AutoBank E: e-banking for rural South Africans
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CTA. 2003. AutoBank E: e-banking for rural South Africans. ICT Update Issue 13. CTA, Wageningen, The Netherlands
Permanent link to this item: http://hdl.handle.net/10568/57629
by Lincoln Mali Lincoln Mali explains how a local bank in South Africa is extending its network of ATMs in rural areas. The initiative is bringing basic banking services within the reach of farmers.
Just a few years ago, Mr Baloyi from Engcobo, a small rural town in the Eastern Cape province in South Africa, had no bank account and received his salary in cash. The temptation to spend all his money at once was considerable, and his chances of getting any form of credit were slim. No bank would open an account for him because he did not meet the minimum financial requirements. Today Mr Baloyi has a bank account, a basic insurance policy, and he also recently qualified for a 5000-rand loan to start a small business. This was made possible by AutoBank E, an innovative electronic banking service introduced in 1994 by Standard Bank of South Africa, aimed at the country´s low income depositors. AutoBank E was launched in response to the overwhelming need for affordable banking services among the ´unbanked´ - the millions of South Africans without bank accounts, particularly in rural areas. Standard Bank realized that its existing branch network was not suited to delivering banking services to this market segment in a user-friendly and cost-effective manner. The AutoBank E centres offer a unique combination of a fully electronic bank account and personal assistance to build customers´ confidence in the security of electronic banking. Customers can open an account with a deposit equivalent to only US$8 and benefit from a wide range of electronic banking services. All transactions are completed through automated teller machines (ATMs), thus keeping paperwork and transaction costs to a minimum. Products and services AutoBank E consists of a growing network of centres in urban and rural areas, whose staff are specially trained to help those not familiar with banking or who have minimal education. There are currently 145 centres spread throughout South Africa, 83 of which are based in rural areas. At one of these centres, an assistant enters the customer´s details into the bank´s computer system, sets up the account and issues a bank card. The assistant then accompanies the customer to an ATM and demonstrates how to deposit the minimum amount required to activate the account. The customer is also shown how to complete other transactions, such as making withdrawals, deposits, balance enquiries and account payments, and is offered advice on the best way to manage the account. AutoBank E customers also have access to the ATM networks of other national banks, facilitating access to money and banking services throughout the country. AutoBank E has led to a remarkable growth in the use of electronic banking in South Africa. Recent market research has shown that about 85% of bank customers now use ATMs for their basic transactions - a major achievement in a market characterized by low education levels. The E Plan account The main account sold through the AutoBank E centres is the E Plan. This is a transaction account with full electronic capabilities to facilitate day-to-day financial transactions such as salary transfers, deposits, withdrawals, account payments, etc. E Plan also features a savings option, which is a special facility to help customers who may otherwise be tempted to spend all their earnings at once. Another important feature of the E Plan account is that it enables customers to build up a track record of credit worthiness. Standard Bank has recently entered into partnership with African Bank, an established microlending institution, to provide credit to customers who would not normally qualify for a bank loan. The track record that customers build up with their E Plan accounts is used to determine their level of credit risk and the amount of short- to medium-term loans they may qualify for. This record also increases customers´ chances of qualifying for finance to set up and manage a microenterprise in the longer term. Standard Bank´s AutoBank E concept has been hailed internationally for its innovative solution to low cost banking services. The real proof, though, will lie in its ability to adapt to the changing needs of a country in rapid transition. In rural areas this means meeting the growing demand for better and closer access to transaction and credit facilities in a sustainable manner. Lincoln Mali is director of mass markets at Standard Bank.