Inclusive financial services
A survey of township residents by Ikapadata, a South African–based research company, showed that 84% of respondents had a bank account and 31% of banked respondents voted Standard Bank as the most popular bank.
(gri FS7 and FS14) Finding ways to include the millions of economically active people in Africa who fall outside the mainstream financial sector is essential to Standard Bank Group’s (SBG) sustained profitability in emerging markets, and contributes to the broader socioeconomic development potential of the countries in which we operate.
To effectively reach and engage this market we must understand the needs and requirements of unbanked customers. Affordability is a key requirement and to reduce the cost of services we look to implement banking models that use low-cost distribution channels such as mobile banking, community retailers and informal trader markets. We also work to create products that are affordable, accessible and simple to use. In South Africa, our inclusive financial services are targeted at a broad spectrum of customers from individuals to small and medium enterprises (SMEs), while in our African operations our focus is largely on SMEs in informal trader markets. Detailed information on the various aspects of our inclusive financial services offerings can be accessed at the links below.
Our efforts include provide our customers with relevant value propositions, product offerings, pricing structures and accessible distribution channels. This is further supported through consumer education so that our customers can make the right financial choices, as well as education, to change behaviour and promote the use of alternative low cost channels such as Cellphone Banking. Challenges in servicing this market include increased competition, regulatory complexities, the number of cash-out facilities and addressing low account activity, as well as migrating customer behaviour to alternative low-cost channels.
Number of Inclusive Banking Customers
During 2012, we simplified our product offering and successfully launched the AccessBanking product suite: AccessAccount, AccessSave, AccessLoan and AccessProtect. We strengthened our low-cost distribution channels to improve access to cash-in and cash-out facilities. At December 2012, we had more than 6 800 AccessPoints in place with 85% being active. In addition, we had over 188 low-cost points of presence such as AccessBanking Centres and extended hour outlets.
We also launched the Standard Bank SmartApp to support Cellphone Banking and we simplified our marketing communication, increased our consumer education reach and streamlined our pricing structure to include pay-as-you-transact and bundle options. Sound governance practices and staff training have ensured that we meet related regulatory requirements.
Our long-term focus is to be the South African leader in financial inclusion through increasing our volumes and revenues while driving down our acquisition, origination and servicing costs. Success depends on strong customer acquisition and our target is to grow our number of Inclusive Banking customers to around 9,2 million and provide access to credit to over four million South Africans by 2015. During 2012, we acquired an average of 140 000 Inclusive Banking customers per month and granted loans to the value of R3,7 billion.
To boost customer acquisition, we implemented the Local Market Initiative during 2012, where Standard Bank employees deliver banking to the underbanked as a community initiative. The sales teams consist of branch staff and mobile sales agents. These teams sell AccessBanking products at organised events or in areas with many potential customers such as taxi depots. Local Market Initiative campaigns are mostly held over weekends and we currently open 26% of our Inclusive Banking transactional accounts at these events.
As the spending power of low-income individuals increases, we will be able to migrate some of our Inclusive Banking customers to middle-market and associated products. At December 2012, our Inclusive Banking customers with a transactional account stood at 6,2 million, representing 71% of our Personal Banking customer base in South Africa. Some 4,9 million Inclusive Banking customer are active.
|Number of Inclusive Banking customers||6 213 049||5 365 974||4 808 605|
|% of inclusive banking customers (as part of Personal Banking customer base)||%||71||59||N/A1|
|Number of new to bank transacting customers||1 695 959||1 356 636||938 052|
|Number of customer that are active||approx||4 942 263||>4 300 000||N/A1|
We continue to deliver on the provisions of the Financial Sector Charter with respect to access to financial services in South Africa. The table below sets out our progress on this pillar which has been verified by independent external auditors.
|1. Access to financial services|
|Transaction products (Mzansi): (Effective access for LSM 1-51)||1 406 319||1 373 964||1 046 200|
|Savings products (Mzansi): (Effective access for LSM 1-51)||1 406 319||1 373 964||1 046 200|
|Transactability coverage (%)||79,32||68,34||68,55|
|Full service coverage (%)||63,09||63,01||63,43|
|Affordable housing loans (cumulative) (Rm)||25 343||21 285||17 460|
|3. Consumer education spend|
|% of post tax operating profit||0,13||0,15||0,24|
|1||LSM 1-5: Living Standards Measure (LSM) 1-5 includes all persons with a monthly income below R4 457 (2011: R4 165).|
|Note: Mzansi accounts include zero balances.|
|Note: To ensure convenient access to banking services, we must provide broader physical access through ATMs with a transactability function, where customers can withdraw cash or view bank statements, within 10km of 80% of people classified as LSM 1-5. Branches, service centres and ATMs with a full service function where customers can transact, as well as open or close accounts and interact with a bank employee, within 15km of 80% of people classified as being LSM 1-5.|
We will continue to focus on offering simple products with affordable pricing structures. We will utilise the new core banking platform to migrate all our old low-income product offerings onto this new platform, continue to build a network of low-cost channels and increase our efforts to shift customer behaviour towards using these channels.
- Accessible transactional products.
- Accessible insurance products.
- Accessible personal loans.
- Consumer education.
- Affordable housing in South Africa.
- Enterprise development.
- Supporting SMEs in South Africa.
- Supporting SMEs in Africa.
- Physical access in underbanked areas in South Africa.
- The youth market.
- Shari’ah banking.