Mzansi account competitors
I have described elsewhere in this blog the rapid progress being made in the roll out of the Mzansi basic bank account, developed and launched in late 2004 by the big South Arican Banks as part of their Financial Sector Charter obligations. Over 600 000 new accounts had been opened by March 2005, mainly by people never before banked.
However, it is also good news to hear last week of the success of another low end bank account offering which is not under the Mzansi brand: that of small micro-lending bank Capitec. A news report in SA’s Business Day newspaper reported that this small (market cap barely $140m, versus billions for the large SA banks) new (formed in 1999) bank had opened 125 000 new low end debit card accounts of their own in the past financial year, or an average of 10 000 per month. The average Mzansi issuer has opened 24 000 accounts per month in the five months since launch (5 issuers, 5 months), but this is by banks with much larger branch networks and brands than Capitec’s. Capitec took the strategic decision not to label its product under the Mzansi label but offers it as a standard product in the market.
This is good news for two reasons: first, it indicates that there is a strong demand to be banked by lower income people, as I have argued before. Second, the success of Capitec creates healthy competition for the Mzansi issuers, which should keep the Mzansi product specs developing and more flexible. For one thing, the pricing standards on Mzansi devolve to the individual issuing bank this year, having being kept uniform for the first year. It is in the interests of low income banking in South Africa that there is not just one product class for banking unbanked people—even if the product is a good start like Mzansi, the risks are just too high if it were to fail in time.
With Mastercard, Capitec is also running a world first pilot of a pre-paid debit card in a rural area of South Africa. This type of transaction product may prove useful in environments in which on-line communications are not available or too expensive. Low end banking markets need small, nimble innovators like this.
