The response of the big 4 commercial banks to the financial inclusion imperative

Leopold-George, Evelyn (2012-03)

Thesis (MDF)--Stellenbosch University, 2012.


South Africa’s Financial Sector Charter of 2003 to 2008 contributed in many ways to financial inclusion of the excluded masses, resulting in a decrease in proportion of excluded excluded from over 50% in 2003 to 23.5% in 2010. Commercial banks around the world have been known to bank the unbanked or downscale using various models. The report investigates the motivation for commercial bank downscaling in South Africa, leading to the various models of downscaling chosen by the Big 4. The reports finds that commercial banks in South Africa are moving away from fragmented methods of engagement of the bottom of the pyramid due to the large market which exists at that segment. This market accounts for on average 50% of the banks’ clients which indicates that banks have been dealing with this market for some time. The recent rise of a Microfinance bank has been credited as the stimulus for the more aggressive approach that banks have taken in recent years. Bank employees believe they have the resources and support to explore models of serving the market profitably while external stakeholder to the bank believe the banks are not geared for the market due to their cost structures and mentality and are therefore not fully exploring the potential in the market.

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