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

• 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

Strategic Advantage

Teba Bank is well placed to service its particular markets:

• 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

Infrastructure and Distribution

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

• 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.

Account Structure

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