The financial services sector has a lot of ground work to do within the mass market, there is a sense of mistrust surrounding banks, which are often seen as a necessary evil rather than a growth enabler. Ads24 discovered that banks are seen as inflexible, full of red tape and intimidating. ‘Mashonisas’ or loan sharks are expensive, but more familiar.
This market does still take credit and debt is a part of life. Spazas are an important provider of credit, it’s key to their survival. The mass market make limited use of formal financial offerings for three things only, saving, credit and insurance.
According to the UCT Unilever Institute, Survivors (defined as individuals with a household income of less than R6000 per month) usually go to the ATM once a month and check that their money has come in, whether through a job or social grant, and then withdraw all of it in cash. They would rather take the risk of carrying cash around because they mistrust banks, they avoid charges, and find it easier to budget with tangible cash in hand. Cash is the currency of the informal trade and one can negotiate with cash.
Ask Afrika’s Kasi Star Brands survey found that Kasi shoppers bank together through informal saving structures such as stokvels.
A respondent in the UCT Unilever Institute survey said, “We don’t trust banks anymore because they charge us more than they should.” Survivors have a huge suspicion towards financial institutions, and the evidence shows that they are intimidated around ATM’s and there is a general disgust around bank charges. Terms and conditions and fine print grate with an entrenched verbal culture. A respondent said, “At the banks they say we must sign here and here and that the pages of writing are not important – but what are they hiding?” Survivors are rightfully suspicious as they are often being lured into taking further credit, there is a huge growth of credit, but also a massive credit burn.
The lack of understanding of interest structures and the experience of getting into bad debt because the T&Cs are not understood has led many Survivors to opt for loan sharks, a respondent said, “With the Mashonisa you know what you have to pay.” There is a greater trust for people on the street and in the community. English is the language of the marketer but not of the market, financial service providers who have made their product offerings simple, easy, accessible, and not intimidating have thrived in this market.
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