eBucks IS THE FIRST VIRTUAL CURRENCY with a bank's backing and is expected to be profitable in three years

"We're an Old-Economy company. We have customers and make profits," jokes Paul Harris, CE of FirstRand Banking Group, a part of the financial services company FirstRand that boasts a market capitalisation of R38bn. Harris has been able to ignite the entrepreneurial passions of a Silicon Valley Internet start-up inside FirstRand.

These passions will culminate in the launch of eBucks next month. The final stage of its e-commerce strategy, eBucks makes FirstRand the first banking group in the world to launch a secure electronic currency that extends beyond the Internet to cell phones and ATM machines. "Why should we be outmanoeuvred by new players?" asks Harris. He says many IT and Internet companies are attempting to compete with the banks with cheaper and newer technology. However, they lack critical mass, settlement systems, trust brand and reputation that's necessary for a financial services company.

Harris chairs the recently formed ebucks.com subsidiary and is jokingly referred to by his much-younger colleagues as "the bucks@ebucks.com". Unlike many other established corporations, which are unable to adapt their corporate cultures to the Internet age, Harris says he is "not hung up on hierarchy and the desire to control" and has, therefore, been able to facilitate an environment where ideas can grow.

FirstRand's business philosophy of independent, owner-managed business, he says, is ideally suited for e-commerce business. Founded 20 years ago as merchant bank, with start-up funding of R10 000, FirstRand now encompasses 90 profit centres, spanning banking, insurance, healthcare and asset management. These include Discovery Health. Outsurance, Origin, Henry Ansbacher, Momentum, WesBank, First National Bank (FNB) and Rand Merchant Bank.

"I have a tolerance for chaos. But I have no tolerance for inertia," says Harris.

But too much chaos can be destructive. A year ago, FirstRand had 69 uncorrelated e-commerce initiatives. "We needed to fly information," says Harris. It was imperative that each FirstRand division be Internet enabled.

A new company Hyphen will act as the internal connecting platform for business-to business e-commerce initiatives. Formed out of MC² Solutions, FirstRand's former electronic banking division and the Merchant Card Acquiring business (formally FirstCard Merchant Solutions), Hyphen offers a range of e-commerce solutions. Each month it processes 8m electronic transactions worth about R52bn.

The vision is for Hyphen to build the bridge between FirstRand's Old- and New-Economy businesses. It will create a common delivery platform for the various transaction systems and will also link all the group's products to multiple payment systems. Customers will be able to amend their details online from 50 000 touch-points nationally.

"We will provide the connectivity in the group. We act like a multi-adapter electricity plug by allowing our profit centres and customers to plug into our e-commerce platform," says Hyphen executive Callie Basson. Hyphen earns fees through internal and third-party payments and earned a R28m profit this financial year.

Its solution offering is "unrivalled" for an SA group, according to a recent report from Deutsche Bank securities.

It says that implementing Hyphen "is no trivial task".

But it will be eBucks, the world's first bank-backed e-currency, that will put FirstRand on the Internet radar screen globally. FirstRand has committed R300m over the next three years to kick-start the initiative.

"We started working on eBucks a year ago and expect to be profitable within three years," says eBucks.com MD Michael Jordaan, the age 32-year-old entrepreneur who co-founded Origin and proved himself by profitably repositioning FNB HomeLoans.

Despite the hefty start-up loan, the 43 young eBucks developers and support staff, working from an open-plan office on the second floor of RMB's headquarters in Sandton, have kept costs to a minimum.

There will be no eBucks coins or notes, says Jordaan. eBucks is a virtual currency. It can be exchanged for goods and services at eBucks merchants such as retailers, airlines and hotels. Users will be able to make purchases through electronic media including the Internet, call centres, voice-response systems and cell phones. An eBucks debit card will be introduced next year.

The Reserve Bank has been consulted regarding the use of eBucks. A feature of e Bucks is that it is underpinned by the rand but cannot be exchanged for rands.

Customers will earn eBucks by being part of the FirstRand community. Rewards in the form of eBucks will be earned by trading with FirstRand group companies. Customers will have an eBucks account in the same way that they have a FNB cheque account.

eBucks.com is not confined to FirstRand group companies. Other businesses may join to improve their own customer loyalty.

FirstRand bought the wwwebucks.com domain name from a cybersquad for R3m. It also bought the domain names for SA, the UK, Ireland and New Zealand.

"This is not another 'me-too' e-commerce strategy. It is logical, understandable and implementable and has benefits for customers and the group," says Deutsche Bank Securities.

About eBucks:

eBucks, the rewards programme offered by First National Bank (FNB) and RMB Private Bank, is acknowledged as one of South Africa's leading rewards programmes with highly active members spending in excess of 80% of the eBucks earned in any given month.