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The Mzansi bank account has been more beneficial to the banks than expected and certainly not the revenue drainer they had predicted. Nevertheless, some banks have lost the golden opportunity of tapping into a new market.

Research by FinMark Trust shows that, of the 4.33-million accounts opened since 2004, over 3-million accounts remain active. As a result Mzansi has increased the percentage of banked South Africans from 45% to 63%.
Of the 72% of people who had never had a bank account before, 7% of them have migrated upwardly into the mass market products of the individual banks. That equates to about 400 000 people the banks would not have tapped for their own bank accounts without the Mzansi initiative.

Yet one could argue that, for the first two years, Mzansi was a grudge project whose main aim was to tick a box in the Financial Services Charter.

Charles Chemel of African Bank and a founder of the Mzansi initiative that compared to other product launches, virtually no money was spent by the banks on the initiative, yet it resulted in over 3-million clients for the banking industry. “For something that got so little attention it is amazing how well it has done”. He says that the perception that Mzansi has lost banks money is wrong. Although there are acquisition costs per customer, very little was spent on the brand and the product simply used existing infrastructure.

Bob Tucker of Standard Bank acknowledged that, for the bank as a whole, Mzansi added to their income base. The bank had, over the last four years, created the infrastructure for their mass market segment and Mzansi was simply run off that infrastructure. As a result every rand earned from Mzansi has contributed to the fixed costs. “Mzansi has been positive; we have seen an upward move,” says Tucker.

Chemel believes the perception the banks created around Mzansi as a loss leader was politically motivated. “If you are seen to make a profit, then the social partners will criticize that the product is overpriced,” says Chemel who adds that, as a result, the perception has damaged the commitment to the Mzansi brand with CEOs not focusing resources on this potentially lucrative sector.

However Nedbank and Postbank have successfully targeted Mzansi as a way to grow their mass market. Nedbank was behind its three competitors in terms of entering the mass market and therefore focused its efforts on Mzansi with aggressive pricing.

Nedbank was one of the two big banks to exceed their targets in respect of Mzansi, responsible for a third of Mzansi accounts opened. Postbank has been responsible for 50% of the Mzansi market.

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