Finding the right financial products to serve the underserved
Financial inclusion remains a key issue in South Africa, and promoting real inclusion is critical in enabling more people to improve their quality of life, says Simphiwe Phakathi, Executive Head of Sales and Distribution at EasyPay Everywhere. Financial exclusion is associated globally with persistent poverty.
“At its most basic, the issue is that so many people remain underserved by traditional banking products, and so miss out on all the benefits that come with access to a modern banking system,” he says. “But the deeper challenge, the underlying cause of this financial exclusion, is that many people can’t access the financial products they really need and can afford.”
“It’s not that the low-income segment of our population don’t see the benefits of banking. True, some have trust issues, but the big barrier is that they don’t see financial products that are designed for them.”
The financial sector in South Africa remains dominated by the Big Five banks. While some 85% of adults have an account, many of these are using their accounts merely “as a post box”, to send and receive money. They don’t see the value of keeping the money in the account.
Some 12 million South Africans receive permanent social grants, that’s approximately 20% of the population dependent of social assistance. The numbers are actually much higher as some people are eligible for more than one grant and there are also large numbers of people receiving Social Relief of Distress grants. This large body of grant recipients need partners that really understand their needs, and financial products and services that help them stretch their social grant to the maximum.
EasyPay Everywhere sees this customer as more than a social grant recipient, we work with our customers to understand their financial needs and goals. As a result, we at EasyPay Everywhere have created products and services that meet the customer needs in the communities we serve. We plan to continue to work closely with our customers to provide value in our products; EasyPay Everywhere bank account, lending solutions and insurance products.
“EasyPay Loans, our lending offering, offers customers a way to access credit cost effectively. Responsible debt is one of the most powerful tools people can use to improve their lives, but conventional credit is often too expensive for this market, while unregulated lenders often expose customers to unscrupulous practices and exorbitant fees” Phakathi observes. “Our loans product was crafted to make it both affordable and to eliminate the abuse of credit that lands so many people in a debt spiral.”
Consumer research shows that access to no-nonsense, easy-to-understand and affordable credit is something that customers value very highly. Typically, it is used to deal with exceptional or unexpected expenses, to make home improvements or to start a small survivalist business.
“Borrowers can only get a new loan once the old one is paid back, and over 70% of them are repeat borrowers,” Phakathi says.
EasyPay Everywhere’s’ funeral insurance is targeted at the recipients of social grants. As with the other products, the offering was designed with the market’s needs in mind. The offering covers EasyPay Everywhere customers, their spouses and dependent children, but the cover is also available to pensioners between the ages of 60 and 79 who might well be primary caregivers to their grandchildren. It can also be purchased to cover the customer’s extended family. The available cover amounts are between R5 000 and R30 000.
The final piece of the financial inclusion puzzle is distribution. Phakathi says that EasyPay Everywhere lives up to its name because it is in the communities, alongside those who most need such services, largely in townships and rural areas. By contrast, conventional banks are located in business centres and so travel expenses are incurred to reach them. The company also uses gazebos to have an ad-hoc presence near SASSA locations or in community centres, making it easier for customers to get things done all in one trip. At present, there are over 230 EasyPay Everywhere branches nationally, in addition to pop-up branches available at regular sites, retailers and community spaces. “We’re also committed to servicing our customers through multiple channels, including low-cost digital and mobile channels – making their lives easier wherever we can” says Phakathi. EasyPay Everywhere provides loans, statements, balance checks and banking services via mobile App and USSD as well as services customers through its voice branch, social media and contact centre servicing and support channels.
“We are where the people are, we work closely with them to understand what they want and need,” he says. “People are incredibly innovative, and if you give them the right products, they will use them to leverage their slender means in many different ways, and in the process, this will help make things come together in their lives Easynto Ziyahlanga. By helping more people access the financial products they really need, products that help avoid over-indebtedness and remove financial risk in families, the economy benefits, and we can begin to reduce the terrible inequality in the country—these are the true benefits of financial inclusion.”