History of Teba Bank • Since 1976 the Fund has facilitated payments to mining industry pensioners and dependants in rural areas largely through Teba Limited agencies • Since 1988 the Fund has acted as Paymaster to gold and platinum mines • July 2000 full commercial banking licence • Initial mandate – to provide financial services to mineworkers and their families • Extended mandate – to provide affordable and accessible financial services to the existing market and the broader communities Strategic Advantage Teba Bank is well placed to service its particular markets: • It understands the market in which it operates • Its core function is to exclusively service this market and no other • Its services and distribution channels cater to the specific needs of the market Infrastructure and Distribution • • • • • • 72 outlets on the mines in 5 provinces 10 outlets in rural areas 6 Mining Town Branches 70 Teba agencies in rural areas of Southern Africa 37 Saswitch linked ATMs satellite network allowing real time banking at bank outlets and ATMs • Web access for debit order lodging for third parties Business Problem definition • Affordable entry point to financial services • Geographic accessibility • Security - network - client - bank • Simplicity • Adding real value to customers Problem components • • • • • • • Pricing and cost structure Point of Sales distribution Participation in national payments system Telecommunications – coverage and cost Systems – switching, databases etc. Security for client and systems Training and promotion Components of the system • Components • Card • Communications • On Us POS System • Off Us POS and ATM’s • Backend System • Transmission account • Sub account system and triggers • Reporting and MIS Card Description • The Card • A plastic magnetic stripe card • Linked to an online numbered account • PIN based • Counterfoil allows the user to easily obtain a new card without having to go into a Teba Bank branch but need only to go to an issuing merchant with the counterfoil and his PIN number. • Reliable vehicle for money payouts Teba Bank A-Card Functionality • Financial functionality • Registration of account • Purchase • Cash back • Transfer to other TAC accounts • Pin-less stockless recharge of airtime • Third party payments • Information Functionality • Third party payments • Business • Savings and buying clubs etc Account Structure • Transmission account • The transmission account update immediately on the receipt of information. • This eliminates the risk allowing withdrawal of more money than is available. • Sub account • This allows different functions to be linked to the account such as medical payments only. • It also allows contributions or payments to be directly paid from the account at a certain time of the month without having the expense of a debit order. Proposed communications • Significant decrease in the data packet size • GSM based coverage • 50% cost effective than Fastnet per transaction with no additional equipment. • Able to carry information and the financial transaction simultaneously. Rollout to other banks • • • • Modular design Multi currency Interface adaptability Communication structure independent for countries that have low cellular / radio coverage. • Easy installation Regulatory and legal issues • • • • • National Payments System Card associations ICASA – telecommunications Banks Act Financial Intelligence Centre legislation (Money laundering) National Payments System • PASA • Swift • PCH agreements - technology risk - settlement risk • SARB • Sponsorship option • New switching hub • Cost structure • Mentorship Card association membership • Benefits for membership of strong card brand e.g. Mastercard - Merchant recognition - Central bank and NPS members comfort • Costs Telecommunications • Monopoly supplier in SA • Security issues Bank’s Act • Deposit taking • Supervisory concerns - operational risk - settlement risk Financial Intelligence Centre Act • Use of agents to open accounts • Proposed legislation exemptions: - payments of a maximum of $1500 - deposits not exceeding $200 if more than one in a calendar month and at any time an amount of $1500 which enables the account holder to maintain a balance not exceeding $2,000 - no international transfers allowed Conclusions • Innovation of each element required for cost effectiveness • Support of regulators essential • Question all assumptions made by vested interests in status quo • Careful use of alliances • Know your customer and the environment