8 September 2005South Africa’s low-cost national bank account, “Mzansi”, launched in October 2004, extends banking to low-income earners and those living beyond the reach of banking services – and has already proved to be a hit.According to Colin Donian, the Banking Association South Africa’s Mzansi Initiative director, over 1.5-million Mzansi accounts had been opened by the end of August 2005, with the great majority of new accounts opened by South Africans who had never banked before.“The profile of the Mzansi Account holder is mostly female, with an average account balance of just under R300,” Donian told I-Net Bridge. “We also know that around 90% of account holders are new to the institution with which they have opened their account.”Banking branches outSouth Africa’s four major retail banks – Absa, First National Bank, Nedbank and Standard Bank – as well as Postbank offer the Mzansi account.Along with “container branches” and mini-ATMs in townships and rural areas, Mzansi is an initiative by the country’s banks to put full-service banking within at most 15 kilometres of all South Africans, and an automatic teller machine (ATM) within at most 10km of their homes.“South Africa compared with other developing countries is on the right track in banking its bankable population,” the Banking Association says in a statement.According to the association, about 13-million South Africans were “unbanked” at the time of Mzansi’s launch. In the seven months between October 2004 and May 2005, an additional four percentage points of the population was banked via the Mzansi account, placing the country on a par with Argentina and a step away from Malaysia.Banking fees head southMzansi – a colloquial South African expression meaning “south” – is a basic, standardised, debit card-based transactional and savings account. All that is required to open the account is a valid ID document.To keep costs as low as possible and to ensure that the account is easy to use, transactions are limited to deposits, withdrawals and debit card payments – the account includes a debit card that can be used at retail outlets.No management fees are charged on Mzansi accounts, and one free cash deposit per month is allowed.Mzansi customers are thus able to save without having their capital eroded by bank charges, with the only charge being for transactions made – and with ATM transactions costing the same regardless of which bank’s ATM is used.Mzansi Money TransferIn September 2005, SA’s “big four” retail banks and Postbank launched a low-cost money transfer facility aimed at the poor, especially individuals entering the formal banking sector for the first time.Mzansi Money Transfer provides a reliable, secure, instant means of sending money anywhere in the country, to and from over 5 000 bank and Post Office outlets.Transfers are limited to a maximum of R5 000 per day, and users not need to have a bank account.Mzansi Money Transfer, says Donian, should perhaps have come before the Mzansi bank account.“If one looks at the most basic of financial intermediary needs of the South African economy, which is still highly cash-based, there is a historical flow of money from urban to rural areas, in the form of cash,” Donian told I-Net Bridge.According to Donian, some six million South Africans transfer in the region of R12-billion in cash annually, a large part of this to family members in rural areas.More products in the pipelineAccording to I-Net Bridge, the banking industry is looking at ways of increasing the functionality of the Mzansi account – specifically, at adding a payment mechanism – without turning it into a second-order banking product.“The Mzansi Initiative is really about the establishment of a brand that serves as an umbrella for a far broader range of financial services that address the needs of those opening a bank account for the first time,” Donian said.An Mzansi account payment mechanism would allow the country’s financial institutions to offer other tailor-made low-cost products, such as insurance and collective investments, under the Mzansi brand.The measure of Mzansi’s success, Donian told I-Net Bridge, was that the financial sector and the community at large now saw Mzansi “as synonymous with access to affordable financial products and services; also, this success is evident in the decision by banking industry to extend the brand across the financial sector.“We recognise the brand power that has been created in the marketplace, and the stakeholders that have supported the brand.”SouthAfrica.info reporter Want to use this story on your website? See Using SouthAfrica.info material.