Adding the ranks of the unbanked as customers can be a daunting task for any financial institution. For Standard Bank of South Africa, which serves a nation with a large unbanked population, the key to reaching this segment is treating them like any other banking customer, and realizing they cannot be served through traditional banking channels.
Willie Stegmann, an executive with Standard Bank, discussed how the bank partnered with SAP to make significant inroads with South Africa's unbanked population, during a presentation at the International SAP Conference for Financial Services in London.
According to Stegmann, 67& of the adult population in South Africa is unbanked, while 37% also live in rural areas. In many parts of the country, cash is still the preferred financial instrument. However, he added that despite those statistics the population is very tech savvy; most of the population has mobile devices and is "very comfortable with technology."
To better capture this market, Standard Bank created what it calls the AccessAccount -- an account designed to be simple, convenient and comprehensive, Stegmann said. These accounts are offered as a "pay as you bank" model with no monthly fees, as well as premium accounts with different degrees of monthly fees and added services.
To sign up new customers -- many of which live in rural areas -- Stegmann said "AccessAgents" are deployed in promotional tents or at local stores around the country, and can sign up new customers via a mobile device as long as they provide proof of residence and identification.
"This information gets processed and sent to our back end," he added. "Accounts can be opened up in eight to ten minutes."
Customers are then not only signed up for mobile banking, but also receive a debit card, which can be used at "AccessPoints," at around 5,000 locations throughout the country -- usually small retail shops, where customers can deposit or withdraw cash, make money transfers and even buy prepaid electricity or mobile telephone airtime.
"New branch construction is very expensive, so we looked at other means of low cost distribution," Stegmann explained.
According to Stegmann, 5,000 new customers per month have opened an AccessAccount since March 2012. Additionally, another 3.5 million legacy accounts were moved onto the Access system during a core transformation that took place over a weekend in April. The bank migrated on to a new SAP core platform, which Stegmann said will help Standard modernize and expand in certain areas, such as an improved CRM system.
Standard Bank also faces some challenges and areas it is looking to improve upon. Stegmann said about 50% of new Access accounts are activated; the bank is looking to get that number in excess of 80%. Standard Bank is also looking to drive transactions on these accounts to an average of more than five per month per customer.
Ultimately, what makes Standard's initiative to reach the unbanked successful is inclusion, Stegmann said.
"If you are an Access customer, your are formally in our banking systems," he added. "We are not treating this customer any different; they are a standard Bank customer with access to a range of services."