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

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Financial functionality

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Registration of account

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Purchase

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Cash back Transfer to other TAC accounts Pin-less stockless recharge of airtime Third party payments Information Functionality

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Third party payments

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Business

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Savings and buying clubs etc

Account Structure

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Transmission account

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The transmission account update immediately on the receipt of information.

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This eliminates the risk allowing withdrawal of more money than is available. Sub account

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This allows different functions to be linked to the account such as medical payments only.

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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