South Africa’s banks are using their formidable joint product development capacity to create a national savings account designed to service millions of people who have no banking services.
The scheme is scheduled to be launched late this year. It is aimed at up to seven million South Africans who don’t have bank accounts, but are considered “bankable”.
The underlying concept is that the banks will share their facilities to service these clients. First National Bank’s Viv Bartlett explains: “The easiest and quickest way for the banks to provide access to financial services to previously unbanked people, is for the banks to cooperate in the use of their existing infrastructure. The favourable pricing implications are clear.”
In the fiercely competitive financial sector, senior managers attribute this newfound spirit of cooperation to the pressure of the Financial Services Charter.
The charter requires financial institutions to make their services accessible — within a range of 20km — to lower-income individuals. If they achieve 80% penetration of this market by 2008, they will notch up four points in terms of the charter scorecard system. The more points each bank scores the more likely it is to benefit from government business in future.
With about 650 branches and “points of representation”, and more than 3 000 ATMs, Absa has the largest reach to the South African public. The Postbank has about 1 500 branches and points of representation, but lacks the banks’ electronic infrastructure.
Outlining the proposed product, Absa’s Louis von Zeuner said: “Although the numbers are vague, we estimate that of the 14 or so million people in the so-called mass market, six million have bank accounts. The banks will continue to compete for market share among these customers.
“Another six to seven million are currently unbanked, but are bankable in terms of their needs. This is the group that is the target market for the planned national savings account.
“A snag is that servicing these potential clients with existing banking products is just not viable. So this is where the banks have decided to cooperate.”
Von Zeuner said the national savings account would reflect the affordability of the product and the needs of the targeted customers. “We envisage that the clients in this market will become a feeder stream for mainstream products, as they become more acquainted with the banking system.”
Closely allied to the development of this product is the ongoing activity in card development — ever-smarter bank cards.
National bank account clients will have a card with, for example, a South African flag on one side and a small logo of the bank that holds the account and pays for it. The client will be able to use the card at any “point of representation” for an affordable fee.
According to Von Zeuner security is vital for the system, and he foresaw the use of one card to meet all identification needs.
He added that it was a fairly simple matter to develop the product, as it would be underpinned by the existing Saswitch system — the interbank system for shared ATMs.