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Q&A: No plans for Bank Zero to use blockchain, bitcoin says Michael Jordaan

Venture capitalist and former FNB CEO Michael Jordaan says his new app-based Bank Zero won’t be accepting bitcoin or Ethereum when the bank launches later this year.

It follows Jordaan’s announcement yesterday that Bank Zero is expected to launch in the final quarter of this year.

Read more: Michael Jordaan blown away by all the good wishes on app-based Bank Zero

“Not at (the) launch but this could happen if there is customer demand,” Jordaan told Ventureburn in an email today.

When asked if the bank will make use of the blockhain, he said he and his six fellow founders were not considering this at this stage.

“The SA payments system is sophisticated by global standards. But we remain open to blockchain if it can make payments faster, more secure and less expensive than the current system,” he added.

Michael Jordaan says his new app-based Bank Zero won’t be accepting bitcoin or Ethereum when the bank launches at its expected to launch later this year

Responding via email to several questions posed to him by Ventureburn today, Jordaan reveals a bit more about what customers and the market can expect with the new bank.

Ventureburn: How will the bank gain the trust of South Africans? And how will you collect and transport cash from any such payments?

Michael Jordaan: Ultimately by delivering richer functionality, complete transparency and more control over finances. Lower fees and better interest rates will help too.

VB: Will this be a bank for the middle class or those with smartphones?

MJ: Any business or individual that is comfortable with using a smartphone qualifies.

VB: Why are you going the way of being a mutual bank?

MJ: It is a more conservative construct which fits our philosophy of nurturing a savings culture and rewarding our customers by becoming shareholders.

VB: And what use will having black ownership be?

MJ: We are proud of our 45% black shareholding. Transformation is part of being South African.

VB: And where will the actual money be held?

MJ: Same as any other bank except we will not be lending it out but investing it in top rated banks and treasuries.

VB: Are there examples where this kind of app-based bank has worked elsewhere in the word?

MJ: Yes. There are too many examples to list in the UK and Europe, while payment apps already dominate in China.

VB: What are some of the risks?

MJ: Our major risk now is execution. We have set ourselves tight timetable to launch by end 2018. Then it will be all about customer acquisition.

VB: Will you be making use of the blockhain – such as Change did with an ICO in Singapore last year?

MJ: Not at this stage. The SA payments system is sophisticated by global standards. But we remain open to blockchain if it can make payments faster, more secure and less expensive than the current system.

VB: Will you consider accepting digital currencies like Bitcoin and Ethereum as deposits and payments?

MJ: Not at the launch but this could happen if there is customer demand.

VB: Are you looking at including digital identities such as the Estonia e-Residency initiative?

MJ: We hope to make everything as electronic and seamless as possible. Like most countries the SA infrastructure is still largely manual and Estonia would be a great role model for everything including banking.

Featured image: Bank Zero chairman Michael Jordaan (Supplied)