Bank Zero's customers have already moved 'tens of millions' from other banks

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Bank Zero CEO Yatin Narsai says customers are coming through "in thousands" since the bank launched in August and they've moved "tens of millions" in deposits to Bank Zero.
Bank Zero CEO Yatin Narsai says customers are coming through "in thousands" since the bank launched in August and they've moved "tens of millions" in deposits to Bank Zero.
  • Bank Zero CEO Yatin Narsai says customers are coming through "in thousands" since the bank launched in August.
  • They've also moved "tens of millions" in deposits to Bank Zero.
  • The bank will now accept more customers as it does away with the waiting list, but it only needs 100 000 to break even.

Anyone can now join Bank Zero without standing in a queue, as has been the case since the bank launched in August.

The newest bank in SA, backed by former FNB CEO Michael Jordaan, opened fully on Monday night. That said, in the two months of operating with a waiting list for people who wanted to join the bank, it had customers coming through "in thousands", said Bank Zero CEO, CEO Yatin Narsai.

The bank started adding small numbers of customers in 2020 when it was beta testing its systems. It deliberately kept customer numbers low to test how its homemade banking system would respond to demand.

It took Bank Zero almost two-and-a-half years since it first announced in 2019 that it would start beta testing to open finally its doors to the public.

But Narsai said the days of keeping volumes low are over, and the bank is ready to operate "fully" like its competitors.

"We are now at the stage where we feel confident that we can open it up fully. The waiting list process is not ideal; that's what we've also seen. People want to engage in the ecosystem. They want to friend their families into the household account," said Narsai.

The bank said since the August launch, it has attracted customer deposits "in the tens of millions". Narsai said it's been way above the bank's expectations because it didn't expect all those gains while still operating with a waiting list.

"And I'm not just talking to customers about customers with millions. Obviously, they are there. But there are customers that come in with R100 000, R200 000, half a million. It's fascinating to see the amount of goodwill and people voting with their money. I personally was taken aback," said Narsai.

Attracting 'serious customers'

He said Bank Zero expected its newly acquired customers to "test the waters" by opening many dormant or rarely active accounts, which usually happens with new banks. But Narsai said the activity rate in Bank Zero's accounts is in the region of 60% to 70%. That, of course, comes from a much smaller customer base than TymeBank's, which has roughly 3.5 million customer accounts.

With 24 million South African smartphone users in SA, Bank Zero believes the market to tap is massive, even as other digital banks are counting on the same devices to grow their customer bases. 

But the bank has always said that business banking customers are its priority segment. Narsai said since the launch, the acquisition of business banking customers exceeded Bank Zero's expectations. And the vast majority were bigger Pty Ltd companies, not small sole proprietors.

"I really didn't expect businesses on-boarding every day. And they did. It just carries on … What we're seeing is the serious business customers coming across," said Narsai.

Low-hanging breakeven point

But even though the early days have delivered above-expectation customer numbers and deposits for Bank Zero, it said it only needs 100 000 customers to break even.

The bank hopes that the current activity rate of its customers will continue as it grows its base. But even if new customers don't transact or bring in as many deposits as those who got in during the waiting list days, the bank is counting on its capital-light structure to bring it to the breakeven point faster.

Bank Zero employs 35 people but will increase this as it acquires more customers. It does not have any branches. Although it has an office where it conceptualised its operations before Covid-19, everyone works from home now. Narsai said the management team does not see itself ever building a "Taj Mahal" kind of head office.

But, most importantly, because Bank Zero built its banking platform from scratch, it doesn't have to pay a supplier, nor is it paying any monthly licence or other maintenance fees.

"When you buy the banking industrial complex package, your budget and your capital injections have to be in the billions of Rands. We walked away from those types of decisions. And those savings are what enable us to achieve breakeven that is so low," said Narsai.

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