Financial services professionals in the United States can learn a lot from South Africa. The country has a sophisticated financial services industry, with well-developed capital markets and established companies offering a wide range of personal finance products. However, South Africa also has extreme poverty, and there is palpable political and social urgency to raise the living standards of the lowest income South Africans. South Africa’s government and financial services industry believe that access to financial services will be critical to alleviating poverty and helping more South Africans achieve financial well-being. As a result, the industry seeks to provide 80 percent of low-income people with access to life insurance, collective investments, short-term risk insurance, and banking services by 2014.


Providing financial access to 80 percent of low-income consumers is an ambitious goal, even considering that more than half of South Africa’s population is formally banked today. As the financial services industry transforms itself to serve the large underbanked market in South Africa, many companies are experimenting with exciting new ways of doing business. This paper describes these innovations—many of which either translate directly across national boundaries or may spark ideas about how to serve the underbanked marketplace elsewhere.


South Africa’s innovations to engage more underbanked individuals in financial services can be grouped into three categories:

*Products and Pathways: New financial services products, such as the Mzansi account and First National Bank’s Million-a-Month Account, are designed to address the needs of low-income consumers better than earlier products do.
* Marketing and Distribution: Mobile banking, a new MiniATM, the retail distribution of financial services, and creative approaches to financial education have dramatically expanded the channels through which financial services companies are reaching people.
* Risk Management: Substantial regulatory change is driving a restructuring of short-term consumer lending, with a focus on risk management.


South Africa provides a valuable case study for the U.S. financial services community. This paper provides an overview of the service innovations observed in South Africa, many of which provide important insights for U.S. institutions.