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Let there be banking

It is not often that one gets a chance to listen to a pressing social problem being succinctly outlined, and then receives almost immediate news of a creative but practical response.

On Tuesday the FinMark Trust unveiled Finscope, a survey of 3 000 households on access to and behaviour towards financial services.

It found that of 27-million adult South Africans, 51% currently enjoy access to banking services. Of the 49% that is unbanked, 14% had banking services and abandoned them largely due to a loss of income, while the remaining 35% has never used banking services.

Interestingly, of the unbanked half of the adult population, 3% are in the living standard measures (LSM) eight to 10, while, as expected, 70% are lower-income earners, in LSM one to five. It is the latter group that the financial services industry has committed itself to reach.

According to the Financial Services Charter, the industry aims to provide a banking facility within a 20km distance of 80% of people in LSM one to five by 2008.

The first step towards achieving this came to light on Wednesday, when it was revealed that the four big banks — Standard, Absa, First National Bank and Nedbank — are working on a national banking account. Targeted at people who earn less than R2 000 a month, this is expected to be used for services such as the payment of social grants, an idea independently suggested by National Treasury official Lesetja Kganyago as a basis of extending banking services to the unemployed.

The Finscope survey found that 78% of the population earns less than R3 000 a month.

But it also found that, contrary to popular belief, bank charges are not such a great obstacle in accessing banking services. People who have closed a bank account have done so purely because they have lost regular income or feel they earn too little to warrant an account.

Curiously, poor, unbanked people do not believe banks are a rip-off. Wait until they start using the services …

Dave Porteous, CEO of the FinMark Trust, believes the most tangible measure of progress in meeting the goals of the charter is the reduction in the proportion of the unbanked.

This is because a bank account is the key to accessing services like insurance and pension funds, which Finscope found more than 80% of the population has no access to.

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