A Brand New Experience In The Townships: Banking

Joseph Raditsele, a middle-aged laborer at a paint company, is exactly the sort of new customer First National Bank had in mind when it opened a branch in Soweto. Raditsele had never had a bank account before and used to keep his savings under his mattress. Then, he began to fear the possibility of burglary. "The money will be safer at the bank," he says.

South Africa's big banks are going all out to woo clients such as Raditsele. It's not that the market is lucrative. But post-apartheid, it's up to banks to lead the way to economic independence for South Africa's black majority. "If people don't use banks, the prospects for this country aren't very good," says Bob Tucker, CEO of year-old E Bank, which was created by Standard Bank of South Africa Ltd. to help fill the void.

The government is pressuring the banks to be agents of change. In recent bidding for the coveted banking business of South Africa's nine new provincial governments, authorities chose the winners in good part based on their commitment to affirmative action.

The marketing challenge is formidable. An estimated 10 million South Africans, mostly poor and black, have no bank accounts. So banks are sending out black staffers who can market banking as accessible, even fun. Peoples Bank is a unit of financial-services giant Nedcor Bank Ltd. that has been repositioned to serve low-income people across the country. It hired Mokela Michael Mokgohloa as an accounts manager to change the habits of neighborhood savings societies around Johannesburg. Such societies pool their savings to buy groceries, pay for funerals, and even build houses. Mokgohloa gets those savings out from under floorboards and into interest-bearing accounts.

Security remains a chief concern for the banks and their new customers. For that reason, nearly all the new banks are pioneering microchip-embedded debit cards. Wary of carrying large amounts of cash in the crime-plagued townships, account holders can make electronic payments for everything from clothing to food with their cards, which automatically keep track of balances. And ultimately, "smart" cards will save the banks money. Costs are lower for automated transactions, and unlike magnetic-strip cards, they bypass a bank's mainframe system.

BARE BONES. Banks are also looking for low-cost ways to handle low-income customers. Dispensing with marble counters and investment consultants, they are focusing instead en the services their new clients need. For instance, Nedcor's Peoples Bank branches offer only passbook-savings accounts and debit cards that allow most transactions to be automated. Checking accounts, credit cards, and mutual funds aren't available.

Unlike E Bank and Peoples Bank, First National Bank hasn't created a separate brand name to serve low-income customers. But it is tailoring its services. Its new Soweto branch is simply a corrugated metal shipping container with a polished wood door, an ATM, and a single staffer to open accounts.

The vast difference between full-service banks that cater to whites and the bare-bones facilities for new black customers has attracted criticism. One bank calls the gap "condescending apartheid stuff." It may be a while before income, not race, determines where South Africans bank. But for now, just introducing the black populace to the joys of compound interest represents progress.

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