Banks move into Mzansi market

Johannesburg - SA’s biggest retail bank, Absa Group [JSE:ASA], has launched Transact, a simplified affordable banking account likely to replace the government-initiated Mzansi account.

Transact is aimed at customers looking for a basic account, which is easy to understand and cost-effective. It also offers a full bouquet of services.

Arrie Rautenbach, head of retail markets at Absa, said Transact customers would pay no monthly service fees. “No fees when purchasing at till points. No Absa ATM balance enquiry fees. No fees on airtime top ups. And no penalty fees,” he said.

“Transactions will be charged on pay-as-you-transact basis. We have taken the banking services that are important to our entry level customers.”

SA’s big four banks have been steadily snubbing the Mzansi account in the past 18 months, preferring to offer their own variations of the entry-level account.

They have been attracted to that segment of the market after seeing alluring returns gained by Capitec Bank Holdings [JSE:CPI], SA’s fastest-growing low-cost bank.

SA’s entry level market has 15 million unbanked people and Capitec, was the first to tap into this when other bankers thought it was too risky to do so.

Big banks moving fast

Steve Meintjes, a senior banking analyst at Imara SP Reid, said that that Capitec’s strategy of targeting the entry level market had compelled big banks to move fast into this market.

“When many big banks saw what Capitec could do, they moved. This was a natural market evolution,” Meintjes said. “I think in a few years’ time, Mzansi will be seen to have had its job done. It will be over with it.”

The launch of the Mzansi account in 2005 was in line with a commitment by the Financial Sector Charter (FSC) to make banking accessible to the poor.

FNB, a subsidiary of FirstRand [JSE:FSR], South Africa’s third biggest banking group, last month said it had achieved its self-imposed target of opening 150 EasyPlan branches by the end of  December.

Nedbank Group [JSE:NED], the fourth biggest bank, has also launched a new campaign to increase its presence in the entry level banking segment.

Over the next few years Nedbank plans to roll out about 230 outlets which will include personal loan centres and kiosks at retail centres. 

Standard Bank Group [JSE:SBK], Africa’s biggest bank by market capitalisation, has been training people to open accounts in ‘bank shops’ in townships like Thembisa.

The bank shops have a cellphone banking capability allowing clients to do money transfers and buy goods.

Bank-shop accounts allow people to buy products by using their cellphones.

According to the 2011 FinScope South Africa Survey, released a month ago, the usage and awareness of Mzansi accounts have decreased from the 2010 highs.

The FinScope survey said the number of Mzansi account holders plummeted 36% to 3.2 million from 5 million. And 36% of the surveyed individuals had never heard of the account before.