Innovation in fintech over the past decades has resulted in seismic changes within the financial services sector. New technologies accelerating banking 4.0, has propelled the rapid rise in digital banks on the African continent.
Bank Zero, is South Africa’s newest launched digital bank. Originally set to open for business in 2019, delays in granting of banking license, covid-19 pandemic induced economic inactivity, and the recent unrest experienced in South Africa, saw the digital bank postpone the launch by two years to mid-2021.
Founded by former First National Bank executives, Michael Jordaan and Yatin Narsai, Bank Zero was granted a mutual banking license by the South Africa Reserve Bank in 2018.
“We’ve had to first transition to public operations, which unfortunately was interrupted by the pandemic and the recent violence. This caused delays, but our value proposition was retained. We are now ready with a value proposition made for a pandemic world with everything digital – no branches, call centers, paper – customers only need our app and email.” remarked Narsai
What is a Digital Bank?
Digital banking is the automation of traditional banking services. Digital banking enables a bank’s customers to access banking products and services via electronic and/or internet platforms. A Digital Banks offers banking activities online, which were traditionally available at a branch
Digital banking services & products include
- Automatic Teller Machines
- Internet Banking
- Mobile Apps
- Digital Wallets
- Automatic link to your account to pay utility bills
Types of Digital banks
There are various types of digital banks, notably challenger banks and neo banks.
Challenger banks are essentially fintechs that have their own banking license, thus they can flexibly offer traditional banking services. Another key feature of challenger banks is streamlined retail banking processes that leverage new and innovative technology. Carbon (Nigeria) Tyme Bank (South Africa) Bettr Finance (South Africa)
Neo Banks do not hold a banking license, instead, they rely on partner banks. Usually, neo banks are completely digital banks and have no physical presence. Eversend (Uganda) SOL Wallet (South Africa) and 7aweshly (Egypt) are all examples of Neo Banks.
Are Digital Banks better than Traditional Banks?
The rapid migration from traditional banks to digital banks by the market is driven by the low cost of entry. Thanks to technologies like artificial intelligence, machine learning, chatbots, automation, and blockchain alike, digital banks are far much more flexible than traditional banks in products and operations.
With no costs for maintaining physical branches, online banks are very cost-efficient, especially as many transactions carried out online don’t require third parties, as is the case with traditional banks. Automation of many banking processes also means fewer employees are needed compared to traditional banks. All this adds up to considerable cost savings over the traditional banking model – savings that can be passed onto customers meaning fees are exceptionally low and, in some cases, only charged for premium services.
2021 monthly service fees
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