Even though South Africa’s unbanked population is a much greater percentage of total population and the economy is drastically different, the South African experience is instructive for the U.S. for several reasons. The following important lessons from South Africa highlight strategies for promoting innovative financial services among underbanked groups:
There is a role for the federal government to play
The South Africa case is similar to the U.S. in the sense that the retail financial system is overwhelmingly privately owned, and a combination of carrots and sticks have been useful in promoting innovative change.
It can be profitable to serve the unbanked market segment, but the key is looking beyond low-cost products to appropriateness of services and fees while exploiting available technology and distribution channels.