A fundamental aspect of such multi-provider systems is that they aggregate the often-vast G2P recipient volumes for PSPs to compete for. In giving recipients their choice of providers, this set-up should send them flocking to the best option, thereby incentivizing improved services from PSPS as they seek to outdo each other and capture business – a clear win for recipients. One bank in South Africa realized the long-term profitability potential of these customers and turned it into a core aspect of their strategy—first, some history.
SASSA opens up
The South African Social Security Agency (SASSA) distributes a range of payments such as disability, child support, social relief, and senior citizen grants, to name a few. As is often the case with G2P payments, the agency started off by contracting a single vendor, Cash Paymaster Services (Net1), through which to disburse payments. After allegations of fraud and severe mismanagement and a barrage of recipient complaints, SASSA, in desperation, handed over cash payments and account signup responsibilities to the South African Post Office whilst simultaneously opening the account payments system to any provider who wished to take part. One of these was the fledgling TymeBank.
TymeBank is a digital bank that offers cost-effective digital banking services aimed at the mass market in South Africa as an alternative to legacy banks which have tended to serve more affluent customers. Central to their approach are low-fee accounts coupled with thousands of kiosks and ambassadors located within retail outlets throughout the country, offering customers a physical non-branch option with which to interact for services such as account opening, collecting a Visa debit card, checking account balances and updating personal information.
Despite TymeBank offering an ideal account for SASSA recipients (as underlined by a CGAP investigation into their customer base), few people nominated them, with the bulk opting for Postbank accounts. Then, when the COVID-19 pandemic hit the South African government responded by creating a new relief grant that could be applied for digitally, yet TymeBank still saw only a small uptick in registrations. Confident that their offering was superior to that of PostBank, and puzzled why more people weren’t opting for it, TymeBank decided to investigate.
Trial and error
TymeBank commissioned customer research to better understand where (and why) they were coming up short in recipient sign-ups. The research effort was intensive, over the course of which they conducted upwards of 700 interviews, speaking with both SASSA staff and recipients. It became apparent that despite a good product, their customer onboarding journey was at fault. All recipient onboarding was happening at SASSA offices, where new beneficiaries were asked whether they had an account, and if not, were offered a PostBank account. Coupled with this, SASSA’s payment onboarding procedure required lots of paperwork, something Postbank’s staff were on hand to assist with. By contrast, TymeBank representatives were not present, effectively removing them from contention.
In response, TymeBank devised a tool to enable customers to open a bank account at the SASSA office and generate the required information for payment onboarding, including the auto completion of the form SASSA required if recipients wanted to switch their existing payment account. This ensured customers need only complete one trip to the SASSA office to successfully onboard to TymeBank, apply for the SASSA grant and switch their grant payment to TymeBank.
This ensured customers need only complete one trip to the SASSA office to successfully onboard to TymeBank, apply for the SASSA grant and switch their grant payment to TymeBank.
Addressing the account signup issue prompted a change in location and focus of Tyme’s sign-up process with the express goal of activating recipients in one sitting. Rather than meeting people within retail settings which is the bank's usual location, they placed mobile kiosks and staff (ambassadors) within proximity to the SASSA office sign-up locations and armed them with tablets with which to process registrations in real-time. These ambassadors were able to issue newly minted customers with debit cards with which to access their funds, a powerful and much-appreciated tangible link to their new provider.
The changes had an immediate impact. Over the next six months, TymeBank onboarded some 1,204,000 new SASSA grant recipients. Their rapid success caused a reevaluation of the value of this segment for TymeBank, and G2P recipients now represent a critical part of the TymeBank business model. TymeBank realized that despite the low fees they earned from SASSA for servicing these clients, they could serve them profitably by enticing them with full transactional banking and GoalSave, the bank’s saving tool. Over time, through offerings such as airtime purchases and bill payments.
This case highlights a number of key lessons. Mainly, open competition systems worked to the benefit of the three parties involved. TymeBank’s ability to serve SASSA G2P customers only emerged because the system opened up to allow them in and added a new element to their business model. For G2P recipients, it was a boon because it allowed a provider like TymeBank, with the right product, inclination, business model and distribution model to compete for their business. SASSA benefitted because its relationship with the providers rebalanced in their favor, away from their previous single-provider dependence. TymeBank also demonstrated the centrality of understanding the customer experience and reaped an immense benefit from doing so.
All it takes is an open G2P system, a provider that makes an effort to understand customer needs and preferences and offer bespoke solutions
Finally, this case demonstrates that G2P recipients are a segment worth competing for – all it takes is an open G2P system, a provider that makes an effort to understand customer needs and preferences and offer bespoke solutions, bringing value for the customer, the provider and the government.
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