The big banks in South Africa are scrambling to lure the country’s 27-million customers in the mass market with more innovative and cheaper product offerings in a move that marks the near death of the Mzansi account.
FNB was the first bank to challenge Capitec in offering a no-frills, simple bank account when it launched EasyPlan almost two years ago. The other banks have followed and all are now aiming to provide low-cost banking for less than R30 a month.
In July last year Nedbank launched the Ke Yona account; this month Absa extended its Transact account across all its branches and Standard Bank will soon announce its Access account, a paperless, electronic origination bank account.
These banking products are in essence a maturing of the Mzansi bank account. For some banks, Mzansi was a kneejerk reaction to the financial sector charter and it never became fully integrated into their overall banking model. Instead, it was an expensive exercise written off as a social obligation, rather than a real acquisition strategy.
“Mzansi was loss-making,” said Leon Barnard, director of Standard Bank inclusive banking. “It had high cost origination in-branch, servicing was expensive and customer utilisation was very low.”
Even Nedbank, which had a highly successful Mzansi drive resulting in the largest number of Mzansi accounts of the big four banks, conceded that it experienced a shift away from the Mzansi account as clients’ needs continued to change and more appropriate products were designed.
“With the Nedbank Ke Yona offering, we have seen a significant uptake more than three times that of the Mzansi account. Nedbank has more than three million entry-level clients, which include the youth,” said Anton de Wet, managing executive of client engagement at Nedbank.
Gift Manyanga, chief executive of FNB EasyPlan, said customers tended to feel ambivalent about Mzansi. “Some customers find it a good fit; others felt it was a poor person’s bank account. There are also limits and it becomes expensive with a high number of transactions, or if you have more than R15Â 000 in the account.” Manyanga said there had been a dramatic fall in the uptake of new Mzansi accounts, but the transactional levels remained static.
For many customers the banks’ own branded accounts are now cheaper than Mzansi. For example, an FNB Mzansi customer will pay R5 for a cash withdrawal, whereas an EasyPlan customer will pay R2.95. The only real cost advantage of Mzansi is that there are no additional Saswitch fees when withdrawing from another bank’s ATM.
More than a bank account
The key for the banks is not to make the same mistakes. Therefore these new accounts come with a new strategy. They need to be sustainable and offer cross-selling opportunities, and they must not be just for low-income, low-transactional earners. In most cases customers earning up to R100Â 000 a year will find these accounts more cost-effective than present bank offerings. For example, Manyanga said FNB EasyPlan had customers earning up to R300Â 000 a year. He uses the account and his monthly banking fees are about R34.
“We see this as an opportunity to roll out full financial access through the cross-selling of other accounts in order to be profitable. It is not about flogging cheap accounts,” said Lawrence Twigg, managing executive of entry-level and inclusive banking at Absa.
Cross-selling is a key driver of this account, which is why Absa requires customers to have a minimum regular income of R2Â 000 a month. In fact, the account becomes quite expensive for a customer who does not earn that.
The Nedbank Ke Yona account comprises the pay-as-you-use transactional account, funeral cover, personal loan, JustSave account and Vodacom M-pesa, a money transfer option, all of which enable clients to transact, borrow, save and insure. “We intend to provide them with relevant solutions throughout their life cycle: from the first time they open a savings account, their first job, car, home loan, or when they get married and start a family,” said De Wet.
Manyanga said branches signed 15Â 000 new customers a month and issued 13Â 000 loans and 6Â 000 funeral policies. Of the loans, about 35% was new customers to FNB, which offered the opportunity to cross-sell an FNB transaction bank account.
The future of Mzansi
Absa will continue with its Mzansi account because it still has its place as an account for irregular workers or grant recipients, said Twigg. There is also the Absa prepaid debit card that provides basic transactional banking such as cash deposits and point-of-sale transactions. “The aim is to migrate those account-holders into Absa Transact once they are regular earners,” said Twigg.
Standard Bank Access, Barnard said, was effectively the Mzansi and E-plan accounts amalgamated into one product. It is based on the MobileMoney account that has been rolled out in townships, where customers are signed up in a paperless electronic environment, dramatically cutting acquisition costs. Customers can open an account at their workplace or at their local spaza shop, known as a bank shop, where they can deposit and withdraw money at reduced rates and buy airtime and electricity.
Like Absa Transact and Nedbank Ke Yona, Standard Bank Access has no monthly fee. “We have simplified the fees, removed ad valorem pricing and there is no monthly fee,” said Barnard. He added that it would be the most cost-effective banking product for people earning up to R8Â 000 a month, which gave it a potential market of 27-million people.
“By the end of the year the bank will have migrated all customers across to a better product with better functionality at a lower price.”