Research Paper on Financial Inclusion by the Banking Sector
FINANCIAL INCLUSION: banking the unbanked
Aluwani Nengovhela
Milpark Business School
Research paper on financial inclusion by the banking sector
18/10/2013
EXECUTIVE SUMMARY
Millions of South Africans are either not banked (as many as 13 million people) or are under-banked by the banking sector and are therefore financially excluded. The exclusion of so many South Africans from the financial system, limits the ability of a material portion of the population to ultimately accumulate wealth and therefore achieve economic emancipation. Hence, I view that being “banked” is more than just about the possession of a formal banking product, more critically it is about the consumers’ ability to engage the financial system and develop a transactional profile that will ultimately assist in their ability to access credit and generate long term wealth [BankSeta ALP Team, October 2012].
The Financial Services Charter defines being not banked as not having access to any financial products that are on offer from the banking institutions, whilst it defines being under-banked as having access to a limited number of products available from the banking sector.
The purpose of this study is to explore what vehicles are available for use by the banking sector so that it can expand its services to those who are not banked and to those who are under-banked.
The primary mode of research used in this study was secondary data which is available electronically (or desktop research). There were a few interviews conducted to industry experts, especially those who are directly involved with financial inclusion at their respective banks.
The limitations of this research included unemployed young people as it is reasonably presumed that they are not financially excluded but rather economically inactive. Other limitations of this research included illegal immigrants because it can also be reasonably presumed that the law precludes them from being
Aluwani Nengovhela
Milpark Business School
Research paper on financial inclusion by the banking sector
18/10/2013
EXECUTIVE SUMMARY
Millions of South Africans are either not banked (as many as 13 million people) or are under-banked by the banking sector and are therefore financially excluded. The exclusion of so many South Africans from the financial system, limits the ability of a material portion of the population to ultimately accumulate wealth and therefore achieve economic emancipation. Hence, I view that being “banked” is more than just about the possession of a formal banking product, more critically it is about the consumers’ ability to engage the financial system and develop a transactional profile that will ultimately assist in their ability to access credit and generate long term wealth [BankSeta ALP Team, October 2012].
The Financial Services Charter defines being not banked as not having access to any financial products that are on offer from the banking institutions, whilst it defines being under-banked as having access to a limited number of products available from the banking sector.
The purpose of this study is to explore what vehicles are available for use by the banking sector so that it can expand its services to those who are not banked and to those who are under-banked.
The primary mode of research used in this study was secondary data which is available electronically (or desktop research). There were a few interviews conducted to industry experts, especially those who are directly involved with financial inclusion at their respective banks.
The limitations of this research included unemployed young people as it is reasonably presumed that they are not financially excluded but rather economically inactive. Other limitations of this research included illegal immigrants because it can also be reasonably presumed that the law precludes them from being