Reaching Out To The Unbanked
South Africa, with a population of 40 million people has 16 million people who do not use the services of a bank. And it’s not alone. More than 2 billion of the world’s population remains unbanked. Considering that countries like South Africa are counted as emerging markets, what is it that banks should do to tap this segment? Lance Gourlay, corporate accounts director at CR2 talks about how instead of cannibalizing each other’s market share, banks must move to reaching out to the unbanked, after understanding the sensitivities of their perspective. Gourlay cites the example of his friend who while working in a region in South Africa, amidst a settlement of 25 thousand people, never came across a single non-payment, or even a late payment. What this may mean is that banking is still to change people’s mentalities, and make them understand the value of banking and the effects it can have on them, their lives, their families and their communities. And not just in developing countries. It comes as a surprise that 50 million people in the United States are also unbanked. In this very interesting video, Gourlay touches upon various interesting facets like banks using technology, innovation, financial literacy education, getting the right framework in the right place and most importantly, understanding that getting the bank to the people is more important than getting people to the bank. Banks in India seem to be a little ahead in understanding this segment. Last October, ABN Amro’s microfinance department had succeeded in providing basic financial support to 500 thousand underprivileged households. Tamal Bandhopadhaya talks about how targeting the unbanked in India will be lucrative, the challenges that are faced by banks and the uneven holistic picture even after various banks have tried to penetrate this market here. But something worth a thought, like Gourlay says, is that are banks also seeing this as an opportunity to make a difference in people’s lives? Are they giving people more than just a service? Are they making them understand that they are giving them the opportunity to save, to build an asset base, to create a family legacy?