This case explores the different formal and informal financial instruments used by the low-income population in South Africa.From the Standard Bank’s perspective and its own product targeted to the low income population (the Mzansi accounts), the case looks at the different forms of competition that Standard Bank faces and the various institutional arrangements that they have established.
Targeting the Unbanked: Mzansi at Standard Bank
by: Paul Clyde
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After reading and discussing the material, students should:
- Give students a unique context in which to analyze a fundamental problem that banks face, that of “moral hazard”.
- Present an opportunity for students to think beyond the parameters implicitly set up in the case to consider the product that is being provided and the customer to whom it is being provided. In other words, are “banking services for the unbanked” a valuable product to additional stakeholders, beyond just the unbanked population?
- Analyze the benefits of vertical contracts.
- Discuss the relationship between information flows (in this case, obtaining, interpreting, and transferring information that determines whether or not an individual will be able to pay off a loan) and vertical contracting.