Banking the unbanked for policy and profit

Banks have begun to implement their chosen methods of reaching South Africa`s poor and unbanked - but it`s a risky business.

01 March 2005

Serving the unbanked and underbanked market - the majority of South African adults, who earn R5 000 a month or less - is fast becoming a priority for South Africa`s banking institutions. Since the introduction of the Financial Services charter, banking the underbanked isn`t just about tapping a new market. It`s a policy imperative if the Big Four hope to reach the target of providing banking facilities within 20 kilometres of 80 percent of the Living Standards Measure (LSM) one to five.

According to Louis von Zeuner, group executive director of Absa Group, the Charter`s requirement to get financial products out into rural and underserviced areas doesn`t come as a shock. "I think I can speak on behalf of Absa in saying that I don`t think anything emanating from Financial Services Charter is forcing the banks into anything they didn`t have in their plans. It simply forces the banks to expedite on those plans. It possibly calls for more speed, and a bit more structure and order to achieve the goal as a whole."

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