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Individuals and businesses can now bank with South Africa’s newest mutual bank, which has started operations as the country works to recover from the economic harm caused by the Covid-19 outbreak. Bank Zero, which has been in the works for three years, is opening with minimal marketing in the hopes of attracting consumers who have previously expressed an interest. Its mobile app allows clients to open accounts for retail and corporate purposes, as well as for the informal sector. It will compete with traditional and challenger banks in South Africa, but will not extend credit.
“The smaller banks don’t cater for such a wide target market and typically have a narrow focus like just the high- or low-income groups,” Bank Zero Chief Executive Officer Yatin Narsai said Tuesday. “We’re targeting individuals in all income groups and businesses.”
African Rainbow Capital Investments Ltd.’s TymeBank and Discovery Ltd.’s Discovery Bank were among the latest to start functioning among a slew of newly licensed entrants to the market in recent years. In response to new competition, it has established a zero-fee account to compete with comparable accounts launched by South Africa’s biggest and oldest institutions. While it has gotten off to a slower start due to delays mostly due to the pandemic, it is entering the market just in time to benefit from a government and private sector initiative to support small and medium-sized enterprises, according to Nolwandle Mthombeni, a bank analyst at Intellidex.
“There is an opportunity to service the SME market now,” she said. “They need a lot of help after the pandemic, are big employers, and the government will be pushing to allocate more to the sector.”