South African fintech giant Lesaka Technologies has agreed to acquire Bank Zero, a digital mutual bank founded by former First National Bank executives, in a R1.1 billion ($61.4 million) transaction announced Thursday. The proposed deal, subject to regulatory approvals, signals Lesaka’s ambitious expansion into digital retail banking as it steps up competition against leading neobanks such as TymeBank and Discovery Bank.
Bank Zero chairman and co-founder Michael Jordaan confirmed the agreement, highlighting expected synergies between the two firms. “There are lots of regulatory approvals still needed, but both teams are excited about the merger synergies,” he said. Jordaan will remain chairman of Bank Zero following the acquisition, with co-founder Yatin Narsai continuing as CEO. Lesaka plans to settle the consideration through a mix of newly issued shares and up to R91 million in cash, leaving Bank Zero shareholders with an approximately 12% stake in the enlarged Lesaka group.
Founded seven years ago by Jordaan, banking innovator Yatin Narsai, and five other co-founders, Bank Zero received its licence from the South African Reserve Bank in 2018. It launched to the public in 2021, becoming a fully digital, branchless bank. Unlike many competitors, it focused on building a bespoke core banking platform based on IBM Z mainframes and LinuxONE, touting industry-leading security protections like IBM’s Secure Service Container.
Bank Zero, which is 45% black-owned and 20% women-owned, has differentiated itself through patented technology aimed at fraud and phishing prevention. Its unique approach has attracted a disproportionate number of businesses and higher-income individuals, according to its founders. In the year ending December 2024, Bank Zero recorded deposits of around R400 million, with annual card spending reaching R415 million, reflecting year-on-year growth exceeding 50%.
While Discovery Bank and TymeBank invested heavily in marketing to amass millions of customers quickly, Bank Zero opted for a gradual approach, betting on profitability by serving digitally savvy, fraud-conscious customers. “These higher-value target segments provide healthy and steady growth,” the bank said, projecting break-even by 2027.
Lesaka’s Acquisition Spree Continues
The purchase of Bank Zero is the latest move in Lesaka’s aggressive expansion. Formerly known as Net1, Lesaka rebranded in 2022 after Value Capital Partners injected R580 million into the company and oversaw a comprehensive management overhaul. The fintech has since pivoted from its legacy social grant payment services to build a diversified portfolio spanning payments, lending, and now digital banking.
Since 2024 alone, Lesaka has announced multiple acquisitions. In May, it acquired Cape Town-based payments platform Adumo for $85 million, significantly boosting its merchant network to 119,000 retailers across five countries and handling annual transaction volumes exceeding ZAR 250 billion. In November, Lesaka signed a R507 million ($28 million) deal to acquire prepaid electricity submetering business Recharger, positioning itself in South Africa’s private utilities market and expanding its Enterprise pillar under its Merchant Division.
Lesaka said the Bank Zero acquisition will enhance its ability to optimise its balance sheet, allowing the group to fund lending growth through customer deposits rather than relying heavily on bank debt. The company expects a reduction in gross debt of over R1 billion once the deal closes.
Regulatory Hurdles Ahead
The transaction requires approvals from the Prudential Authority of the South African Reserve Bank, the Competition Commission, and relevant exchange control bodies. If successful, the deal will create a formidable player combining Lesaka’s established footprint in payments and financial services for underserved communities with Bank Zero’s digital-first, branchless banking platform.
Lesaka’s move comes at a time when South Africa’s digital banking sector is heating up. TymeBank, for example, has surpassed 11 million customers, many of them low-income earners and grant recipients, and grows by over 6,500 customers daily, with total deposits of around R7 billion. Bank Zero, in contrast, has not offered credit products to date, but the deal could open opportunities for lending to its base of digitally engaged users.
Lesaka’s recent acquisitions — including Adumo, Recharger, and now Bank Zero — reflect the broader convergence of fintech, digital banking, and utility management in Southern Africa. Analysts say the consolidation wave could accelerate innovation and reshape competition among the continent’s digital financial services providers.
As both companies work toward closing the deal, attention will focus on regulatory processes and integration plans. Lesaka’s ability to deliver on the promised synergies will determine whether this ambitious bet pays off in a rapidly evolving market.