Poor turn up their noses at Mzansi

2011-12-10 13:58

The Mzansi account is on the brink of extinction.

Launched by major banks in 2005 amid fanfare, the low-cost bank account is quietly being dumped because it is expensive to roll out and consumers are shunning it for affordable new-generation products that allow them to transact more and qualify for bigger loans.

The 2011 FinScope survey, published this week by the FinMark Trust, noted Mzansi’s rapid decline as more and more accounts became dormant.

“The research indicates that banks seem to be encouraging their clients less to take up Mzansi accounts than in 2010. It is also often the case that the banks will persuade clients not to open this account,” FinMark Trust said this week.

According to the FinScope study, Mzansi reached its zenith last year when 5 million customers were reportedly using the account. But the number of account holders plummeted 36% to 3.2 million this year.

Despite this drop, the number of banked South Africans has remained stable, with 62.8% of the adult population, or 21.2 million people, still being served by the banking sector.

Major lenders – such as Standard Bank, First National Bank (FNB) and Nedbank – confirmed this week that there was a shift away from Mzansi to other advanced low-cost options. Standard Bank and FNB went so far as declaring that the Mzansi account was on its way into obscurity.

But the country’s largest bank, Absa, said it had seen a growth in customers signing up for the product at its branches.

Leon Barnard, the director of inclusive banking at Standard Bank, said the lender would stop selling Mzansi from early next year.

“Mzansi brought awareness in the market, but we have moved on since then. Our model is based on including more people in the financial system, much more than Mzansi allowed,” he said.

Gift Manyanga, the chief executive of FNB’s low-cost branches, known as EasyPlan, said customers had been migrating en masse from the Mzansi account to other affordable products because Mzansi carried the “stigma of being a poor man’s product”.

“If the rate of migration from the Mzansi account to other products continues, Mzansi will fade away,” said Manyanga.

“Despite the drop in the use of Mzansi accounts, banks are still catering for low-income customers. New customers also prefer more advanced products than the Mzansi account.”

Anton de Wet, the managing executive of personal banking at Nedbank, said the bank was experiencing a shift away from Mzansi, but he was not sure if this was a signal of the beginning of the end for the product.

“We are still selling the Mzansi account, but we are selling the Keyona (Nedbank’s low-cost product) three times more than the Mzansi,” he said.
Absa said its Mzansi sales were growing not shrinking.

Harriet Heymans, the managing executive responsible for pricing and products at Absa, said she did not foresee the abolishment of the Mzansi account any time soon.

“What is important to remember is that Mzansi works well for a specific sub-segment of customers. These are customers who only require access to basic financial services. We have other products that customers with slightly more sophisticated financial needs can consider,” she said.

“We carefully consider a customer’s needs and behaviour before offering them an account. If their needs are most appropriately serviced with Mzansi, then we will offer the customer the Mzansi account,” Heymans said.

Jabu Khumalo, a research specialist at the FinMark Trust, said: “Postbank is the only bank that is pushing the Mzansi account in the market, but other banks are moving away from it.” 

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