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Low-balance bank accounts, part 2: Must banks collaborate to succeed?

Low-balance transactional accounts on their own probably lose money for most large banks. There may, nonetheless, be a business case to issue them. Forms of collaboration among issuers may help to reduce losses, even though collaboration may not be necessary to achieve success. This paper reaches these conclusions based on reviewing evidence of South Africa’s experience of promoting entry-level banking between 1994 and 2014 and, in particular, of the Mzansi basic bank account launched collaboratively by the four large commercial banks and the state-owned Postbank in 2005 in the context of other market dynamics.

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David Porteous
David has been involved in finance inclusion initiatives internationally for more than two decades. He received his bachelor’s degree in Accounting from the University of Cape Town, and later obtained an M.Phil in economics from Cambridge and a PhD (Economics) from Yale. David has held executive roles in public and private financial institutions in Africa, and is the founder and CEO of BFA, a consulting firm based in Boston.

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