Over 13-million South African adults have no bank accounts and a comprehensive survey of households suggested on Monday that this was ”a vast opportunity to bank the unbanked”.
The FinScope 2003 survey showed that most South Africans would want to put money in the bank if they had a large sum available, said FinMark Trust chief executive David Porteous. The fact that almost half the population is unbanked is
indicative of barriers to entry that arise from unemployment, irregular income and low personal income.
FinScope 2003 showed participation in the formal financial system as follows:
13,7-million adults currently banked;
3,7-million adults previously banked;
9,5-million adults never banked.
The challenge was ”to understand behaviours and attitudes across the population towards financial services and other related products in order to design suitable financial products and delivery channels.”
FinScope is a national household survey of financial services, needs and use. It surveyed 2 984 respondents aged 18 and over, and aimed to establish benchmarks and identify opportunities for innovation in products and delivery. It deals with the main product categories — transaction banking, savings, credit and insurance.
FinScope supports FinMark Trust’s vision of making financial markets work for the poor by supporting the expansion of access to financial services, said Porteous.
Porteous said the recently announced Financial Services Charter was the financial sector’s commitment to addressing the provision of financial services to the low end of the market. The FinScope findings suggested that reaching this market segment — about 65% of the population — will require a concerted effort between private sector and government, and new forms of public-private partnership.
The survey found that cash withdrawals are the transaction type most often conducted by the banked. The majority of these are conducted using an ATM.
However, in the black community, going into a branch is still preferred to using an ATM.
FinScope 2003 points to a concern: 14% of the market were previously banked, but are no longer part of the system. The survey tracked the reasons for abandoning services to other categories of formal and informal financial services. For example,
the survey found that while nine percent (2,5-million) of adults belong to stokvels and savings clubs, and 29% (7,7-million) are members of burial societies, these members reported difficulties due to other members not paying (14%), running
out of money due to the number of deaths (nine percent) or fraud among members (four percent). Hence, informal financial services are also under some strain.
Other findings include:
Almost one in eight adults have no source of income.
Family members play a crucial role in supporting the poor.
Most grocery purchases are paid for in cash.
Of money in circulation, the majority does not make its way into the banking system.
Most South Africans do not have savings and investment products. Overall, there is very low use of mainstream investment vehicles. Bank savings accounts and burial societies still account for higher use.
One in five South Africans has a store card.
The majority of South Africans live in formal housing, most in brick houses. One in five black South Africans live in informal housing. – Sapa