Tailoring banking solutions for SA’S diversity

Given South Africa’s diversity, a one-sizefits-all approach to business will seldom generate long-term returns.

Our rainbow nation provides opportunities for businesses, but our many cultures, languages and demographics also create unique challenges, which make it vital that businesses understand the communities in which they operate

Realising this, Caxton Local Media commissioned the first ROOTS survey in 2000. Today, it is the longest-running community-level research survey in South Africa.

The eighth edition was brought to market in October 2022. It surveyed 23 000 adults aged 18+, representing 9.3 million adults and 3.9 million households. ROOTS 8.0 provides insights into how South Africans behave, what they look like, what media they consume, as well as what they purchase, when they purchase and where.

“One of the key insights in the banking sector in ROOTS 8.0 was how prevalent Capitec has become,” says Lynne Krog, senior research strategist at Spark Media and ROOTS 8.0 project lead. Capitec is the number one bank in 60 of the 97 communities surveyed in ROOTS 8.0.

This wasn’t entirely unexpected as Capitec has been gaining traction in the banking sector over the past few years. They have disrupted the banking sector by implementing a low-cost entrylevel model. “It will be interesting to see if they manage to maintain this level of growth, given that other banks have followed suit. In particular, Tymebank, which offers a digital solution, and Discovery Bank, which brought behavioural banking to the South African market,” says Krog

ROOTS 8.0 shows how economic pressure has affected behaviour. The impact of this is seen in the increased prevalence of brand sharing in the banking sector – a sector that has relied heavily on loyalty in previous years.

“This highlights the threat to banks who assume that their customers are loyal,” says Chris Halstead, head of sales at Spark Media. It is now more important than ever for banks to maintain their mental availability to ensure that they retain their current customers and encourage them to expand their portfolio within their current banking institution of choice, rather than looking elsewhere, he says.

Where South Africans bank

South African banking industry mind share looks like this (ROOTS 8.0): 40% Capitec

31% FNB

18% Absa

18% Standard Bank

16% Nedbank

13% Tymebank

4% Discovery

3% African Bank

1% Investec Affordability, age, education, and employment status are among the factors that determine the type of accounts individuals will hold. As you would expect, those with loans and credit facilities tend to be more affluent than those limited to a single savings or current account, says Krog. This is most likely because they have the means to prove to financial intuitions that they are low-risk candidates for loan and credit products.

Bank customers read local papers

“The more sophisticated the financial product held, the higher the local paper readership is. However, the opportunity still exists to target those with only savings or current accounts with additional cost-effective banking options”.

“ROOTS 8.0 allows you to dig deeper into each community researched, making it easier to tailor-make an offering that is relevant and realistic. When it comes to financial habits, ‘one size does not fit all’,” says Halstead.

Geography is an important consideration because areas differ, and not just demographically. Even the type of account held by customers varies by bank and by area. “It is important to remember that even national brands, such as a bank, operate in local markets. Your offering and your communication need to take into account these differences,” says Shivani Moodley, business development manager at Spark Media.

ROOTS covers local South Africa – communities falling within the main metro nodes in all nine provinces. Even in these more established and banked markets, there is still plenty of room to expand people’s financial repertoire, particularly with savings and more.

The accounts used in developed areas are savings accounts (74%), current/cheque/transmission (46%), credit cards (25%), personal loans (13%), and brand/home loans (8%). Savings and pensions are the most likely form of investments to be held.

“Great scope exists in this established market as ownership of these types of products are far from saturated. Those with savings or investments are wealthier, better educated, more likely to be employed, and more likely to read a local newspaper than those without. Readers of a local newspaper are more likely to be financially informed and to develop excellent financial habits,” explains Kamo Aphane, corporate affairs manager at Spark Media.

Banks have access to significant info

“The value of ROOTS is that it enables banks to measure their share of mind and profile vs other institutions at a community level,” says Krog.

“This allows them to identify areas where there are potential threats from their competitors, as well as areas where they are performing well and areas where their performance may be improved,” she adds.