Nedbank tries to shed its elitist image

2011-11-19 09:30

Nedbank, long regarded as a bank that caters for the elite and looks down on the poor, is slowly making inroads in its bid to capture a slice of the ­low-income market, where it faces stiff competition from rivals Capitec and African Bank.

Ciko Thomas, managing executive for consumer banking at Nedbank and the man spearheading the lender’s foray into the low-income market, is under no illusion that shedding Nedbank’s elitist image will take a long time.

“You don’t change that image overnight. We still have to go through a long process,”
he says.

Just over five years ago, it was unthinkable that Nedbank would one day open branches in rural towns and townships, where most lowly paid people live. Today, about 161 of its 676 branches are in rural areas and townships, and most of these outlets were opened after 2005.

Last week, Nedbank opened a new branch in Mount Frere, a dirt-poor rural town in the Eastern Cape, a province where the unemployment rate stands at 26.9%, above the national average of 25%.

Nedbank has followed up its branch roll-out by offering new products that are designed for low-income earners.

One of these products is the Ke Yona bank account, which enables customers to transact, borrow and save.

The account, which has a monthly fee of R5, also comes with funeral cover worth R2 000.

“Ke Yona is convenient for low-income earners, but anyone can use it,” says Thomas.

In conjunction with its parent company, life insurer Old Mutual, sister company and short-term insurer Mutual & Federal, and empowerment partner Wiphold, Nedbank is rolling out greenshops, where loans, livestock cover, funeral cover and savings products are offered to poor customers.

At these greenshops, customers are offered micro loans, known as Zakheleni, which many use to start
small businesses.

Says Thomas: “Through Zakheleni, a group of people or clubs can save collectively for six months, after which they may apply for a loan based on the amount they have saved – up to three times – capped
at R10 000.

“We are delighted that Zakheleni has resulted in the creation of more than 700 clubs, translating into 3 500 new Nedbank clients. This is a significant milestone for us as part of our commitment to continue creating a culture of saving in our society.”

One of Zakheleni’s beneficiaries is Eastern Cape hawker Posiwe Kekana, who has used a R2 000 loan from Nedbank to buy more stock to strengthen her business.

“The business is doing well and I am able to repay my debt. The business supports me, my husband, who is unemployed, and my seven children,” says Kekana.

Thomas says Nedbank was growing its customer base in the entry-level market, which comprises low-income earners and middle-income earners. The bank has about 3.2 million customers who are in the ­
entry-level market, earning less than R9 000 a month.

Capitec, African Bank, and major lenders such as Standard Bank, First National Bank (FNB) and Absa are fiercely vying for this highly profitable market.

“We are acquiring about 333 000 clients in this market a year,” says Thomas, who expressed his respect for Absa, FNB and Standard Bank.

“I admire FNB’s innovative spirit and I admire Absa’s size,” he adds.

Absa is the largest bank in South Africa in terms of footprint, with 889 branches. It is followed by FNB (with 801 outlets) and Standard Bank (with 705).

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