Cardless banking in the Nelson Mandela Metropole: A means of financial inclusion for the excluded

Jasmine E Kinsman

doi:10.4102/jef.v12i1.182

Abstract

Orientation: The growth of mobile phone usage and wireless connection has transformed the manner in which financial services are provided. However, it has failed to increase the accessibility to formal banking facilities for the underbanked population. Research purpose: To determine their perceptions and intentions of cardless banking among underbanked consumers. Motivation for the study: The financial inclusion of underbanked consumers is increasingly important given the current social welfare payment crisis in South Africa. Research design, approach and method: The study made use of a quantitative research approach using surveys to collect data from 175 underbanked consumers. Main findings: The study revealed that underbanked consumers have positive perceptions of the complexity, trialability and compatible advantages of using cardless banking. Practical/managerial implications: Underbanked consumers and social grant beneficiaries should be allowed to try cardless banking before using it to experience its benefits in order to assess how suitable it is to their circumstances without the risk of loss or barriers should they not prefer it. Little to no special training should be required in order to use cardless banking, and it must be easy to explain to their friends and family how it works. Contribution/value-add: Recommendations are made to financial institutions who intend on capturing the underbanked consumer segment, the National Treasury and other governmental institutions who wish to increase financial inclusion to underbanked consumers and especially to South African Social Security Agency (SASSA) when considering an alternative payment method for social grant beneficiaries.

Highlights

The large majority of South African consumers (93.8%) have mobile phones (Community Survey 2016:91), while only 28% of the population make use of formal banking facilities (Global Findex 2014)
The term of the invalid contract with the service provider was set to come to an end as of 31 March 2017, but South African Social Security Agency (SASSA) failed to make provisions for alternative methods of payment as instructed by the constitutional court; the social grant crisis in South Africa ensued, where more than 17 million beneficiaries were left with uncertainty as to whether they would receive their grants
Because there is a positive relationship between the variables, a multiple regression analysis was conducted to determine whether these factors exhibit a significant influence on whether underbanked consumers intend to make use of cardless banking

Summary

Introduction

The large majority of South African consumers (93.8%) have mobile phones (Community Survey 2016:91), while only 28% of the population make use of formal banking facilities (Global Findex 2014). The term of the invalid contract with the service provider was set to come to an end as of 31 March 2017, but SASSA failed to make provisions for alternative methods of payment as instructed by the constitutional court; the social grant crisis in South Africa ensued, where more than 17 million beneficiaries were left with uncertainty as to whether they would receive their grants. Given the recent SASSA social grant crisis where an alternative service provider needs to be sought, it is important to first determine the perceptions these consumers have of the possible facilities that could be considered.

Literature review

Results

Discussion of findings

Limitations of the study

Conclusion