The major banks are finding more ways to take banking to township communities that have limited access to branches and ATMs.
Accessibility and affordability remain the biggest barriers to banking in South Africa, where an estimated 13 million people do not have a bank account and nearly 58 percent of workers are paid their wages or salaries in cash.
Standard Bank and Absa have each developed inclusive banking models whereby township consumers can open bank accounts and perform basic transactions at local shops instead of having to go to a branch or an ATM.
The Standard Bank model requires the use of a cellphone, and you receive a card that you can use at ATMs and larger stores, whereas the Absa model requires only a card.
“Inclusive banking is a cost-effective model in a market that cannot afford high bank fees or travel costs to access a bank branch or ATM,” Leon Barnard, the head of inclusive banking at Standard Bank, says.
Barnard says he has heard of cases where consumers pay up to R15 in taxi fare to travel to a bank branch to perform a transaction that costs them R3 and then pay another R15 to return home.
“That simply does not make sense. While we do have cellphone banking as an option, many consumers are not yet wholly comfortable with the concept of cellphone banking, so we needed another way to introduce a paperless, low-cost way of banking,” he says.
The Standard Bank inclusive banking model partners with township shops, such as fruit and grocery stores, and uses cellphones as a transacting tool.
Barnard says the bank looked at Brazil, India and Mexico, where inclusive banking has been introduced through low-cost channels.
Standard Bank has just more than 8 000 bank shops across the country where it has partnered with spaza shops, butcheries or local convenience stores to make banking more convenient and accessible.
Daphne Motsepe, Absa’s chief executive of unsecured lending, says Absa has teamed up with merchants, such as spaza shop owners, retailers and local dealers, so that consumers can perform basic banking tasks, such as balance inquiries, deposits and withdrawals.
HOW THE INCLUSIVE BANKING MODELS WORK
Standard Bank
* Open a bank account at a township kiosk staffed by a person who has been trained by Standard Bank.
You can open a bank account that meets all the requirements of the Financial Intelligence Centre Act (Fica) or an “exemption 17” account.
Fica, which was introduced seven years ago, aims to combat money laundering by requiring financial institutions such as banks to ask you for copies of your identity document and proof of your residential address.
An “exemption 17” account requires only that you produce your identity document. However, if you have an “exemption 17” account, you cannot transfer more than R5 000 in and out of the account in a single day and more than R25 000 in and out of the account each month.
* You will be issued with a card that you can use at any ATM or branch. You will also be issued with a mobile bank account number – which is your cellphone number plus one digit – and this will be linked to the account that you have opened.
* You can make withdrawals or deposits or purchases at a participating bank shop.
* To deposit money into your account, present the cash to the owner of the bank shop. He or she will ask for your mobile bank account number. The owner will transfer the amount you have deposited to your bank account via your cellphone. You will be required to enter a personal identification number (PIN) that is unique to your mobile bank account and different to the PIN you use for your bank card. You would use the same procedure for a withdrawal transaction.
* You can transfer money via your mobile bank account to the owner of the bank shop as payment for goods purchased at that shop.
* There are no opening fees and no monthly fees for the mobile bank account. You do not pay any fees to make a “cash in” deposit at a bank shop and the fee for a “cash out” at a bank shop is one percent of the transaction value. The minimum cash out fee is 50 cents.
Absa
* Absa staff with hand-held tablet computers are approaching consumers in shopping malls or other populated areas and asking them to open an account.
* You must have your original identity document with you to open an “exemption 17” account, or, if you also have valid proof of your residential address (a statement not more than three months old), you can open an account that meets all the Fica requirements.
* You carry out InStore Banking at Absa-accredited shops using your bank card.
* You can make withdrawals from or deposits into your Absa account. For example, to deposit R200, you hand the shop owner the cash and swipe your bank card through the point-of-sale machine. You will have to enter your PIN, which is the code you use for your bank card. Absa then transfers R200 from the shop’s bank account to your bank account and the shop owner keeps the cash.
* You can use your card to pay for purchases at the Absa merchant.
* The fees for InStore banking are the same as those normally charged for withdrawals or deposits at an ATM.
WHAT THE OTHER BANKS ARE DOING
Nedbank and First National Bank (FNB) have initiatives to improve access to banking, although they do not have specific inclusive banking products.
* Nedbank. Anton de Wet, Nedbank’s managing executive for personal banking and client value management, says the bank has 148 kiosks at Pick n Pay and Boxer stores where you can withdraw cash or use the Vodacom M-Pesa money transfer option. Nedbank also has kiosks at Cash Build and Build-It stores where you can buy Nedbank products or open accounts.
* FNB. Line Wiid, the chief executive of FNB’s smart solutions, says FNB was the first bank to introduce mini-ATMs in 2003. “Mini-ATMs create access to banking with low installation costs and are located in retail spaces, often in rural areas or at sites where the ATM traffic does not support a full ATM. Fees at mini-ATMs are much lower than at a full ATM,” she says.
For example, an FNB Smart Account holder would pay R5.70 to withdraw R500 at a full ATM and R2.75 to withdraw R500 at a mini-ATM. Mzansi account holders would pay R5 to withdraw R500 at a full ATM and R2.15 to withdraw R500 at a mini-ATM.
FNB has 117 EasyPlan branches in seven provinces, located at places such as taxi ranks. These branches have ATMs with a “real-time cash deposit facility” called ATM Advance, which means there is no waiting period for funds to be cleared, and the cash deposit costs are lower than those at a branch, Wiid says.