South Africa’s no-fee bank makes first profit before R1.1 billion deal
Bank Zero has reached profitability ahead of schedule and is preparing to broaden its offering as a proposed R1.1 billion acquisition by Lesaka Technologies moves toward regulatory review. The app-only, no-fee bank turned profitable last month, beating the break-even timeline Lesaka had projected for December.
Profit milestone and acquisition timeline
Co-founder and chairman Michael Jordaan confirmed the bank’s first monthly profit, marking an early performance milestone for the three-year-old lender. Regulatory approval for Lesaka’s acquisition is anticipated around year-end, aligning with Bank Zero’s own timetable to secure permissions for new product lines.
Growth drivers and customer base
A key contributor to the outperformance is Bank Zero’s alliance banking model. By providing the underlying infrastructure for fintechs, retailers, and digital platforms to issue cards, the bank has opened new revenue streams while scaling efficiently. The bank now serves about 275,000 customers, including businesses and high-net-worth individuals.
Jordaan expects customer growth to accelerate: partnership pipelines and the planned Lesaka tie-up could add roughly 2 million more customers over time, positioning Bank Zero as a more prominent player in South Africa’s increasingly competitive banking market.
New lines of business: lending and foreign exchange
Bank Zero is seeking regulatory approval to enter lending and foreign-exchange services. Feedback from regulators is expected by the end of the year. The bank plans to fund its lending activities using its approximately R860 million deposit base, complemented by additional investment that Lesaka is likely to make once the acquisition is finalized.
Competition intensifies, consumers benefit
South Africa’s financial sector is witnessing heightened competition as insurers, retailers, and telecommunications firms push deeper into banking and payments. With economic growth averaging under 1% over the last decade, companies are racing to unlock new revenue streams by leveraging their existing customer relationships.
“The race is heating up,” Jordaan said, adding that consumers stand to gain from better merchant acceptance of electronic payments and rising fee competition across the sector. This environment has helped low-cost, digital-first players like Bank Zero gain traction by focusing on efficiency and transparency.
How Bank Zero was built
Conceived by Michael Jordaan—who led First National Bank for a decade—and Yatin Narsai, FNB’s former chief information officer and now Bank Zero’s CEO, the startup launched in 2021 after years of planning. The founders set out to reimagine banking from the ground up, with a relentless focus on cost control and customer-friendly pricing.
Nearly all of Bank Zero’s software has been developed in-house, a strategic choice that helps contain operating expenses and allows rapid iteration of features. The no-fee model has been central to its value proposition, appealing to consumers and businesses looking to minimize banking costs without sacrificing functionality.
Jordaan’s broader ventures
Alongside his role at Bank Zero, Jordaan runs venture capital firm Montegray Capital, which has invested in companies including cryptocurrency exchange VALR and Purple Group, the firm behind the EasyEquities investment platform. He is also involved with Bartinney, his family’s wine estate located about 60 kilometers east of Cape Town.
Outlook
With profitability reached ahead of expectations, regulatory decisions due by year-end, and a potential influx of customers through alliances and the Lesaka transaction, Bank Zero is poised for a new phase of growth. Its expansion into lending and foreign exchange—funded by its deposit base and prospective new capital—could further diversify revenue and strengthen its competitive position in South Africa’s evolving financial services landscape.
