This week’s edition of Finovate Global looks at recent fintech headlines from South Africa.
Lesaka Technologies to Acquire Bank Zero
Lesaka Technologies, a fintech that provides low-cost financial services to underbanked South Africans, has secured approval from the Competition Commission to acquire Bank Zero. An app-only bank co-founded by Michael Jordaan in 2018 and publicly launched three years later, Bank Zero today has more than 40,000 funded accounts and deposits of more than $22 million. The financial institution offers personal and business banking solutions to both underbanked and tech-first customers.
Initially announced in July, the acquisition is valued at $60 million. The transaction consists of a combination of newly issued shares in Lesaka and up to $5 million in cash. Post-transaction, Jordaan will remain as Bank Zero’s chairman, and co-founder Yatin Narsai will continue to serve as CEO. Bank Zero’s entire management team will also remain in place.
Lesaka anticipates that the acquisition will fortify its balance sheet, enhance lending performance, and reduce the firm’s dependence on bank debt. The fintech suggested that the move could lower its gross debt by $57 million.
“The acquisition of Bank Zero is a transformative event in Lesaka’s journey, enabling us to better serve our consumers, merchants, and enterprise clients, by embedding a trusted, well-engineered neobank capability into our fintech platform,” Lesaka Chairman Ali Mazanderani said. “I am delighted to welcome the Bank Zero team to Lesaka as partners.”
Lesaka Technologies offers banking, lending, and insurance products to consumers and cash management, billpay, business funding, and card acquiring solutions to retail merchants in both the formal and informal sectors. Founded in 1997, the company is headquartered in Johannesburg, South Africa.
South African Retailer Explores New Banking Venture
One of South Africa’s largest discount retail groups may be getting into the banking business.
Pepkor Holdings operates more than 5,800 stores across a wide number of brands including PEP, Ackermans, and Tekkie Town. A subsidiary of Steinhoff International, Pepkor is reportedly looking to launch a new banking venture—informally referred to as “Pep Bank”—that will leverage the company’s market reach to offer zero-fee banking to millions of consumers with lower incomes. The company is said to be in conversation with Investec, seeking a partner to support the new bank’s regulatory, operational, and financial infrastructure.
There has been no public commentary from Pepkor on the initiative, and press reports assert that the talks are in “early stages.” Further, the launch of a new bank would require approvals from the South African Reserve Bank (SARB) and the National Credit Regulator, and no such engagement has been reported to date.
That said, the move could be a major expansion for Pepkor, which would benefit significantly from its relationship to its sizable—and largely underbanked—low-income customers. And leveraging the businesses’ nearly 6,000 retail outlets to offer those customers banking services geared toward their specific needs could give Pepkor’s new bank a strong start and make it an instant competitor to current providers.
Revolut applies for South African banking license
Speaking of launching banking operations in South Africa, Revolut announced that it has officially begun the process of securing a banking license in the country. The company has confirmed that it submitted a Section 12 application under the country’s Banks Act, the first step in becoming a licensed bank in South Africa. Revolut first signaled its intention to launch a bank in South Africa in September, highlighting the country as a “key growth market” with increasing rates of digital adoption and an openness to innovative financial products and services.
“Becoming a licensed bank will allow us to bring a full suite of products to the market and ensure we become the go-to financial app for millions of South Africans,” Revolut South Africa CEO Jacques Meyer said.
As a sign of the company’s growing engagement with the South African market, Revolut has appointed Dr. Gaby Magomola as Chairman of Revolut South Africa. A pioneer in the history of banking in South Africa, Dr. Magomola has served in senior executive roles at Citibank, Barclays Bank, First National Bank, and African Bank. He most recently served as Deputy Chairman of the Development Bank of Southern Africa (DBSA).
“Dr. Magomola’s experience is invaluable as we deepen our commitment to the South African market,” Meyer said. “His strategic counsel will be critical in navigating the local regulatory environment, ensuring we build a locally relevant service that addresses the financial needs of all customers in South Africa.”
Revolut’s presence in South Africa would bring significant additional competition to the country’s digital bank industry, which consists of TymeBank, Discovery Bank, and Bank Zero, which has been acquired by Lesaka Technologies, as we noted in this week’s column. Already one of the largest digital banks in the world, Revolut has said its expansion in South Africa is part of the company’s goal to grow its customer base from 65 million to 100 million by 2027. Revolut also seeks to be active in 30 markets by 2030.
Here is our look at fintech innovation around the world.
Asia-Pacific
- Japan’s largest trust bank, Sumitomo Mitsui Trust Bank, selected SCSK Corporation and OneSpan to enhance security for its mobile banking operations.
- Australian superannuation fund Brighter Super partnered with Napier AI to enhance its compliance infrastructure.
- Is Jack back? South China Morning Post featured Alibaba Group Holding founder Jack Ma’s return to the campus of Ant Group.
Sub-Saharan Africa
- South African fintech Lesaka Technologies received approval to acquire Bank Zero in a deal valued at $60 million.
- Revolut has applied for a banking license in South Africa.
- South Africa’s Discovery Bank announced new crypto trading offering.
Central and Eastern Europe
- Lithuanian regtech iDenfy unveiled its new solution that conduct instant license checks during the KYC process.
- The European Payments Initiative (EPI) announced that Wero for e-commerce is now live in Germany.
- Mastercard introduced open loop transit payments in Azerbaijan.
Middle East and Northern Africa
- Crypto payments company MoonPay expanded its partnership with Israel-based Zengo Wallet. The firm’s venture arm, MoonPay Ventures, also announced a strategic investment in the self-custodial crypto wallet.
- First Abu Dhabi Bank teamed up with Thunes to enable global mobile wallet payouts.
- Israel-based fintech PayMe announced plans to expand into the European market.
Central and Southern Asia
- Yuze Digital, a AI-powered fintech platform for freelancers and independent businesses, launched its pilot in India.
- Pakistani fintech Abhi partnered with UAE-based digital platform Numou to help SMEs access financial services.
- Indian fintech Yubi raised $46.4 million to enhance its debt marketplace, collection systems, and AI capabilities.
Latin America and the Caribbean
- Uruguay-based cross-border payment platform dLocal partnered with global payouts orchestration company PayQuicker to help the firm serve more merchants in emerging markets.
- Latin American accounts receivable management and collections automation platform Moonflow acquired Mexican fintech Kobro.
- Colombian fintech Addi raised $50 million in debt funding.
Photo by Madiba.de African Inspiration on Unsplash
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