Standard Bank’s drive to increase financial inclusion by better serving the lower end of the market has seen great success and has revealed interesting insights into the savings habits of lower income earners. Consumers take saving seriously, but go about saving in less traditional ways.
“There is no doubt that South Africa’s level of national saving is far below what it should be,” says Audrey Mothupi, head of inclusive banking at Standard Bank. “However, Standard Bank’s involvement with consumers who either have not been part of the formal financial system, or who have not had their financial needs adequately met, has put to rest the notion that lower income earners are poor savers. What is evident is that different vehicles for saving are used.”
She points to the entrenched culture of stokvels in South Africa as a key example. According to a recent study commissioned by the bank, there are some 800 000 stokvels in South Africa, representing about R 44.6 billion annually. “If you look at savings stokvels alone, there are an estimated 350 000 savings stokvels, with a membership of 5.4 million people saving about R25.41 billion annually,” Ms Mothupi says. “Stokvels remain a distinctly South African method of financial management, but may not always include a financial product, so they may not be part of the formal economy. They allow people to meet their financial needs – whether it is for groceries, school fees, home improvements, or a funeral – in a way that suits their lifestyles.”
She says that it is encouraging to see that consumers are also starting to see the benefits of saving in more formal products too. “Standard Bank’s SocietyScheme product aimed at stokvels continues to see steady growth,” she says.
“Standard Bank last year introduced a new savings account, AccessSave, specifically tailored for individual savers in the lower income market. Since its launch in July 2012, we have seen phenomenal take up, with close to 300 000 new accounts opened between July and December alone. We are especially encouraged by the growth in balances in the accounts, where we have seen 107% growth just in the period since December 2012.”
The account charges no monthly service fee and needs no minimum deposit. “This already addressed a key concern among our customer base – that their savings would be eroded by service fees,” Ms Mothupi says. There is a seven day notice period to withdraw funds from the account to encourage discipline. However, even if all savings need to be withdrawn, the account won’t close. A new deposit will activate the account.
“The account also offers the incentive of a bonus interest payment if customers reach a three month savings goal that they set for themselves,” Ms Mothupi says. “The growth in the balances on these accounts seems to indicate that this is encouraging customers to keep their funds in their accounts to grow.”
Ms Mothupi says that saving with a financial institution offers safety and the benefit of earning interest on funds. “Standard Bank is also making it easier and more affordable for customers to access their accounts, whether it is to deposit funds or view balances. Customers can access accounts at AccessPoints in local traders and spaza shops around the country, and use their cellphone to view balances.”
She says the bank will continue focusing on providing all customers with offerings that are suited to their needs, and also raise awareness about the benefits of saving.