Localisation as a Superpower: Building in South Africa’s Payments Market with Bank Zero

We all come from a banking industry environment and we became frustrated with so many problems that banking customers are struggling with. We want to solve it, but we couldn't. And then we thought, how about putting it all together and start solving for the real problems that customers are struggling with. Welcome back to the Issuo Academy. Today we're heading to South Africa, a market where digital adoption is is accelerating fast. Customer expectations are rising and traditional banking models are being challenged in real time. At the center of that shift is Bank Zero, an organization that is redefining how modern banks are built from localization and infrastructure to operating models designed for scale. Joining me today we have Lizan Hooman, co founder and working shareholder of Bank Zero, and our very own Jeff Parker, CEO of Paymentology. Welcome both of you. We're so happy to have you. Let's start with a quick fire. Just to kick us off, finish this sentence. The biggest misconception people still have about digital banking is that it's only for youngsters, that it's only for the affluent. I think those are the biggest ones. Couldn't agree more. The biggest misconception about digital banking is it's traditional banking with a mobile app. Exactly. That is so true. So many people just think, oh, we take a traditional banking and we now we put it into an app. There couldn't be further from the truth. It reminds me of the dot com days in the 2000s. Every company added an E in front and it became digital. Thank God we're doing things differently. Lizaan, let's start with Bank Zero itself. You've built a bank that looks very different from traditional institutions. Branchless, app driven, zero fees and digital first from day one. Can you take us back to the beginning and talk us through the origin story of Bank Zero and what problem were you really trying to solve for? So there are lots of stories about the beginning and lots of bottles of wine, including from one of our co founders, Michael. But what it boils down to is that we all come from a banking industry environment and we became frustrated with so many problems that banking customers are struggling with and we want to solve it, but we couldn't. And then we thought how about putting it all together and start solving for the real problems that customers are struggling with. And we started building it small and then it became Bank Zero. And I think that's so important. You started off with a problem and Jeff, we hear about this all the time, right? The best solutions, the best platforms, the best banks really start from a problem where you're trying to solve something. Very specific to a customer. And let me tell you, those are always the most successful programs. Lizan, what were the biggest assumptions about banking that Bank Zero deliberately chose to challenge? I think historically there used to be a lot of paperwork involved in banking and it doesn't have to be like that. When you'll see smartphone is a supercomputer in your hand, there's so much that it can do to the same extent liveliness tests. You have to walk into a branch. No, a phone can determine that. So it's paperwork that can be cut out. It is costs. Bank Zero is called Bank Zero for a reason. But there's a lot of fees that are charged that are not necessary if you have systems that are effective. And the reason why so many banks have to charge fees is because of the cost of those, the billion rand cost with those systems. So that would be another one, just making things simple. Banking must be simple. Banking can be fun. And that's all the things we wanted to solve. So people often call us a challenger bank, but we never saw ourselves as a challenger bank. We just said there's a gap where people need better banking and we want to fill it. And especially in business banking, because that is expensive and complex. And that is, I'm very proud to say, we solved very well for now that better banking. And that's what we should all strive for. Because the reality is banking shouldn't take you hours and hours and hours. So that operational efficiency is absolutely critical. When a customer has a bank that, you know, really is proactive and they preempt what the customer is going to ask for, that's so important. So that is absolutely incredible because you really are changing the way people interact with the institutions, which is fantastic. Now that we understand the vision behind Bank Zero, let's talk about how that translates into partnerships. Firstly, congratulations to both you to Bank Zero and Paymentology on the partnership. I think we're all very, very excited, Jess, from Pavementology's perspective, what made Bank Zero such a compelling partner for Paymentology? So thank you for the partnership. Look, I think the key is, as you mentioned, it's partnership. Yeah. I think successful partnerships have to be built through a meeting of minds. And I think when we had our first discussions with Suzanne and the team, it was clear that we were trying to do the same thing. And really that emanates from some of the problems that we've just been talking about is putting the customer at the center of everything we do and trying to solve real world problems that they have. And I think South Africa is an interesting market in that it's very cash dominant. There are some traditional banks that are there and the reason that I think they haven't really solved more of the, or provided a solution for most of that underserved is because they haven't made a product which is really suitable. And I think that from Paymentology, from day one we've been trying to create solutions that meet customer problems. I think BankThera had a meeting of minds and I think when you put the two technologies together with that digital first mindset, it almost just naturally becomes a true partnership. And I think once you start there, everything else is solvable. That's if the meeting of minds so important to build a solid foundation of partnerships because the reality is innovation will come, technology will come, but it's making sure that you are aligned from the very, very, you know, the basics. And that is what a strong long term partnership really, you know, it's a foundation. Just on that point. I attended your palmetology conference in Cape Town in May last year where I got introduced to the team and I remember coming back to Bank Zero and saying this is the team that you want to work with. So vibrant and energetic and innovative and focused on results and you want to have fun at the same time as well. Yeah, it's a meeting of minds. It's also a meeting of culture I think as well. And the only thing you can guarantee with partnerships is things are going to go wrong and you want to make sure that you, that you can trust the partner on the other side to solve things. Absolutely. It's, you know, we always talk about, everyone says, oh, in payments, payments, something will go wrong. It's not will, it won't. It will. It's about how you work together with your partners, how you react to problems together and how you ultimately find solutions. And that builds stronger partnerships across the board. I want to look ahead now. What excites each of you most about the next phase of this partnership? It's that pain. Ontology sits in an unbelievably unique space and there are so many partners that you can bring in and are possibly going to bring in. And that's what excites us because Systeme is built for scale and we really want to see that grow. So that's where my excitement sits. Look, actually I agree, but I think one of the things I didn't mention about the compelling partner aspect is the meeting of the minds. What was really key about that was actually the focus on supporting the types of businesses that we wanted to bring in. So the concept of this term alliance banking is going to be a key priority for Bank Zero. And I think the fact that is very aligned to what we want to do is super exciting when we look at the broader landscape. You know, 60 million people are in South Africa. 80% of the transactions are still cash based. There is a huge untapped market. And I think in just the few months that we've been kind of conceptualizing this idea, the pipeline is just getting bigger and bigger. And I think we're really only at, like I almost say stage Zero now. It's not even phase one and it's already looked pretty exciting. So I think we've almost got an unprecedented opportunity to really meet customer needs and to build out that proposition to meet both the needs of consumers and SME. So I actually, I'm probably more excited about this than many opportunities I've seen in my, in my career so far. Absolutely. I think meeting of the minds, but also a shared vision. On which customers are you trying to solve for? How do you meet the market where it is and solving for that 80%. What a huge opportunity for both Paymentology and Bank Zero. And this again, solid foundation to build so many different customer experiences on top of it. So what an exciting time. I want to zoom out now to South Africa or to the broader market. South Africa is one of the most sophisticated payments ecosystems in Africa, even though 80% of payments are still done in cash. Jeff, how does localization give both Bank Zero and Paymentology that competitive edge in South Africa? Great question. I think one of the things we operate in 55 countries around the world. And so I think we have a reasonably good understanding of what's required in different markets. And there are certain markets around the world that have a very strong localized requirement for how you do business. And South Africa is definitely one of them. It's very strong regulators. It has very strict requirements around data residency. And how you process those transactions has a need to integrate into local domestic switches. And so understanding that local environment and then how you build experiences around that, still delivering a seamless, intuitive payment experience with a customer is a real skill. And I think if you can do that localization, well, it's not a checkbox, it's a superpower. It means that there are barriers to entry which are maybe higher, but once you can actually break those down and actually meet them, it gives you a real competitive advantage. And I think the product offering that I think we've built together as partnership is really meeting those localized requirements. We're really understanding the regulators and we're super excited because already we believe that we can bring new products to market that don't exist because we think we understand the market and together we can actually solve for all the regulator requirements but also still meet the customer requirements. That localization is superpower. It really is true because once you get, like you just said, the compliance out the way, it leaves you so much room to innovate, scale, tap into new segments, new ICPs. So really that localization is the key to unlocking this entire market, which, congratulations, you've already done on that. Compliance isn't always something to just get out of the way. It can be a superpower in itself because if you can do it slicker than anybody else, that is what gives you the edge. Absolutely. Embedded compliance is the new, should be the new normal because customers shouldn't feel that pain of compliance, but they should know that it's there. Right? Customers, especially in South Africa, when they get that SMS to say you have just paid at this is your balance, that actually makes them feel more secure. It doesn't. It's not a pain in other countries. It's like, oh, it's another notification here. It's like, okay, my bank knows I've made this transaction. It's correct. The mindset of customers is so different. They want to know that the compliance is there. They want to know that you've got their back and you're covering the risk while still have this fantastic experience. I think one of the biggest barriers to entry in South Africa to digital adoption is trust share. Whether you agree with it or not, cash is instant, it's real time, it's physical, it's there, you have it in your hand. Yeah, yeah, that's easy to trust because it's there. Yeah, that's what we've been brought up on. So convincing people to move to digital requires a lot of education and I think the compliance is absolutely critical because it's the effective compliance, the notifications that you talked about that builds that trust. So I think actually you raise a really good point. It's actually the compliance has to be at the center of everything you do. Luzon, what trends in the market is Bank Zero excited about and how do your plans factor in the Saab's new payments ecosystem modernization program, which is set to revolutionize the South African payments ecosystem by 2030. You mentioned earlier about South Africa having such a strong banking system in Africa, but it's quite well known that South Africa, even in the world has had a very strong system for a very long time. Which means that even though it might feel like we are behind the times, sometimes sitting here at the bottom of Africa, these modernization projects are so essential. There are so many things that are going to happen in terms of the non banks, the regulatory notes that are coming out at the moment. There's going to be a lot more competition but luckily with a good strong regulators that you refer to that will be kept in check. So for me it is about us. Getting away from banks means friction and cost and it's slow and getting to that point where everything is slick and we can do things faster for customers. Not, not for us. For customers. You were talking a little bit earlier about Bank Zero, but we literally we care about the customer. That's why we've also built the bank without even taking salaries because we wanted to make it a success. That is incredible. Firstly, your customers will be very happy about that. I'm just like, wow, this is groundbreaking. I mean the fact that you've actually as a business decided to do that should say to your customer, customers or actually does say to your customers, this is definitely the bank that I want to bank with. I can definitely trust them because you know what, they're putting their money where their mouth is, which is very, very different for South Africa. So I'm really sure that once you start onboarding more and more customers, we're going to see a huge influx. I'll be one of them. But that's also why paymentology made such a big impact on us to partner with you, because of the big span that we suddenly have in customers. Yeah, absolutely. To say this, I always hate this part because it's the final question, what advice would you give to other banks that are considering a similar digital transformation journey? It doesn't have to be in South Africa, but in any emerging market. What did you say, Jeff? An app or a digital bank isn't just a bank with a mobile app slapped onto it. You need to start right back where the processes need to be digital. Everything needs to be straight through. So if you can't promise the customer that what they do digitally is going to all the way through flow in a reconciled way and that they can trust the process. It's a non starter. So do not try and slap an app just onto an existing system. Ideally don't even buy a banking platform out of a box, rather build your own so it can be truly unique. Absolutely. I love that build from start to actually match the needs of customers. Because so often we see people just saying okay, Well, I have this product, I can repurpose it and make it do something else. You're absolutely right, they cannot. And starting from the customer experience and working backwards is absolutely key to that success. Jeff, same question to you. Look, look, it's a bit along the same lines. I think it's super important when you're Digital banks are big term. Yeah. Like, and you know, I think it gets thrown around a bit too freely these days. I think you have to be very intentional in terms of what are you building and why are you building it and who you're building it for. The market needs to be big enough to service, but it also needs to go after a particular segment of the market. And so you have to be clear about how you're going to bring value and how you're going to differentiate. And I think, you know, bringing back to what we talked about with Bank Zero, the clear focus on alliance banking, it's actually quite unique, I think, from a digital banking perspective. And so that's an area that I think together we believe is a huge opportunity in this market. If you're a digital bank, it could be that, but it could be one of 10 of the different things. But don't just build a generic digital bank and expect people to come. I think you need to be very clear in terms of who you're building it for, why you're building it for them, and then be very clear in terms of how you build it. You can obviously build on that over time as you get traction, but I think it's that lack of focus that can often lead to a lack of product market fit. The Love it intent, value partnership in a nutshell. Perfect. Lizan Jeff, thank you so much for joining the Issuance Academy. Today's conversation shows what's possible when a bank is willing to rethink traditional models and pair that vision with modern payments infrastructure. Bank Zero's journey is a powerful example of how digital first banking is being built differently right here in South Africa. Catch you next time on the Issua Academy. That wraps up today's episode of the Issua Academy, Pavementology's podcast to innovate, scale and provide impact. I hope you're leaving with fresh insights and actionable strategies to help you revolutionize your card programs and drive true impact in the world. If you've enjoyed today's conversation, please leave a review to help us reach more pioneers like you. Also, be sure to subscribe and follow us for more inspiring episodes and behind the scenes content from Pavementology. Until next time. I'm Miru. She. Naidu. Keep innovating, keep scaling and keep striving to make an impact.