The Study of the Emergence of Low Cost Bank Branches in South Africa

This paper reviews the landscape of entry-level bank branches in South Africa and also identifies successful elements of an entry-level banking strategy in the country. It reveals that serving this segment requires a focused approach to reduce operational and capital expenditures as well as innovative means to acquire and effectively serve high volumes of clients. To achieve this, the paper identifies four changes in entry-level banking strategies: change in bank branches, change in composition of infrastructure, change in products and services, and a shift in promotional activities. Few common strategies suggested in the paper include:

• Introducing cashless bank branches that substantially reduces the cost of infrastructure and eliminates the cost of cash handling;
• Smarter staffing to reduce staff costs such as employing fewer staff with lower qualifications and offering a lower basic and high commission remuneration structure;
• Extending operating hours to serve commuters effectively;
• Establishing alternatives to branches to reduce capital costs, such as mobile offerings, carve outs/in-retailer models, 'access agents', self-service devices (cash accepting ATMs), and kiosks;
• Moving away from a credit only focus to an increased range of basic products;
• Adopting below-the-line marketing strategies to differentiate bank entry-level offerings from their traditional offerings.