Michael Jordaan. Picture: MARTIN RHODES
Michael Jordaan. Picture: MARTIN RHODES

The much anticipated Bank Zero, which is backed by former FNB CEO Michael Jordaan, starts its first trial runs for staff today after being formally granted a licence and successfully integrating its back-end systems with the Reserve Bank’s national payments systems.

SA’s newest bank will use an app for its customers, using its “revolutionary new core banking platform”. The pilot will include ôfull end-to-end testing of the customer experience from ‘on-boarding’ through to actual transacting”, and “perfecting the integrated business, security and regulatory processes”.

Bank Zero is one of four new banks expected to launch in SA as technology enables new ventures to launch at lower cost.

The others are TymeDigital, for which Patrice Motsepe’s African Rainbow Capital Investments has made a takeover offer; Discovery Bank; and the Post Office’s Postbank, which will be allowed to offer a wider range of services.

The soft-spoken Jordaan is renowned for his 10 years as CEO of FNB, during which he ushered in the digital age of banking by introducing the country’s first smartphone banking app in 2011. He headed loyalty scheme eBucks, oversaw the introduction of its Slow Lounges in airports, and won numerous national and international awards for innovation.

Of an app-based bank, the now Stellenbosch-based venture capitalist said: “Facebook, WhatsApp, Twitter and Instagram are the new normal for societies.”

Bank Zero, which was granted its mutual bank licence by the Reserve Bank on August 17, integrated with the national payments system during September.

“Settling directly with the Reserve Bank rather than through a ‘sponsoring bank’ enables us to participate directly with peer banks in the movement of money,” said Lezanne Human, co-founder and executive director. “We now have the ability to control our payments value chain, which forms a powerful foundation for innovative and cost-efficient offerings.”

We explored banking from first principles and explored what is available from open-source software and cloud processing

Alpha testing involves a small team validating the end-to-end live systems and processes, Bank Zero says, and includes a “scientific approach to building a bank [that] uses precise, laboratory-style testing”.

The bank’s CEO and co-founder, Yatin Narsai, says: “Alpha testing is a major achievement — most institutions invest billions just to get here.”

It has collaborated with IBM and Mastercard, including developing a “new generation of card”, which the latter says will deliver “cutting-edge security and other unique features”.

One of the challenges Jordaan says the new bank is working on is countering “painful fraudulent payments”, warning that “criminals are innovating, so should banks — it’s an imperative”.

IBM is hosting Bank Zero on its open-source-based LinuxONE enterprise server, which it says provides “breakthrough enterprise-grade security … through its pervasive encryption technology”.

Jordaan and Narsai worked together for years at FNB.  “He is probably the person I’ve had the most arguments and debates with ever. And also someone I respect hugely for his intellect and ability to get things done,” Jordaan said.

“I left FNB in 2013 and Yatin followed in 2014. We kept in touch and often continued our debates over red wine. We explored what type of bank we would want to build if unencumbered by legacy systems and where cannibalising our fee revenue would not matter. We explored banking from first principles and explored what is available from open-source software and cloud processing.”

Bank Zero Mutual Bank says it is more than 45% black-owned and 20% women-owned.

• Shapshak is editor-in-chief and publisher of Stuff.