FNB has announced First Business Zero, a digital-only business bank account with no monthly account fee.

While competition in the retail banking sector has driven down fees, business banking has remained largely uncompetitive and expensive. We are finally seeing some competition coming to this market, especially for entry-level, small businesses.

Capitec recently announced its acquisition of Mercantile Bank with the intention of starting a business bank early next year, and this week FNB launched its SME business banking offering called First Business Zero.

First Business Zero is a digital platform business bank account. It has zero monthly banking fees and free card swipes, although there are pay-as-you-go fees on transfers and debit orders. The catch is that this is only available for sole proprietor businesses with an annual turnover of up to R5 million. So this is not for more established, incorporated businesses.

Considering that a sole proprietor does not have to open a business account and can bank in their own name, it doesn’t necessarily make sense for a sole proprietor to open a business bank account, given the traditionally higher fees.

Building up a credit history

FNB Business CEO Mike Vacy-Lyle says that for a small business, using a low-cost business banking solution allows it to start to build up a track record with the bank when it comes to accessing credit. Vacy-Lyle says entrepreneurs struggle to access financing in their own names as they cannot provide payslips. FNB is using a credit scorecard specifically aimed at small businesses which will allow automatic credit approval after six months of trading.

“Better use of data, understanding client context, easier credit applications through scoring and digitisation, as well as lower origination costs, have led to better, deeper credit underwriting and quicker turnaround times. This has made borrowing from FNB Business a much better experience with better pricing.”

Another feature is the inter-operable QR code for accepting payments. All business banking customers can now apply for a QR code linked to their business account. This effectively allows the business’s customers to pay using their SnapScan, Zapper or Masterpass app. The merchant fee is 2% for debit cards and 3% for credit cards.

Despite paying no monthly account fee, First Business Zero customers also get free access to the FNB Business suite of free value-added services, including instant accounting software, invoicing, cash flow and payroll. The account also includes an FNB Connect SIM card that includes free data, minutes and SMSs (up to 100MB data, 30 voice minutes, 30 SMSs).

“FNB has invested billions of Rands in developing a business banking platform that offers holistic and integrated financial solutions to all types of businesses. To maintain our market-leading position, it is essential that our business model continually evolves to provide relevant solutions for customers, from learning how to start, run and grow a business, to registering a company, opening a bank account, applying for credit and managing the businesses daily affairs,” says Vacy-Lyle who adds that the sole proprietor account is the testing phase in developing a more digitised solution for all business customers. By the middle of next year FNB expects to roll out solutions for incorporated businesses, although the fees will reflect the complexity of the banking solutions offered.

Free online entrepreneur course

FNB has also launched a new digital app-based entrepreneurship learning programme called Fundaba. All FNB customers can download the program for free on the FNB banking app.

Fundaba is a free interactive e-learning business education platform and comprises multimedia content such as videos, podcasts, quizzes, templates and tools for all FNB customers to learn about entrepreneurship and running a business.

Jesse Weinberg, head of the SME Customer Segment at FNB says the bank conducted extensive research and worked with hundreds of local business owners and mentors to provide users with critical knowledge and practical help to assist them as they navigate the business journey, from incubating a business idea, to starting, running and growing a business in South Africa.

SMEs can also actively share and provide feedback on various educational chapters to constantly increase the effectiveness and relevance of the content.

The name Fundaba was created through the combination of the South African words “fundi” (colloquial for “expert”) and “indaba” (discussion) and consists of 12 modules across four lifecycle stages of a business (incubate, start, run and grow). It follows a South African entrepreneur’s journey as they build their first business – ‘Lebo’s Bakery’. All audio and video content is available in five languages: IsiZulu, isiXhosa, Sesotho, English and Afrikaans.

This article first appeared in City Press.