‘We expect a lot more competition and we think customers are now going to go to the innovative banks that give them the better deals, not just the big ones’: Michael Jordaan, co-founder and chairman of Bank Zero.
SIMON BROWN: I’m chatting with Michael Jordaan, co-founder and chairman of Bank Zero. Michael, I appreciate the time today. Corporation for Deposit Insurance is a bit of a wordy title, but in essence deposit insurance has arrived in South Africa and individuals are now insured for up to a R100 000 in case of a banking bust.
This will be paid by insurance from the banks, from the fees, which of course they may just pass back to us anyway. But it’s not going to be government’s responsibility anymore is the crux of it. SIMON BROWN: You’ve made a great point. If I’m looking to open an account, one of the things you are always worried about is – because, as you mentioned, this is your hard-earned savings – that bank not being there in the morning, which means there has been a natural inclination to kind of move to the big banks, because they’re ‘too big to fail’. They’ve been around for hundreds of years.
SIMON BROWN: I take your point, absolutely. And one of the things – and this is data from Sarb – says that it protects about 90% of depositors. In other words the vast majority of our population. But you’re quite right that individuals and other businesses can now do the same for smaller amounts up to R100 000 per institution.
MICHAEL JORDAAN: That’s exactly right. So this is a large phenomenon in South Africa. It’s how people save – very, very often through stokvels – but they haven’t always been protected individually. So a stokvel on its own could go up to R100 000 and be protected.
SIMON BROWN: Good question – and maybe there isn’t an answer to this – why is this happening only in 2024? You mentioned the banking run in 2008. I remember Saambou, which was around 2003, and more recently VBS. We haven’t had a lot of collapses, but it just seems to be something which makes intuitive sense for a banking industry.
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