South African micro-lender plans to launch digital bank

South African micro-lender, Barko, wants to launch a digital banking offering with Swiss banking software company Temenos.

Temenos announced on Wednesday (27 October) that it will enter the local banking industry through Barko, by integrating its open banking platform.

Barko Loans already operates as a micro-finance institution in South Africa, with 188 branches across the country. The group offers small loans and funeral cover, but has now applied for a Mutual Banking License to operate as a full-service digital bank.

According to Temenos, Barko will be built on the group’s widely used digital core-banking service, Temenos Transact, using cloud infrastructure. The group said that Barko will leverage “full front-to-back services”, allowing the bank to consume, configure and integrate with external applications.

“Barko aims to disrupt the banking status quo with more accessible and affordable banking to advance the financial wellbeing of millions of South Africans underserved by traditional banks. Critically, the investment in Temenos’ open banking platform will enable Barko to launch new banking products, from deposit and savings accounts to credit and loans, at speed and at a low cost,” it said.

Barko, chief executive officer, Kobus de Wet, said that the bank will target “millions of South Africans that are unbanked or underserved by the traditional banks”.

“With Temenos’ modern cloud banking platform we can bring new products to market faster and at a significantly lower cost compared to banks on traditional core banking systems. Ultimately, this means we can pass on savings with products and services that improve the financial lives of the people that bank with us,” De Wet said.

The group wants to offer customers longer-term and lower-cost loans, affordable banking products and easy-to-use services across digital channels.

“Barko’s entry into the South Africa retail banking market represents a significant moment for customers and the industry. We’re pleased to work jointly with Barko to deliver the hyper-efficient cloud banking platform that will help it realize its ambitions of making financial services more affordable and accessible to all South Africans,” Temenos said.

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South African micro-lender plans to launch digital bank