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

Categories : Collaboration business models and managing change, Technology and Operational Enablers


Author: David Porteous

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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