Basic bank accounts take off in SA
In October 2004, with great fanfare, the major SA banks launched
a new type of basic bank account under the umbrella brand Mzansi. This brand, carried on all the new debit cards issued, allows consumers to operate their debit cards at all the usual ATMs and points of sale. A key aspect of the product is that it carries no fixed monthly fees, which distinguishes it from existing low end debit offerings. It allows one free monthly credit to the account; and charges for all transactions—the fee scales vary by bank.
The takeup of the Mzansi basic bank account, launched by South African banks last October, has exceeded all expectation, according to a report today in leading daily Business Day: to date almost 600 000 new accounts have been opened, in little over 3 months. As the Banking Council’s Colin Donian, responsible for the Mzansi brand, “90% of the accounts that have been opened are by people who do not have an existing relationship with a bank. They have opened an Mzansi account. So if we have to answer the question "is this going to the right target market, as envisaged?" It certainly looks like that from this initial data.”
I await with interest a more detailed analysis of the typical Mzansi user profile. However, the early success is important, since it starts to create positive network effects: the more people with Mzansi accounts, the more useful the account is as a means of transferred value between people, when new cost effective technologies such as cell phone enable P2P payments, are enabled.
However, one of the results of Mzansi may be unintended: the largest issuer of Mzansi cards now is the state owned Postbank. Moribund and struggling for years to find its niche, maybe that institution has found it as a provider of basic bank accounts. The facility for others---large banks who are the only other issuers today to new entrants-- to compete under the Mzansi brand is important to preserving the vitality of this new low end financial services brand.
