First National Bank (FNB) has obtained a 67,74% reach in under-serviced areas over the past two years in its drive to meet the Financial Sector Charter targets, which require 80% of low-income earners to be within 15km of a banking facility.
The roll-out of 1Â 400 mini-ATMs across the country has been a major part of FNB’s strategy to reach isolated communities. The innovative idea has had positive spin-offs for trading stores in the rural areas, as well as increased convenience for the community.
Part of this innovation was an agreement between FNB and the Eastern Cape provincial government to facilitate the payment of social grants such as the Social Old Age Pension (Soap) and child grants. FNB identified trading stores in remote rural areas in which to place 242 of its mini-ATMs. The machine works off a bank card that is issued to the grant receiver with a PIN number. The customer swipes the card, enters the PIN and stipulates the amount they want to withdraw. The machine issues a slip, which the customer takes to the store owner, who then pays over the amount to them. The store owner gives the slip to FNB and it then reimburses the money directly into their account.
For Russel Hulley, owner of a trading store in Qolara, 40km from Butterworth in the Eastern Cape, the installation of the mini-ATM has resulted in the store turnover “increasing dramatically”. Not only does Hulley benefit in that most of the 800 grant recipients who use the mini-ATM in his store buy their monthly groceries from him, but he has lowered the costs and danger of handling large amounts of cash.
Instead of taking his store’s weekly takings to Butterworth to deposit, the money is effectively recycled in his store — and he saves on the cash-deposit fee by having FNB make the deposits into his account. He pays a monthly rental fee for the machine but receives a rebate if he exceeds a certain level of transactions.
For the recipients, this offers a far safer and more reliable means of collecting their grants. According to Michael Arnold, head of the ATM division for FNB, previously, the government vans that brought the grant money were highly unreliable and could not access the village during the rainy season. The vans were also sitting ducks for an ambush.
The recipients now spend the bulk of their money in the store and are less of a target for criminals. In the case of Hulley’s store, pensioners in the area are collected on payday and returned to their homes with their groceries.
The store owner is a focal point in the community and high levels of trust are placed in them. Most of the pensioners leave their cards, ID books and PIN numbers with the store owner, something unheard of in urban areas.
According to Craig Anderson, area manager for FNB’s Eastern Cape ATM division, this is often the safest way to store your card. “Last month a pensioner was murdered by her son for her bank card and PIN number.”
One challenge that still faces the banking community is that, although these new customers would be considered “banked”, they use the account purely for transactional purposes. They withdraw the full grant payment and, if they want to save, they give some money to the store owner who puts it in a trust account for them. For FNB, explaining to their customers that they do not have to draw all their money at once is the next educational challenge.