Low-balance bank accounts — Part 2: Must banks collaborate to succed?

Abstract

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.