit card, as well as make use of the typical cash-out facilities at major local retailers (similar to what is offered by most large South African banks).
What is Bank Zero’s fee structure?
We are turning the typical banking pricing model upside down. Instead of customers being charged for basic banking, and then getting lots of bells and whistles (which are often not used) for free, we want our customers to pay little to nothing for basic banking – and then pay for added features. We feel that this is a much fairer way of sharing costs and benefits with our customers.
Many want to know what our customers will be charged for holding an account, making payments, swiping for purchases, etc. Unfortunately we cannot reveal more at this stage, but what we can say is that our fees will be very competitive.
We will also be minimising some particularly painful fee practices such as penalty fees on debit order bounces, declined transactions, late payments, insufficient funds, overdrawn accounts, etc. More on this will also be revealed closer to our launch.
Why are we doing this? Because we strongly believe in making banking accessible and affordable to all – both businesses and individuals – as this has a positive impact on the economy.
How is it possible for Bank Zero to be a low-cost bank?
We strongly believe in making banking accessible and affordable to all – both businesses and individuals – as this has a positive impact on the economy.
That is ultimately why we chose the mutual bank structure which allows for efficient use of capital which in turn leads to cost efficiencies we can pass on to customers. But what does capital efficiency mean? Regulators determine the minimum amount of capital a bank is required to hold. For traditional banks that offer a very broad spectrum of services (including loans and complex investments) the minimum prescribed capital to hold is 25 times higher than for mutual banks. High capital requirements mean banks have to generate higher income in order to deliver their targeted return on equity (ROE). In order to do so, they then have to charge higher fees.
As long as risk is well mitigated, holding excess capital is counter-productive, inefficient and leads to a worse customer experience.
In addition to lower capital requirements, Bank Zero also has a low-cost infrastructure. The Bank Zero core banking platform is based on reliable open source software components. This avoids the use of old-school legacy banking platforms which come at a huge cost and requires expensive and extensive modifications – and which cost banks (and therefore their customers) billions. (Examples of such modifications are the need to align to modern-day regulatory requirements and defending against cybercrime.) Because we use open source technology, the end-to-end platform is very cost-effective and efficient.
On top of that, purpose-building a bank from scratch using latest technology is incredibly cost-effective.
Once one combines the benefits of our modern low-cost banking platform with our capital efficiency, customers stand to benefit handsomely.
Why does low cost not mean low security?
Where required, we didn’t back away from smart investments in highly advanced technologies.
We use biometrics extensively in our App to prevent any fraudulent activities.
Our debit cards operate on Mastercard’s latest EMV technology and multi-layered security protocols. We are further combining this with our own unique and advanced security feature which is currently being patented.
Our core banking platform runs on an IBM’s LinuxONE™ mainframe, which provides us with advanced business critical security through pervasive encryption technology. Running an open-source core banking platform on the new IBM LinuxOne mainframe is ground-breaking. And we have combined it with other open-source software and cloud technology for certain business functions. This leads to a best-of-both-worlds combination of security and low cost.
Why is the core banking platform not in the cloud – why on a mainframe?
Many factors from cost to regulatory requirements to cryptography and other security requirements play a role in making a decision to run a core banking platform in the cloud. Whilst the cloud is good for managing certain services (which we indeed use), it becomes a challenge to manage a bank’s core banking platform.
Once infrastructure is in a cloud, it is outsourced to that cloud provider. That means that the business is bound by those agreements covering aspects such as scalability, usage, capacity-on-demand and disaster recovery. These costs could grow exponentially as volumes grow. By using our own infrastructure for our core banking platform, we have full control over these factors.
Our chosen mainframe solution provides the ability for us to grow exponentially, while controlling all factors (CPU, Memory, Disk, Network, DR, Remote capability, etc) allowing us to manage the environment efficiently and effectively.
Why should customers choose Bank Zero over other banks?
Being low cost is one thing. Offering better and more comprehensive functionality through well designed products and services is a totally different ballgame.
We believe that both businesses and individuals require significantly more functionality than what is currently available, to solve their daily banking problems. And although most banks are starting to somewhat address the needs of individuals, we haven’t yet seen a bank that offers the required banking functionality to businesses.
In addition to innovative functionality, Bank Zero’s App and back-end design provides enhanced security, using the latest thinking and cutting-edge technology.
Bank Zero’s smart ecosystem will enable true financial connectedness in an already digitally and socially connected world.
Why did Bank Zero choose a mutual bank structure?
A mutual bank allows customers to bank as they would normally do with other traditional banks. In fact, it is possible for a mutual bank to be structured such that customers will never know the difference!
However a mutual bank could decide to offer some valuable features easily enabled by the mutual bank structure, and which we have chosen to include in our offering:
Customers can become shareholders of Bank Zero by holding specific cash investment products. We will make more information on this available at a later stage.
The model enables the creation of financial communities within our bank – for example clubs, families, groups of friends, and business colleagues.
The age-old principles of mutuality also link directly to the principles of social connectedness which have seen many modern applications of in the last 10 years. These principles play a key role in how we innovate.
Regulators enforce certain capital requirements on mutual banks, which differ from traditional banks:
The mutual bank structure allows for the efficient use of capital – which has a strong cost benefit to the bank. (See How is it possible for Bank Zero to be a low-cost bank? for more detail.) Mutual banks can choose whether they want to pass these cost benefits on to their customers, which Bank Zero will be doing.
Mutual banks are forced to have a more conservative investment approach to customer deposits. This is to ensure financial stability for both customers and the bank. (See more under How does Bank Zero protect my money – is it safe?)
Note that although mutual banks may offer credit, Bank Zero has specifically decided not to provide any lending products.
How does Bank Zero protect my money – is it safe?
Some say ATM bombings is becoming a national sport whilst others would argue phishing is by far the leading cause of fraudulent theft. Globally cyber-crime is on an alarming rise. Gone are the days where huge safes and clever alarms protected one’s money. Ones and zeros are the tools of choice by hackers.
Cyber-criminals are a major concern and all too often people suffer losses through phishing. People are often tempted through greed (“Congrats you won…” or “SARS refund is due to you…”) or driven by fear (“Protect your account now…”) and then follow unsafe links giving away important personal and OTP information.
Protecting our customers' money is our passion. Whether this money is “in flight” or “at rest”, we employ the latest secure hi-tech together with innovative business processes to give our customers peace of mind. Our safes are literally layers and layers of sophisticated technology.
We further reduce risk by collaborating with heavy-weights like Mastercard and IBM.
We believe though that prevention is the best cure, and have built our security infrastructure, systems and processes around our future customers. We are investing significantly in security mechanisms that includes the latest in biometrics: to get to your money, your biometrics are needed; and if your money moves, you'll know about it.
How do I obtain shares in Bank Zero?
After our last public communication we were inundated with emails asking how to acquire shares in Bank Zero. Our customers will be able to become shareholders by holding specific cash investment products. We will be making information on this available at a later stage only. Until then, sit tight and save…