The influence of income on households and the role of banks

Wealth is still defined or determined in many black African communities as the amount of land and livestock that one owns. It has to be said that land seems to be the most important part of wealth, since the belief is that access to land provides access to other needed resources. A man is able to build a home for his family, till the land for food and have grazing land for his livestock. The land also guarantees that there will be room for married sons to build homes for their families within the village, community and clan. The ownership of livestock, especially cattle is still very important in the lives of many black African families. Whilst, the accumulation of wealth in cash, material things and shares appears to be the new definitions of successes, evidence points to the conclusion that wealthy black African men that live and work in the cities are investing in farms and breeding cattle, sheep, goat and other livestock. Many of the older wealthy black Africans retreat to these farms during weekends or holidays and these farms are also earmarked for retirement havens.    

Income and the ability to purchase simple goods and services are pivotal for all households. The lack of income can be a real disabling factor for people that are in charge of households. For many people, especially those living in closely knit communities, the lack of resources to purchase food and other household items can erode their perception of self-worth and negatively affect their human dignity. It is understood that whilst people can be generous and be willing to assist those that are struggling, the dependency should not last for over a long period of time. Community members get fatigued from providing ongoing support to able bodied persons that are capable of supporting themselves, yet continue to look to others for material support.

The rise of income in South African households

If the increase of low cost and subsidised housing developments and the spread of new bonded housing communities are a sign of an economy that is growing and benefiting all the people of South Africa, is any thing to go by, it can be said that the democracy also brought about an improved quality of life for South Africans across the country. A visit into many urban and rural communities will introduce one to what is commonly referred to in the townships as “extensions”, the new houses that are nearer to the old areas. In most cases, it takes the availability of income to enable people to afford to move into new homes. New homes come with the need to buy some new furniture, fittings and other house wares.

The rise of income classes in black African communities

The fact that many black South Africans have since 1994 experienced rises in income cannot be disputed. There might be those that argue that the attainment of a living wage is still distant. Influential and community leaders in the urban and rural communities of South Africa are in agreement that the rise of incomes and availability of greater opportunities for black South Africans have also brought about some “class system”. It appears that the issue of classes is going to be a subject of heated debate in years to follow.

The facts about the African middle class has over the years given rise to robust discourse in some sectors, while in others it provided for cynicism. Analysts in the various forms and types are struggling to reach broad unanimity on the size and general character of the African middle class. The middle class can be broadly defined as the social class that comprise those members of society that are not poor and yet not very wealthy. It is the business and professional people that own businesses or work in companies and other institutions as professionals. The Human Sciences Research Council has in 2004 reported that the African middle class is comprised of 2.5 million people and some interest bodies and institutions have placed the numbers above 2.5million and others believe that numbers presented by the Human Research Council are very high. The upper class is what is referred to as the super-rich, the elites, the owners of wealth and other resources. African people have in the ten years of democracy increased, at varying levels, their numbers within these class categories. However, according to a report released by the Bureau for Market Research (UNISA), there is still reason for cautious celebration. The report states that in the period from 1995 and 2000, real personal disposable income for Africans increased annually by 2.7%, whereas that of Whites increased by 1.1%, 2.8% for Indians and 2.1% for Coloured.

 It is interesting to observe that people are not willing to categorise themselves or be categorised under any class. Even those that are willing to reveal their income levels are quick to refuse the categorisations of low class, middle class or upper class. Those that earn R 7000.00 and above per month refuse to be labelled as middle class. Not that they are comfortable with being labelled as the lower class either. It appears that in the minds of many black African people these categorisations have some uncomfortable resonance with the apartheid past of South Africa and the association of classes with the White and elite communities of South Africa. The belief is that the upper class lives in Sandton (Gauteng), Bishopscourt (Western Cape), Stiltes (Mpumalanga), Umhlanga Rocks (KwaZulu-Natal), Beacon Bay (Eastern Cape), etc. The lower class is associated with farmers and artisans that live in rural towns and poor city neighbourhoods. It would be interesting to observe over time whether black Africans will accept being called the Black Diamonds, a label coined from a research project by Research Surveys. A company called TGI has selected to refer to the same market as the Onyx Market.            

If the middle class, or whatever one chooses to call it, is at all critical for successful market segmentation, marketing strategy formulation and planning by advertisers and marketers, there is no doubt in the minds of most people that the black African middle class is growing and is set to be a significant contributor to the profits of many products and services and the growth of brands. However, marketers and advertisers need to be careful not to treat the results of these surveys as a new phenomena that has recently become obvious to marketers and advertisers. These are people and households that have been in existence for a long time. The marketers and advertisers, out of ignorance or sheer disregard, have chosen to believe other things about these people.

Education as a driver for the changing economic environment

Training systems such as ABET, Adult Basic Education & Training, Skills Training and the broadening of educational opportunities, combined with a more equitable employment environment and improved salaries have led to a rise in rural people with incomes that are higher than ten years ago. The mushrooming of registered and unregistered colleges in the urban and rural towns has produced large numbers of graduates with various types of certificates and diplomas. Unfortunately, some of the certificates and diplomas have been issued by unaccredited colleges, and therefore mean very little in the job markets, other qualifications are in the skills that are less sought after.

Government programmes and entrepreneurship    

The increases in new opportunities that are related to the department of public works and other governmental programmes have seen new types of entrepreneurs emerge in the urban and rural areas. Entrepreneurs have also registered various kinds of companies to benefit from government tenders. Many rural communities continue to build schools or clinics out of their own resources and donor funding. Government, through institutions such the DBSA, Development Bank of Southern Africa, and NDA, National Development Agency, is creating a better life for many rural communities. Today enterprising rural people are able to become involved in the building of roads, installation of electrical networks and the building of schools and clinics. This is contributing towards the creation of a new aspirational class with the requisite income to access goods and services, which were previously unknown to rural and urban black African communities.

           

The acquisition of cars and such items as designer clothing and “international” music CD’s is becoming part of the cause in these areas. Pringle shirts and jerseys, Nike trainers and Levis jeans are assuming a highly visible profile in rural areas. In some of these areas, in the past, washing of clothes and personal bathing was done with a cheap, all purpose soap known as “blue soap”. This has changed. In my travels, I observed that people in rural areas use the same washing powder brands and bath soap brands that are popular in the townships. The same goes for other basic household goods, such as toothpaste, shoe polish and margarine.

Income controls the patterns of consumptions

The decisions households make in selecting which major purchases to make first are still a subject that is not well defined. Some households might purchase vehicles before a fence, garage or car-pot is built, others buy music systems and television sets ahead of acquiring lounge suites or tables and chairs. Homes have garages, yet they do not have vehicles. These garages are usually rented out to tenants needing accommodation or simply utilized as extra storing facilities. For example, the BMW advertisements that shows a top of the range BMW model parked under a corrugated shed next to a typical township four (4) room house.

The practice of parking vehicles next to the bedroom windows of the houses is common in the townships, because these households have cars and do not have fences or garages. The bedroom windows provide the best form of security possible. It is easy to establish that the value of many of these houses are usually exceeded by the value of the vehicles purchased or that the rentals for the houses are very low, that is if the given households do pay rent.

Bulk buying saves money and time

The concept of bulk buying and saving has led to many households keeping chest-freezers and upright fridges. Meat, chicken and other frozen products are purchased in large quantities to avoid making similar purchases during the month or paying less per unit cost by bulk buying. In some instances these chest-freezers and fridges are kept in dining rooms, lounges or even bedrooms.

There are households that have more than two refrigerators or chest freezers and yet have no spare or extra room to house these appliances. It is common occurrence to find the above appliances being stored in the bedroom, dining room or the section that was meant to be the garage for a car.

However, there are some critical differences. Items such as all purpose household cleaners, furniture polish, air freshener and fabric softener are used by the relatively well to do in these communities. Also, food items such as frozen vegetables, cheese, cold meat and ice cream desert are used by a limited number of rural people. People in these areas tend to use their refrigerators to store bulk meat, tend to buy eggs in large trays, tinned foods (e.g. baked beans, tinned fish) in cases.

The value of LSMs in how purchasing decisions are made

It is mind –boggling to come across households in the townships and rural areas that spend their income in ways that are totally out of kilt with what the LSM (Living Standard Measurement) categorisation would suggest. A large number of households in the townships of Lekazi (KaMhlanga) and Matsulu spend more than 10% of their income on DSTV subscription. Many of these houses hardly have plastering and decent painting on the interior and exterior of the walls of the houses, yet have a satellite dish on the roof. It is understandable that they probably do not have a choice but to subscribe to receive satellite television, if they want to receive a clear broadcast signal. The above areas are surrounded by hills and small mountains.

The above observation is not unique to DSTV. It is known that a number of households in the townships and rural areas spend their income on premium brands even where they have a choice of less costly substitutes.

I do not believe in the LSM consumer categorisation system. But within that system, the family would be in the 6-7 categories. The father is a cleaner at a local library and the mother is a domestic helper. They do not use English in their vocabulary. They have one child who is at the University of Cape Town, one in matric and one in grade nine. The children speak IsiSwati amongst themselves and their parents. They are staunch Christians and one Wednesday evening, I attended a Bible Study with them. The Bible was debated robustly and in a very educated manner. This was all done in IsiSwati. It was refreshing to see how educated the language was, if one may put it that way.

The choice of brands and township culture

The buying behaviour or pattern of the people in the townships of South Africa makes the conclusion on how households or individuals will spend their hard-earned income impossible or a challenge to map onto a set rigid scientific model. Young people that come from low income households are known to possess very expensive tastes when it comes to the choices they make in buying shoes, sneakers, belts, shirts or a simple pair of jeans. These have to be recognisable brands and they should preferably be manufactured in the US or UK. These countries are known to be producing “imports” and therefore possess superior quality products.

There are brands that have been defined by manufacturers and marketers as falling under higher LSMs, but these brands have for some ‘strange’ reasons found themselves in homes that low are income earners.

It is also interesting to note how premium and low-priced brands are able to live in the same cupboards in many households. King Korn Mabele and Lucky Star pilchards, products that are often associated with the rural and poor communities, sharing the cupboard with brands such as Mrs. Ball’s chutney, Weet-Bix, Nestle Hot Chocolate and Ouma Buskeit, products that are associated with higher LSMs and wealthier households.        

The availability of credit to individuals and households

Individuals and households, more so in the black African communities, have over the years expressed concern that financial institutions have not been helpful in granting suitable banking and credit facilities to black Africans. This seemingly “anti-black Africans” position by financial institutions has also raised the fury and discontentment in the labour unions, who have called for state intervention in forcing banks to have a more welcoming attitude towards the black African people. Black African business organisations have on numerous occasions also engaged in meetings with banks to persuade them to have a newer perspective towards the black African people. The lack of security is often cited by financial institutions as the main obstacle to accessing credit from banks.

The lack of support or interest by the banks for the lower income groups has created a market for micro-lenders and other unscrupulous loan grantors. The micro-lenders seem to have simplified the requirements to accessing the creditworthiness of people in the lower income groups, those that are commonly referred to as the “unbankable”. Micro-lenders are perceived by the people that access their facilities to be charging very high interest rates. But people in the lower income groups continue to access the loans micro-lenders provide because of the minimum hassles they experience when dealing with micro-lenders. The design, architecture and the business language spoken in the conventional banks are geared at the high end income group persons. The lack of proficiency in English is a barrier for the low end income groups.

According to a study conducted by the FinMark Trust, 22% of South Africa’s urban and peri-urban population is fully banked, 37% is partially banked and 37% is un-banked. The fully banked is comprised of individuals that have an ATM card or savings account, and in addition a cheque account and or a credit card or transaction account. They have at least completed secondary education, and many have either completed or part completed tertiary education. The study further defines these people as aged 35+, they live in suburbs, they are Asian or White, they are in LSMs 8-10. The partially banked is comprised of individuals that only have an ATM or savings account. The equal numbers are said to be found to have completed secondary and tertiary education. Age is 25-35; they live in informal and township areas. They are mostly black, but remainder show almost equal numbers across Coloured, Asian and White population groups. They are in LSMs 3-8. The un-banked are said to have no ATM or savings card. They are “less educated”, all ages and reside in informal areas and townships. They are mostly Black and Coloured in LSMs 3-5.

The rise in social groups such stokvels, burial societies, family societies and grocery clubs points to the existence of money exchanging hands amongst the groups that are defined by banks and similar institutions to un-banked or un-bankable. The ability to purchase and pay subscription fees or instalments for items such as cell phones, DSTV, motor vehicles, clothing, furniture and appliances should be an indicator that there are high numbers of people that should be customers of banks, yet remain out of the banking family. In recent years, it appears that banks have begun refocusing of the previously ignored black African population. For example, Nedbank, through its Personal Loans division seems to be gearing itself to attracting and servicing the previously un-banked market. The television and print campaign featuring the television actors and comedians Joe Mafela and Mlangeni Nawa, popularly known as Sdumo and Laqhasha respectively, is bold enough to communicate at a level and in a manner that is understood by many in that target market. The print advertisement follows on the television commercial that shows Laqhasha, as a loan shark or debt collector, entering Sdumo’s workplace or home with a pick handle. Laqhasha swings the pick handle in a threatening gesture. Sdumo with panic and fear in his eyes, he mentions that in his recollections, the debt has been repaid. Laqhasha reminds Sdumu that interest is usually charged over interest and therefore he still owes more money. Loan sharks, Mashonisa, unregistered micro-lenders, and their modus operandi are well known by most in black African communities. It is a known fact that when one fails to pay one’s debt to a loan shark, violence, assault and even death can be meted out to one. The Nedbank print advertisement shows a fearful Sdumo raising his hands in surrender with the pick handle resting on his chest under the chin. The line, There are safer ways of getting money, works well with image.

The ABSA Micro Loan print campaign speaks directly to one of the reasons people would want to access micro loans. The advertisement utilises imaging and messaging in a very clever, simple and creative way. This type of posing for a photo and image can be found hanging on the walls or in photo albums of many black African households, therefore, the association with the target market would be very high and the advertisement would have good retention potential. The advertisement features a happy-looking and handsome young man that is dressed in a style associated in the target audience with a coming-of-age, succeeding or upwardly mobile young person. The diamond patterns on the jersey and the socks are associated with the Pringle brand that is known for quality and premium pricing. The two-tone shoes are associated with the quality shoe brands such as Viking and Florsheim. The hat is an indicator that “I am not a boy”. It is worth noting that in some communities of the Eastern Cape, young men that have come out of initiation schools would be dressed in this type of khaki trousers and shirts and a hat. Such young men are no-longer regarded as boys in their communities and are welcome to join other men in the discussion of important community issues and can share beer with older men. The line, There’s a good life after an Absa Micro Loan, works well with the image and the copy that goes on to read, With a Micro Loan from Absa, your tomorrow starts today. So why choose any other loan when you can get the most affordable loan in the market…Micro Loan from Absa. Izokuphilisa. Izokuphilisa can be loosely translated to mean that it will keep you alive or it will help you succeed. The offering of cellphones to those that apply is also a great idea, since cellphones and the ability to have more than one cellphone are popular in this target market. One wonders whether the choice of location, Ghandi Square, in Johannesburg City, carries another deeper message!  

Other compelling reasons to take a loan

Households indicate that are numerous reasons that compel them to take out loans from banks, micro-lenders, loan sharks and stokvels. It has to be noted at this stage that it is not common practice to approach the stokvel group to request a loan, unless if the group on its volition decides to intervene and assist a member that has a financial problem Members of stokvels join the groups knowing what the unwritten rules are. The inability to pay one’s dues to the stokvel can be tolerated, but members choose not to owe money to the group.

Households indicate that they would look for a loan to pay for the following, in order of importance:

·      Child’s education

·      To buy food

·      To start a business

·      To buy a home

·      To pay for a funeral or wedding

·      To pay for medicines

·      To buy furniture and clothes

·      To pay a long debt

The need to take a loan to pay for the education of a child or children appears to be most important in the lives of black African households. The priority is also informed by the belief that education is an inheritance that every parent should provide for his or her children. Some families would vow that they would rather go hungry than comprise the education of their deserving school going children, others believe that parents should do everything in the power to find ways of paying for the education of their children. Education is seen by many parents to be the only way available to them to pluck their children out of poverty. Women can be seen in the urban and rural roads of South Africa, walking their children to and from school. There is a Sesotho saying that goes, Mme o tshwara thipa mo bohaleng, loosely translated as, the mother holds the knife on its sharp end, meaning that a mother will do anything to protect or look after her children.

The responsibilities of providing food to the household is a responsibility that first and foremost sits on the shoulders of fathers, however, many households have unemployed fathers or have single mothers that have to fend for the children. Parents would go out and search for the means of providing food for their children. The need to find a loan to buy food is usually a measure of last resort, when all else fails. The responsibility to feed one’s children supersedes the risks involved with borrowing money from the loan sharks to buy food. This challenge is alleviated by grocery stores, butcheries and food outlets that are unwilling to give credit to households that are unable to pay for food. Government’s child support grants and food parcels have become a necessary and much needed intervention for many homes in the urban and rural areas of South Africa.   

The loans taken to start businesses are viewed by many to be ways of being self-employed, growing wealth and living good lives. There is also an immediate belief amongst these entrepreneurs that the businesses are going to be successful and the loans would be repaid in no time.

The need to provide shelter for one’s family is very important to many people. The ownership of a home is regarded as a goal that has to be achieved at some point in life, and the sooner the better. Ownership of a home becomes part of what could be seen as a more secure life, devoid of the uncertainty that the family could some day be asked by the landlord to vacate their home.

The occurrence of a funeral or wedding can be a perfect indicator of how financially prepared families are in meeting the demands of a funeral or wedding. These are times when families contribute financially towards making it possible that the high expenses of the funeral or wedding can be met. The inability to finance a burial or a wedding is viewed negatively and that comes with some level of embarrassment. It is common for family members to include their siblings and or parents in their insurance policies, to ensure that when death takes place, the policy can provide the required income.

Healthcare is a matter that bedevils many households. Access to high quality and convenient healthcare depends on the ability to pay. The strain that HIV and AIDS are having on many households is set to require higher levels of income for medicines and general healthcare. Communities in the urban and rural communities of South Africa have experienced the scourge of the pandemic.

The kind of furniture a home has for many years becomes a status symbol for homes in the urban areas of South Africa. Rural homes are undergoing varied standards of transformation. The deco and western constructs of home improvement and style have encroached into the homes of even the most rural of communities. The furniture styles and decorations that are commonly found in the urban homes of South Africa are having major influences on the types of furniture that are going to be seen even in huts in rural South Africa. This transformation brings with it the need to have more income or access to credit. The impact modern furniture has in rural homes also matches the type of clothes people in the rural areas have in recent years been purchasing. Even in the very traditional communities, western or modern clothing has taken over or it is combined with traditional regalia to produce newer clothing trends.

The rising levels of debt besieging even the most affluent or educated of people of South Africa is being experienced in low income groups. In some areas it is becoming apparent that people are using debt to service other debts. Micro-lenders and banks are making loans available to people, some of whom use those loans to pay for furniture and clothing accounts.

The repayment of loans and credit                    

The repayment of loans and debts accumulated from the credit facilities that are made available by various financial and retail institutions have become monthly responsibilities that many households have to service and eventually settle. Consumer education on debt servicing and credit in general are areas that appear to require some attention and the assurance that consumers will be educated and informed about the role of credit and the responsibilities that arise out of having debt, including the consequences of not servicing debts as agreed with the credit grantor. The easy access to credit from various retail stores and instalment credit from furniture stores and other grantors of such facilities has turned many households into slaves of these credit grantors. For these families, money received by the households as salaries and wages goes out to cover the debts as soon as it is earned from working for hours, days, weeks and months.

It is very clear that the levels of debt many people find themselves in, makes it impossible for these people to pay all monthly repayments and instalments as and when these fall due and payable. The only way of servicing all the debts means that some form of staggering the repayments to the various creditors has to take place. This means that the creditor or instalment that has been paid in the current month will not be paid the next month, because the previously skipped instalment must be paid. In the minds of the people that have skipped paying one month, no offence has been committed because the intention to pay the instalment is there, albeit the next month.  Unfortunately, it does not look like creditors are aware of this system of staggering payments and therefore taking judgement and listing the account holders with the credit bureaus. This has often led to an unnecessary breaking down of the relationship between the credit grantor and the account holder, to the detriment of both parties. For example, organisations like Telkom have been quick in cutting the line when the house telephone account goes into arrears, with the hope that the account holder would rush to pay the account and have the line restored. Unfortunately, with the introduction of cell phone technology and the easy access of this technology by people, the motivation to pay for an account that has already been suspended is not high enough to warrant the effort to pay.

The National Credit Act

The introduction of the National Credit Act No. 34 of 2005 (NCA) has been received with mixed feelings. There is a section of the consumers that view the NCA will protect the ordinary consumer from being strangled by debt and the other emerging view suggests that the NCA will result in more people being deprived the opportunity to access credit.   

The National Credit Act document signed by the President of South Africa states very boldly that the Act is geared: 

To promote a fair and non-discriminatory marketplace for access to consumer

credit and for that purpose to provide for the general regulation of consumer credit

and improved standards of consumer information; to promote black economic

empowerment and ownership within the consumer credit industry; to prohibit

certain unfair credit and credit-marketing practices; to promote responsible credit

granting and use and for that purpose to prohibit reckless credit granting; to

provide for debt re-organisation in cases of over-indebtedness; to regulate credit

information; to provide for registration of credit bureaux, credit providers and

debt counselling services; to establish national norms and standards relating to

consumer credit; to promote a consistent enforcement framework relating to

consumer credit; to establish the National Credit Regulator and the National

Consumer Tribunal; to repeal the Usury Act, 1968, and the Credit Agreements Act,

1980; and to provide for related incidental matters.

Even as early as three months after the introduction of the NCA media reports have been unanimous in suggesting that the new national credit act is having an adverse reaction on the sales of property, the purchase of vehicles by the middle and low income groups. Consumer groups believe that South Africans have always been over-borrowing and therefore the national credit act would automatically ensure that access to credit is curtailed. The proponents of the national credit act hold the view that the national credit act was designed to project the ordinary man in the street, the consumer.

  

The location of and access to financial institutions

Access to finance and the services provided by financial institutions have always been the privilege of the white community. Even the locations of the banks have been skewed in favour of the white customer. Black African people have over the years had to travel to the towns and cities to access financial institutions. To this day the distances that black people from the townships and rural areas have to travel remains very long. For the majority of the township and rural folk, transport to the towns and the cities takes the form of donkey carts, taxis, trains, busses, bicycles and motorcycles. The distances from some of the townships and rural areas can range between five (5) to eighty (80) kilometres. According to the FinMark Pilot Study, 20% of the fully banked claim they always use public transport to get to their banks, and 12% use it sometimes, compared to 65% of the partially banked who claim they use public transport always and 12% use it sometimes. The study goes on to indicate that the average cost of a trip to the bank by public transport is given as R5.00 – R6.00, and this is most mentioned in LSM 6. It is noted that the FinMark Pilot Study excluded the rural areas. A study conducted on behalf of the National Department of Transport states that a quarter of households that use public transport spend more than 20% of their income on transport.    

Banks in general are regarded as unfriendly and anti people in the low income groups. The facts are even more pressing in the plattelands and rural towns where people from the rural communities feel that the banks nearer to their communities treat them as if they do not want to do business with them. Language can be a real barrier when Afrikaans speaking tellers and bank staff in these areas refuse to speak English or a local African language. It is very evident from the promotional material, brochures and other communication tools that the message or the content is not intended for the lower end of the market or people that are unable to converse in English and Afrikaans.

Concepts such as interest, bank and withdrawal fees, credit and debit are not well understood by many people, especially the less educated and lower LSM categories. This lack on knowledge of the language of banking and finance does not seem to affect the higher LSM as much as it affects the lower LSM. People with large amounts in banks cannot easily notice the R50.00 fees deduction from their account or choose to ignore it because they hope that the interest would at some point offset the fees. Whereas the individual that banks R 1 000.00 into their cheque account would notice the next day or when they check their balance that it is now sitting at less than the R 1 000.00 that was deposited a day or two ago. It appears that banks spend very little effort in explaining these misunderstood deductions and rely on providing brochures that are meant to explain these fees and charges. According to the FinMark Pilot study, 62% of the unbanked that used to have an account indicate that they stopped banking because they felt that their money is taxed by the bank. 57% felt that they pay to keep money in the bank, 55% believed that the money in the bank does not earn interest, 53% think that banks are not always safe places and 52% were frustrated by not being able to access their money immediately.

The major banks have made tremendous strides in providing ATM banking facilities in the many townships across the country. These ATMs can be seen in every major township and village, placed at petrol filling stations, taxi ranks and other places that have high numbers of people. FNB (First National Bank) also launched a mini-ATM into the various business outlets in the urban and rural areas of South Africa. The mini-ATM is portable enough to place on the counter in the shop or tavern. The concept behind the FNB Mini-ATM is that account holders would go to the outlet, swipe their cards, insert their pin number, specify the amount required, receive a voucher from the machine, sign the voucher and hand it over to the shopkeeper, shebeener or business owner. The business owner would then give the cardholder cash equalling the amount stated on the voucher. The business owners who accepted to have the mini-ATMs placed on the counters were motivated by the belief that cardholders would find reason to purchase products and services from the outlet or be able to stay in the tavern and enjoy their favourite beer or brandy. Whilst the idea from FNB was well conceived, it appears that there was no adequate planning for the number of cardholders who would utilise the mini-ATM and access cash. The majority of business owners that had the mini-ATM in their business indicated that they would in many occasions run out of cash to dispense. It also did not follow that the cardholders would buy products and services from the outlet wherein the mini-ATM was located. The other reasons for the inability to have enough cash to dispense were created by the cash based trading relationship suppliers of essential stock items have with the outlet or business owners. For example, the outlet or business owner needs cash to purchase soft drinks, bread and milk. The business cannot operate effectively without the availability of such essential products, and therefore the payment for these items is prioritised, above the need to dispense cash to the cardholders. The FNB mini-ATMs have worked very well in shebeens and taverns that have sit-in clientele; because the patrons withdraw cash to purchase their favourite beverage and sit down to enjoy themselves. This allows for some form of the circulation of the cash.

Banks are still the best places to keep money

It can be said that even though respondents or people in households express a number disappointments with banks and the services they offer, banks are still perceived as being a trusted and reliable friend for money and saving. According to the FinMark Pilot Study, when raking the nine (9) most preferred methods of saving money, 59% of the fully banked mentioned insurance policies as the most preferred method of saving money, followed closely at 58% by those that mentioned the buying of property, 52% mentioned bank saving accounts and 49% indicated that retirement annuities are the preferred methods of saving money. The picture changes somewhat when the partially banked are analysed. 64% of the partially banked preferred savings account, 34% believed that bank fixed deposits where ideal in saving money and 21% indicated that buying shares was the preferred method of saving. The unbaked have no bank account, but 55% indicated that they would keep their money in the bank, 44% would choose the Post Office Savings account, 39% believed that burial societies are the preferred method of saving and 33% mentioned that they would rely on their stokvels.

It is very clear from these findings in the FinMark Pilot Study and the observations made during the Brandpilgrimage that the banks still have the greatest potential in bringing into banking family the many people that are still out in the cold. However, the current face of the banks and their modes of doing business have to be adjusted and fine-tuned for these people.

The misconception that the image of a safe or vault represents the same values or a sense of safety and security for the money deposited needs to be balanced with correct messages sent with the marketing and advertising produced by banks. Whilst the image of a safe or vault can mean: Safety and security for the money you have deposited with us, in other communities and people the image of the safe conjures up the difficulties that they might have in trying to access their savings at the time when they need to. The fact that people need to give notice over a period of time before they can access their savings does not sit well with many existing and potential banking clients. In the views of the above people, life’s events are difficult to predict and that planning for the future should also come with the ease of accessing one’s savings or investments when that unforeseen mishap occurs.

The levels and the types of crimes that have besieged the banks have refocused the banks’ priorities towards more security and anti robberies strategies and in many cases this inevitably takes place at the expense of what should be a warm, transparent and customer-friendly banking environment. In many banks thick glass separates the tellers from the people that deposit their monies and investments with these banks. Conversations between the bank and its customers are conducted through a gap or tiny holes in the glass. For some customers, this means that when the criminals enter the bank, the tellers will be safe behind the thick glass and the robbers will interact freely with the banks’ clients or the people in the bank at that unfortunate moment.