frog_finmarktrust_the_personalities_of_the_underbanked_final

THE PERSONALITIES OF THE UNDERBANKED:
A POINT OF VIEW ON FINANCIAL INCLUSION IN SOUTH AFRICA
FROGIMMERSIVE RESEARCH BRIEF
NOVEMBER 2012

2FINMARK TRUST + FROG | THE PERSONALITIES OF THE UNDERBANKED
document contents
01 introduction
02 methodology
03 market context
04 personas
05 recommendations

4
INTRODUCTION | FINMARK TRUST AND FROG
FINMARK TRUST + FROG | THE PERSONALITIES OF THE UNDERBANKED
Created with initial funding from UKaid from the
Department for International Development (DFID),
FinMark Trust (FMT) is an independent trust. FMT’s
purpose is ‘Making financial markets work for the poor,
by promoting financial inclusion and regional financial
integration’. It does this by conducting research to
identify the systemic constraints that prevent financial
markets from reaching out to these consumers and by
advocating for change on the basis of research
findings. Thus, FMT plays a catalytic role, driven by its
purpose to start processes of change that ultimately
lead to the development of inclusive financial systems
that can benefit all consumers.
frog is an innovation consultancy with deep roots in
product design and realization. frog works across
market sectors, geographies, cultures and
technologies to help its clients bring meaningful
innovations to life. These clients typically face intense
pressures to bring more innovative, more business-
viable and more consumer-centric solutions to their
target markets. frog’s interdisciplinary, end-to-end
methodology helps them do so.
A key principle of frog’s innovation process is to
discover compelling new solutions through inspiration.
Quantitative market research is a necessary starting
point, but deeper, more immersive, qualitative
ethnographic perspectives bring this research to life,
injecting the voice of the consumer into the product
development cycle.
FinMark Trust appointed frog to conduct immersive
research within a lower-income community in South
Africa to better understand the challenges of
deepening financial inclusion in South Africa. FinMark
Trust engaged frog for a 2-week frogImmersive study to
provide additional insights on consumer behavioral
patterns, lifestyles and attitudes on financial services.
This document describes frog’s approach, findings and
recommendations.

FINMARK TRUST + FROG | THE PERSONALITIES OF THE UNDERBANKED 5
INTRODUCTION | ABOUT PERSONAS
The challenge of research-led innovation
Quantitative research enhances our
understanding of people’s lives and their
contexts. It is critical to developing a sound,
evidence-based approach to policy and
regulation, as well to better informing business
strategy and planning.
For governments, it offers insights into the lives
of the entire population, sizes the markets
which require speciﬁc policy focus and
provides guidance on policy initiatives. For
businesses, these insights provide important
input into business cases and validate
strategic roadmaps.
To do this well, quantitative research must
describe the status quo in rigorous, statistically
valid ways. It uses large sample sizes,
geographically broad respondent coverage,
and ﬁxed questionnaires to create as accurate
a picture as possible of consumers in the
world today.
This perspective is fundamental to the
development of viable policy and business
strategy, but innovation is concerned with
something else – it thinks about tomorrow, not
just today.

Introducing personas, a tool for new thinking
and innovation
True innovation attempts to create new
meaning and value in places where they did not
exist before. To do so, it seeks to promote new
consumer behaviors, often with little precedent
in the market today.
How do we create new products and services
that will lead to this type of behavioral change
that underlies meaningful innovation?
Creating new products and services based on
an understanding of today’s consumers tends
to lead to incremental, evolutionary
improvements in those products and services.
Instead, we need inspiration for what behaviors
could be tomorrow. To be able to project in this
way, it is helpful to think about consumers in a
deeper way. Behaviors today are a reﬂection of
a more fundamental personality trait, need or
aspiration. Behaviors tomorrow may look very
different from what we imagine, but they are a
manifestation of those same fundamental
personality traits, needs or aspirations.
Personas are a tool we use to help us think
about behaviors in this deeper way, to allow us
to design the behaviors of tomorrow.

Personas as the voice of the consumer
Personas are stylized, abstractions of typical
consumers seen in a target market.
On the surface, personas feel like they describe
a unique individual. Personas have names and
ages, families and friends, incomes and
expenses, daily rituals, less frequent behaviors
and personal possessions.
But a persona also has needs, deeply felt as
they are a reﬂection of the persona’s priorities
and ambitions in life. A persona also has
aspirations, dreams of what life could be, and
attitudes, a reﬂection of how interaction with
people, places, and things should be.
Collectively, all of these characteristics create a
vivid personality. The richness of a persona is
critical, as it helps inject the voice of the
consumer into the innovation process.
Too often, as consumer research leads to
product design and development over months
and even years, something gets lost in
translation. Often it is the consumer voice.
Personas help us ensure the consumer voice is
strongly felt throughout the end-to-end
innovation process.

Personas through qualitative research
Creating a vivid consumer voice is better
suited to qualitative, not quantitative,
consumer research.
Qualitative research methods, based on
principles of ethnography, psychology, and
sociology, seek to probe smaller sample sizes
in greater depth.
Consumers’ deepest needs, motivations, and
aspirations tend not to surface from simple
questionnaires. Trust must be developed,
relationships must be built, signiﬁcant face-
time must be committed and alternative
methods of investigation must be explored to
uncover these aspects of consumers’ lives.
Qualitative research methods are well suited to
this type of study. The combination of deep
qualitative research with a solid quantitative
foundation is critical to create the richness of a
persona that makes it so useful to the
innovation process.

Behavioral and attitudinal signiﬁcance
As personas emerge from qualitative research
over small sample sizes, they can not be
construed as a complete representation of the
target market. They do not attempt to paint a
statistically valid picture – this is the job of a
formal, quantitative market research or
segmentation study.
Instead, personas offer a behaviorally and
attitudinally signiﬁcant perspective on the
target market. The behaviors and attitudes
expressed through personas are based on
observations of repeated patterns across
diverse consumers in the research sample,
telling us that these behaviors and attitudes
are not one-off observations, but
manifestations of fundamental needs
and aspirations.
There may always be additional personas that
a different qualitative study can uncover, but
this is not relevant to the innovator. As long as
the personas that were uncovered offer enough
range to inspire creation of meaningful
products and services, they are serving
their purpose.

Personas as provocative inspiration
As the ultimate goal of personas is to inspire
continuously through the innovation process, it
is helpful to ensure they are structured in a way
that is as inspirational as possible.
We often ﬁnd through our research that any
given individual participant is inspirational in
certain ways, but collectively, research
participants are inspirational in many ways.
To that end, personas are more useful when
they are composites of multiple individuals, as
opposed to being based on just one individual.
Furthermore, it is helpful to gently exaggerate
certain persona characteristics, emphasizing
the most fundamental differences in consumer
behaviors and attitudes. This act of
provocation helps us inject the voice of the
consumer into the innovation process in a way
that emphasizes the most important
consumer differences rather than similarities.
This process of emphasis and abstraction
tends to be a more useful means of
inspiration, as it focuses on our attention on
what’s most critical and meaningful.

Introducing Angela, Lucien, Natalie,
Matome, Rolphy, and Patrick & Meiki
In this document, we present 6 personas that
emerged from a 2-week qualitative research
study we conducted in South Africa.
These 6 personas describe behaviorally and
attitudinally signiﬁcant consumer differences.
We do not intend for these personas to
represent a complete picture of the South
African consumer. But we hope they are a
starting point and motivator that bring a
deeper, richer consumer-centric perspective
into the innovation process.

The beginning of an innovation journey
Although we will make recommendations on
market opportunities that financial service
industry players can use as starting points for
their consumer-centric innovation initiatives,
these recommendations should not be viewed
as definitive solutions.
Instead, they should be treated as the starting
point of an innovation journey. The aim of this
journey would be to discover, design, deliver
and deploy meaningful products and services
to the unbanked and underbanked consumer,
achieving sustainable market impact and
lasting consumer benefit.
To do this, additional research and opportunity
identification, ideation and conceptualization,
product and service development, and
commercialization are necessary steps to truly
address the challenges of financial inclusion in
South Africa.
Discover
Analysis Becomes Insights
•  Design research
•  Market and business research
•  Technology assessment
•  Opportunity evaluation
•  Roadmapping
Design
Insights Become Ideas
•  UX architecture and interaction
•  ID sketching and modeling
•  Ecosystem integration
•  Visual design
•  Prototyping and usability
•  Out-of-box-experience
Deliver
Ideas Become Products
•  Detailed UX design and
documentation
•  CAD modeling and mechanical
engineering
•  Software architecture and
engineering
•  Testing and QA
Deploy
Products Become Reality
•  Certification
•  Systems integration
•  Packaging and marketing
support
•  Post-launch revisions
and enhancements
Focus of this study

INTRODUCTION | FROGIMMERSIVE
Introducing frogImmersive
Our immersive, ethnographic research
methodology (called frogImmersive) aims to
gain insight into consumer behaviors, attitudes
and aspirations, and unmet and unarticulated
needs. Our research is not an activity for its
own end; instead, its purpose is to inspire
new ideas.
Ultimately, our goal is to identify strategic
directions for innovation through the synthesis
of research ﬁndings into insights, insights into
opportunities, and opportunities into new
product and service concepts. Along the way,
we deﬁne personas – abstracted
representations of target consumers – as a
tool to ensure that the voice of the consumer is
always present.
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INTRODUCTION | FROGIMMERSIVE | IDENTIFYING RESEARCH DIRECTIONS
Identifying research directions
Before commencing research, it was
imperative that frog, Finmark Trust and its
syndicate partners be aligned on research
directions. Leveraging preliminary results of
the FinScope study and existing market
understanding, we identified 8 directions to
explore in depth in the field:
Temporal context: The behaviors around and challenges
of irregular income and unpredictable expenses.
Financial ecosystems: The portfolio of formal and
informal solutions used by consumers to manage their
finances.
Learning and literacy: The impact of financial, textual,
and technological illiteracy on financial service usage.
Affinity groups: The impact of communities and groups
on financial behaviors.
Challenges and hurdles: The pain points of using financial
services from the formal sector.
Aspirations and goals: The identities of consumers as
defined by their personal, family, community, and
business goals.
Notions of value: The true value of financial services,
beyond costs and monetary results.
Circles of trust: The approaches used to discover, build,
and sustain trust, particularly with respect to formal
institutions.
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INTRODUCTION | FROGIMMERSIVE | RESEARCH “PLANNING”
Research “planning”
We plan for breadth but anticipate depth. Our
research plan is more of a guideline, not a
script. During fieldwork we continually adapt to
seek insights from unexpected places, so our
“plan” must allow for continuous
improvisation. We hire local fixers who are
essential to this approach, allowing us to step
up to anyone (like an orange farmer with a
broken car on the side of a rural road) to start a
conversation.
From our research directions, we focused on
financially underserved consumers in South
Africa. These are likely to be from middle- to
lower-income brackets with poor access to
formal financial services as well as those who
are newly formally included.
Our initial plan identified 4 starting targets:
Heads of household: The key decision-makers in a home,
with both traditional and modern attitudes
toward finance.
Small business owners: These might display special and/
or additional needs due to level of exposure to money and
financial transactions.
Community leaders: Both financial influencers and
decision-makers in their communities.
Students: Most likely to adopt and explore new financial
products and technologies.
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INTRODUCTION | FROGIMMERSIVE | LOCATION PLANNING
Location planning
We selected the Polokwane area due to its mix of
cultures, economies and proximity to formal rural
and urban settlements. The various communities
in this region have a broad range of income levels
(from 45% to 79% with under R9,600 household
income), employment (from 9% to 39%) and
education levels (from 5% to 27% uneducated,
from 4% to 24% with higher education)*.
We don’t live in business hotels, preferring to
live locally in the communities we study. For
this study, our home base was a low-end
guesthouse in Seshego township.
Our research activities took us across the
region in search of strong research
participants. Over the course of research, we
aimed for the following recruiting mix amongst
the underbanked:
Age: 18-65
Gender: male and female (evenly split)
Income: low to middle income; LSM 3/4/5/6 (split 30%/
30%/20%/20%) with LSM 1/2 and LSM 7 also evaluated
for outlier perspectives
Education: primary and secondary levels
Family structure: single, family with kids, single parent
family, multi-generation households
Occupation: student, small business owner,
entrepreneur, farmer, vocational worker, mobile agent,
trader
Location: peri-urban/rural (split 70%/30%)
*Source: Census 2001 – Stats SA
Polokwane
Seshego
Mankweng
Modjadjiskloof
Haenertsburg
Tzaneen
Chebeng
Ga-Madiba
Nobody
Ga-Mothiba
Bloodriver
Ga-
Mashashane
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INTRODUCTION | FROGIMMERSIVE | CONDUCTING RESEARCH
Conducting research
We learn more from limited, in-depth
explorations than from large-scale, passing
studies. We spend hours in interviewees’
homes, exploring every aspect of their lives to
understand needs, motivations, aspirations,
behaviors, hopes and dreams.
We continuously look for opportunities to dig
even deeper, at times shadowing them for
hours, meeting their families, visiting their
workplaces and churches, attending private
events like funerals, and keeping in touch
throughout the course of the research program
and sometimes beyond.
We ﬁnd a great source of insight is targeting
people when they least expect it. We talk to
people on the street, in stores, and in transit,
continuously digging for insights. At times
we’re rejected or rebuffed, and at times these
spontaneous acts turn into hour-long
interviews that are richer than we could have
ever anticipated.
Over a week in the ﬁeld, we performed 20 in-
depth contextual interviews (including expert
and group perspectives) and numerous
intercept interviews, generating more than 800
data points and taking in excess of
4,000 photographs.
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INTRODUCTION | FROGIMMERSIVE | CONDUCTING RESEARCH
An even mix of LSM 3-6, education levels, family structure and gender, spread across formal rural and urban environs. Occupations: students, street vendor, small business owner, taxi
driver, teachers, ﬁrewood salesman, orange distributor, tractor driver, poultry farmer, saleslady, tombstone parlor owner, burial society leader, iron monger, pastor, grill man and cleaners.

INTRODUCTION | FROGIMMERSIVE | SYNTHESIZING INSIGHTS
Synthesizing insights
A key ingredient of our approach is to turn our
home into a project space, continuously filled
with observations, insights, and new ideas. At
the end of each day, the research team comes
together to synthesize findings into insights.
This allows us to share and discuss the day’s
work, evaluate our progress and alignment with
the hypotheses, refine our objectives and plan
the activities for the following day. Key insights
are captured on Post-its, providing a visual and
dynamic reference.
The final step in the field is the identification of
key themes, supported by the insights
gathered from the field. In Polokwane, we
derived some 30 themes, allowing us to distill
out key insights that would later inform the
attitudinal and behavioral framework for the
personas that we create during final synthesis
and documentation.
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INTRODUCTION | FROGIMMERSIVE | SYNTHESIZING PERSONAS
Synthesizing personas
After fieldwork, we returned to frog
Johannesburg to continue the synthesis
process. We further refined and molded the
themes, expanding some, contracting others,
collating insights along the way.
Our goal through this exercise is to identify
patterns across participants. These patterns
form the basis of a persona framework, a set of
behavioral and attitudinal axes that
differentiate the underbanked consumer. We
know an axis is valid if we uncovered behavioral
and attitudinal insights from a majority of
participants related to the axis and if these
participants’ behaviors and attitudes are
spread evenly across the axis.
By placing all research participants along these
axes, we find clusters that suggest strong
commonalities in behaviors and attitudes – the
foundation of a persona. Typically, clusters of
the same 3-5 participants across each axis
form valid grounds for a persona.
From this process of pattern-seeking and
cluster analysis, we identified 6 personas
differentiated along 4 behavioral and
attitudinal axes.
21

A framework for understanding personas
From our research, we identified 4 axes that
articulate fundamental behavioral and
attitudinal variations amongst consumers.
The nature of qualitative research does not
allow us to claim that these are the only axes to
consider in the market. But we can claim that
these are some of the behaviorally and
attitudinally significant variations that tell a
compelling story about financial inclusion.
1.  Risk tolerance
2.  Financial discipline
3.  Trust in formal institutions
4.  Financial horizon
22
financial disciplinefinancial horizon
trust in formal institutions
risk tolerance
low
high
high
low
low high
long short
INTRODUCTION | PERSONAS | FRAMEWORK

Josephine, a salaried saleslady, feels trapped in an
irrecoverable debt cycle initiated by the necessity to pay
for the burial of her husband and two children. She has no
problem taking out multiple leveraged loans.
Risime, a 24-year old student, views borrowing as a high-
risk expense. He disapproves of the concept of credit and
would prefer to achieve his dreams through savings and
acquisition of concrete assets.
Risk tolerance
Through our research, we met people who
were highly risk-averse, unwilling to use credit
products of any sort and comfortable with
products that offer only simple returns, and
those who were highly risk-tolerant,
comfortable using combinations of leveraged
credit products and curious about investments
that could reap bigger rewards.
LOW HIGH

Respect, an informal trader, has very irregular income, so
takes great care to manage her expenses. She carefully
decides when and how she can treat herself (“I’m going to
buy ice-cream tomorrow”, after careful deliberation).
John, a self-employed orange distributor, is uneducated
and ﬁnds it difficult to budget and account for expenses.
He and his wife believe savings clubs are the only way to
save, as the group enforces discipline.
Financial discipline
Through our research, we met people who
were highly disciplined, adept at managing
their limited incomes, ensuring they never
went into debt, who save for the future, and
those who were undisciplined, often relying on
informal group services or other support
mechanisms to manage their money.
LOW HIGH

Michael, a poultry farmer, is happy to ignore the mundane
details of keeping a bank account. He claims he does not
always check his bank charges as he fully trusts his bank
to take care of him.
William, a wood-seller, is a successful entrepreneur who
has turned to informal support after being rebuffed by
formal institutions for loans, even though he’s been a solid
customer for multiple decades.
Trust in formal institutions
Through our research, we met people who had
developed signiﬁcant trust in formal ﬁnancial
providers, secure in the belief that their money
would be safe and willing to reach out to banks
for advice and support, and those who were
highly skeptical of banks’ intentions and
actions, often due to prior bad experiences.
LOW HIGH

Molaiwa is a single mother and a student. She lives with
her parents and gets by on a R280 per month SASSA
grant. Despite this low income, she is planning on earning,
saving and borrowing to uplift her family over time.
TD, a tractor driver, doesn’t bother to save because his
budget is too tight. He prefers thinking one day at a time,
focusing on the now, not worrying about the bigger
picture until his fortunes change.
Financial horizon
Through our research, we met people who had
grand plans for their future and some
indications of how they could realize their
dreams through steps they could take in the
short-term, and those whose entire focus was
on the day-to-day, ignoring the means by
which ﬁnancial services could lead to a
better future.
SHORT LONG

MARKET CONTEXT | THE SOUTH AFRICAN FINANCIAL LANDSCAPE
The South African financial landscape
Through our research, we learned about a
broad array of financial services used by South
African underbanked consumers.
As in most markets across the world, people
manage their finances through a portfolio of
services that attempts to meet their needs
related to having money to achieve individual
goals (savings), acquiring funds when money
isn’t available (credit), transferring money to
people and institutions (payments), and
hedging against risk (insurance).
People employ a range of formal and informal
financial solutions across these categories of
needs. The particular solutions used are a
reflection of South Africa’s unique position and
history, one that combines the banking
infrastructure and financial sophistication
typically associated with developed markets
with the lack of access and traditionalism
typically associated with emerging markets.
By means of introduction, we’ll first review the
most common financial services we
encountered through our research. We did not
come across the full range of financial services
available in South Africa, so this introduction
should not be considered comprehensive.
28

A bank transfer is the most common instrument used to
transfer money over distance, whether to individuals,
businesses, or for services. Most participants were
comfortable with the notion of transferring money within
the same bank or to other bank accounts via an intra-bank
transfer, performed in-person at a retail branch.
In several cases, participants would withdraw cash from a
savings account at one bank, then travel to another bank’s
retail branch to deposit money into another person’s
account. The purpose of this activity is to minimize bank
transfer fees.
A common behavior we witnessed amongst multiple
participants was the use of multiple bank accounts for
different purposes. Savings accounts were often
separated from accounts used primarily for payments.
Participants maintained multiple bank cards to use
these accounts.
Many participants made electricity payments through
bank transfers or through retail channels. Shoprite, for
example, allows for purchase of prepaid electricity
through their retail stores.
A few participants used debit orders and stop orders for
the purposes of making loan payments on a car or other
bigger-ticket items. In general, these were viewed as more
sophisticated payment mechanisms, not understood by
most consumers, and perceived as not relevant to the
regular needs of the underbanked.
Mobile money was not popular amongst our participants.
Several knew it existed, but didn’t see a burning reason to
use it, claiming bank transfers accomplished the same
task. One exception was an immigrant family that used a
specialized mobile money service to transfer money to
relatives in Zimbabwe.
PAYMENTS
Risima, a student, on payments:
Risima uses internet banking to buy airtime and electricity
and to transfer money to siblings. He also uses an eWallet
money transfer solution through PEP stores to send money
to siblings. He keeps 3 bank accounts for different purposes
– including one dedicated to receiving money from
his parents.

A bank account is the primary savings instrument used
by most. All of our research participants had an account
with a major financial institution ostensibly intended for
savings, although the realities of low income and high
expenses meant that in many cases these accounts did
not hold much. In several cases, these accounts were
opened out of necessity (e.g., as a job requirement or for a
grant, a visa, or a loan).
Several used multiple bank accounts to promote savings
discipline. Some create obstacles to cash withdrawal
(e.g., giving an ATM card to a relative) to help save.
A few participants also used specialty savings accounts,
like 32-day stop orders and auto-direct debit orders to
help save.
Participants trusted banks as secure places to safeguard
the money they have, despite a handful of examples of
fraud or other inexplicable account leakages. Many prefer
accessing their account at a physical branch for safety
reasons, while others were comfortable using ATMs.
Keeping cash on hand as an alternative was seen as
particularly unsafe.
Most were not aware of specific account fees or interest
rates, although a few had a general sense.
Although more sophisticated savings instruments like unit
trusts and money market accounts exist across South
Africa, we did not encounter any usage through our
research.
On the informal side, stokvels (savings clubs) are
commonly used in many communities. Stokvels are
associations of typically less than 20 individuals from one
community. All members contribute a fixed amount
periodically (weekly, biweekly, or monthly) that is placed
into a common pool stored in a bank account. Each
period, the total pool is paid out to one member, giving
that individual the opportunity to take advantage of a large
lump-sum burst of cash.
Many stokvels intend payouts to be used for a specific
purpose. In our research, we encountered grocery stokvels
(intended for bulk grocery purchases) and event stokvels
(intended for wedding, Christmas, and party purchases).
Stokvels vary in their structure – some have formal
leadership (presidents, treasurers) with strict rules (e.g.,
penalty fees for missed contributions), while others are
loosely structured and quite flexible. Some offer loans as
well, keeping a percentage of the total pool to the side for
low-interest (or no-interest) loans to members.
Many value the social aspect of getting together
periodically the most. Many male interviewees believe
stokvel participation is a female activity, preferring not to
get involved, even if they ultimately benefit from the
payouts.
Saving through accumulation of tangible assets is
another behavior we observed. For those who could afford
to, purchasing a home or car was seen as a responsible
way to save. Some in rural locations preferred purchasing
cows or other livestock.
SAVINGS
Zacharia, a teacher, on savings:
Zacharia has a mix of informal and formal saving
mechanisms in his portfolio. Cash is far too liquid to save for
the short-term, so a 32-day notice account provides the
requisite discipline to save for big-ticket items such as
building a house for his mother and fraternal family.
Medium-term savings requirements are fulfilled by investing
in livestock. An education policy for his children is an
additional long-term saving option, but only when his short-
term needs are fulfilled.

Bank loans are a well understood credit mechanism,
although attitudes vary widely toward the very notion of
credit. Participants complain that the bank loan process is
particularly complex and time-consuming, requiring
extensive documentation that may be difficult to obtain
and requiring weeks or months for loans to be approved,
often with minimal visibility into the status of an open loan
application. Most participants thought bank loans were
best for big-ticket purchases – business expansion,
homes, and cars.
Banks vary in their flexibility in loan payment. We heard
examples of stricter banks that come down hard when
payments are missed or late, imposing penalties and
threatening to change terms. On the other hand, we heard
of more forgiving banks that allow loan terms to be revised
and payments to be missed in times of need – only a
token payment need be made to keep the loan alive.
Another common formal loan product is the official
student loan (NSFAS), offered by the government to
cover the costs of tuition and textbooks. This loan does
not require repayment until after graduation, when the
graduate has secured a full-time job. These loans have
penalties for poor academic performance – failing a year
results in the loan being rescinded.
Almost all loans we discussed with participants were
unsecured loans. The sole exceptions were those who had
secured automotive loans used to purchase new (or
almost new) cars.
A few participants used credit cards (issued by the major
banks), but these were typically viewed as emergency-
only solutions.
Retail credit products were also quite popular. Several
participants purchased bigger-ticket items like vehicles or
regular bulk purchases like annual clothing using retail
credit, paying back in installments over time. Interest rates
are typically around 20% per month for major retailers.
We did not encounter extensive use of informal credit
mechanisms. A few participants had experience with
stokvel loans, used for community-related purchases
(e.g., weddings and parties).
More often, people turn to friends and family for casual,
smaller loans, but the social stigma associated with being
indebted to those who are close means that this
mechanism is not a regular course of action. People see
this as gifting (as there’s no interest or repayment
scheduled) rather than credit.
A last resort is the loan shark, but exorbitant interest rates
(above 40%) and the fear of forced removal of assets by
the loan shark’s “sheriff” (i.e., muscle) make this a hardly
desirable alternative. However, we did hear a story about
one individual using a loan shark as a consistent, monthly
source of loans to cover the final tough week before
payday. The lack of an application process and speed of
loan approval made it the most useful option available.
CREDIT
Josephine, a retail saleswoman, on credit:
Despite her experience of the dangers of heavy borrowing
from both the formal and informal sectors, Josephine does
both. Long-term needs are fulfilled by the formal sector,
where money is easily spent and repayments become a
long-term burden. A credit card helps for smaller payments,
providing access to revolving credit without regard for
interest rates. When times are tough, the immediacy of
short-term loans from loan sharks puts food on the table for
her children and orphaned grandchildren.

The most common insurance product seen amongst
South Africans is funeral insurance, intended to cover the
extremely high costs of funerals (R60,000-80,000). On
average, funerals occur over a period of 2-3 years, with the
first 7-11 days being the most cost-intensive.
Funeral insurance is typically provided via a burial society
of 20-25 members, although sizes vary. This society is an
informal mechanism that functions as a group savings
club (R25-50/month payments) with a long-term horizon,
paying out significant funds at the time of death of the
insured.
Many participants were part of multiple burial societies to
ensure coverage of all family members – some societies
just cover the husband and wife, just the kids, just certain
age ranges, etc. Similarly, membership in multiple
societies ensures all funeral costs are covered – some
societies just focus on coffins, tombstones, food, funeral
function supplies, etc. Some societies also have
geographic or community requirements, only permitting
membership if the applicants are living in a specific
location (sometimes a single block). See the next page for
more details on burial society mechanics.
Funeral insurance is also available through formal
institutions, but these are less popular at the moment.
They are more attractive to consumers with
geographically dispersed families.
Other forms of insurance – health, life, and property
insurance – are available in South Africa, but our research
participants were not particularly interested in these. The
value they offer was perceived as too long-term, too
abstract, and only for those with higher disposable
income. Ironically, owning life insurance was seen as being
particularly risky as it could put one’s life at risk, as others
would know the specific value placed on a life.
INSURANCE
Patrick, a teacher, on insurance:
Patrick ‘s insurance needs are fulfilled from both the
informal and formal sector. Within his portfolio are two long
term insurance products – a self-initiated endowment /life
insurance product and a group life insurance scheme
provided through his SADTU (trade union) affiliation. A burial
society affiliation completes his long-term insurance
portfolio requirements.

Funeral insurance: much more than insurance
Consider the significant prevalence of funeral insurance
and the burial societies that provide it. The traditional view
of this phenomenon is that it is a unique insurance
scheme. But its actual mechanics include more than just
insurance – it has savings, credit, payment, and insurance
facets, particularly when assessed from a consumer’s, as
opposed to from a bank’s, point of view.
When asked about savings, many respondents describe
their burial society contributions as a savings scheme,
often while simultaneously describing it as a form of
insurance. They further characterize the practice of
making regular contributions as representative of strong
financial discipline, something they believe should be
valued in credit contexts (e.g., in loan applications). Some
burial societies allow emergency loans from the funeral
pool, effectively serving as credit institutions. And the
mechanics of contribution and of payout touch on many
of the core principles of payment solutions – payment
over time, over distance, and over social networks.
From a consumer perspective then, the funeral insurance
and burial society phenomenon can be viewed as the
ultimate composite financial product, bringing together a
variety of diverse financial behaviors that are traditionally
viewed (in the formal sector) as siloed.
This example highlights a fundamental principle of
consumer-centric innovation: behaviors don’t always fall
nicely into corporate product structures, nor should
providers try to force customers into using products
based on these structures.
0R
5,000R
10,000R
15,000R
20,000R
25,000R
0! 2! 4! 6! 8! 10! 12! 14! 16!D0 D1 D2 D3 D4 D5 D6 D7 D8 D9 D10 D11 Y1 Y2-3
typical funeral inflows and expenses over 3 years postmortem
food,
transport
(cash)
food
(cash)
food
(cash) food
(cash)
food
(cash)
food
(cash)
food (cash),
grave-digging
(cash)
food
(cash)
food (cash),
cow (cash or
bank transfer)
body storage fee (cash),
coffin (cash or
bank transfer)
transport
(cash)
tombstone
(cash or
bank transfer)
food (cash),
cow (cash or
bank transfer)
uncovered funeral expense (payment mechanism)
covered funeral expense (payment mechanism)
•  cash inflow from formal and informal funeral insurance (payment mechanism)
•  R5,000 food
(cash)
•  R15,000 coffin
(cash or
bank transfer)
•  R25,000 insurance payout
(bank transfer)
•  R5,000 condolences
(cash)
time (days to years)
Note: some societies make in-kind payments instead of cash.

PERSONAS | FRAMEWORK
Through cluster analysis of participants placed
along the 4 axes of the persona framework, we
identified 6 personas, representing 6 unique
personalities with different financial behaviors
and attitudes.
Collectively, these 6 personas span the full
range of behaviors and attitudes defined by the
4 axes.
The 6 personas are:
1.  Angela, the aspiring student
2.  Lucien, the family man
3.  Natalie, the survivor
4.  Matome, the driven businessman
5.  Rolphy, the struggling entrepreneur
6.  Patrick & Meiki, comfortable elders
risk tolerance
Patrick & Meiki,
comfortable elders
Angela,
the aspiring student
Lucien,
the family man
Natalie,
the survivor
Matome,
the driven businessman
Rolphy,
the struggling entrepreneur

PERSONAS | ANGELA, THE ASPIRING STUDENT
PERSONA 1:
Angela,
the aspiring
student
22 years old
FET student
Seshego, living with her family
Single (in a relationship)
Aspiring students are keen to contribute to their
family once they graduate. Many are hoping that
their certiﬁcate will secure them a full-time job
with a stable salary. Savings is a challenge for
many as they ﬁnd ways to discipline themselves
from over-spending on clothes, food and
entertainment.

“Getting a certiﬁcate is important. By all means, I’m going to
graduate.”
A level 6 student in Education and Development, Angela is looking forward to
her graduation. As the youngest daughter of a single parent family, Angela
relies on her NSFAS loan to cover half of her R6,500/year tuition. She
understands that she will need to repay the loan but is not exactly sure about
the interest rate and repayment schedule involved, nor does she think she
really needs to worry about it at the moment.
“Saving money alone is hard. I need someone that is trustworthy and
understands me.”
Angela gets most her pocket money from her eldest brother working in
Pretoria. Money is usually deposited into her student account at the end of
the week. She has speciﬁcally asked her brother to deposit on a weekly basis
so she will refrain from spending all of her monthly allowance in a week.
Angela leaves for school at 8 am everyday. She eats lunch and dinner at
home to save money. On weekends, Angela enjoys spending time with her
friends in town. Her largest spend apart from groceries is on clothes. She has
a credit account with Ackermans – she currently owes R300 and must pay
back R105/month (20% monthly interest included).
Angela bought a BlackBerry last year for her school assignments. She
spends up to R60 on prepaid airtime per month (R40 on calls and R20 on
20MB of data). She also uses Whatsapp and Mixit to connect with
her friends.
“In the meantime (before graduation), I am planning to set up a
perfume business to earn money.”
With a strong entrepreneurial spirit, Angela is also an active member in the
Youth Enterprises Group (YEG). With over 500 members, YEG is one of the
largest societies in her college, and she loves bonding with other
like-minded students.

200# 100# 60# 50# 30# 30# 30#
MONTHLY PERSONAL INCOME
Trans-
port Others
R500
family-supported
Clothing Food and drinks Airtime
Entertain-
ment Savings
MONTHLY EXPENSES
SPENDING PATTERNS
R470
KEY ASSETS
0 7 14 21 28
DAILY
SPEND
MONTHLY
SPEND
Nokia E63 Used PC Television
Spending bursts
after weekly
allowances

risk tolerance
Angela is an active member of the
Youth Enterprises Group in her college
and has a broad social circle of financial
influencers. However, when it comes to
finance, she still prefers flexibility and
tends to rely more on herself to ensure
she meets her goals.
At age 22, Angela is already thinking
way beyond her graduation. In reality,
however, Angela does not really have a
savings plan, and her monthly
allowance from her family barely
covers her expenses.
When it comes to finance, Angela has a
strong preference toward formal
institutions, as she believes their
policies and products better suit the
lifestyles of young people.
Although an NSFAS loan is generally
considered a safe bet, Angela signed up
without understanding the actual terms
involved. Aside from her education loan,
Angela also has some light, manageable
retail credit, despite not having
an income.

While most people of her age tends to dream big, Angela’s
aspiration is more grounded in reality. She is looking
forward to her graduation, as having a certificate will
increase her chance of finding a full-time job, allowing her to
start contributing to her family. With a stable income, the
very first thing she would want to do is renovate the house
her parents are living in. Angela also hopes her children will
have a better life than the one she currently has. She would
want all her kids to go to universities (not vocational
schools) and is already planning to get education policies
once she has her first child and a stable income.
“I hope my degree will help
me get a job. If not, I’ll start
my own business. With the
money, I can fence my
parent’s house.”

KEY INSURANCE NEED
Lower barriers to entry for formal
funeral insurance
Angela wishes to pursue a formal
funeral policy, which she thinks is a
more modern approach than her
parents’ burial societies, but cannot
without payslips and other formal
documentation that she doesn’t have.
She is keen to use a formal solution as
she plans to move to a larger city away
from home and will no longer be
entitled to her parents’ burial coverage
after she gets married.
KEY PAYMENTS NEED
Greater control and ownership of
the money receipt process
There have been a number of times
when her brother is busy, forgetting to
send her money on time. Angela will
then have to borrow from her friends
for the weekend. She is frustrated that
her income is so dependent on the
behaviors of others.
Angela is currently covered
under an informal burial
plan, paid for by her parents
(R50/month).
Angela receives money
from her elder brother
every week. She withdraws
around R100 every week
from an ATM located inside
a Shoprite 30 minutes from
where she lives.
Like 70% of other students
studying at FET, Angela
currently ﬁnances her
R6,500/year tuition fee
with a loan from NSFAS.
KEY CREDIT NEED
More approachable loan
information and education to
inform long-term planning
Although Angela will only start
repaying her student loan after she
graduates and lands a full-time job, she
is still concerned that the loan burden
may be quite severe. She doesn’t truly
understand how her life will be
impacted by loan repayments, nor
does she have the time or energy to
ﬁgure it out given the distractions of
school life.
KEY SAVINGS NEED
Greater self-discipline to promote
savings and discourage careless
spending
Preventing herself from spending her
entire allowance within a week is a real
challenge given the temptations of
student life. Angela doesn’t feel she
has enough self-discipline, so she asks
her brother to deposit her allowance
on a weekly – not monthly – basis, to
resist the urge to spend.
Angela opened a student
account 2 years ago. She
receives her weekly
allowance (R125) from her
brother in this account, and
also uses it to pay for
school fees.

PERSONAS | LUCIEN, THE FAMILY MAN
PERSONA 2:
Lucien,
the self-made
family man
44 years old
Poultry farmer
Chebeng, living with his family
Married with children
Being the heads of a household and the only
breadwinners, self-made family men have the
challenging role of ensuring a stable ﬂow of
income for their family, both now and in the
future. Growing their present income and savings
while juggling the needs of their multiple
dependents are their biggest concerns.

“I head out to the farm at 4:30 am everyday to make sure everything is
alright. Sometimes, I sleep there.”
A father of five and the owner of a chicken farm, Lucien has a very busy life.
Monday through Saturday, he wakes up at 4:00 am and attends to his farm
business. Managing a poultry business is not easy – income is uncertain and
volatile as revenues are highly dependent on the market price of chickens
and fertility rate of the eggs. Lucien on average earns R4,500/month and
might earn an additional R3,000-7,000 at the end of the year depending on
how many chickens are bred.
“I never borrow money from the bank because I believe I will end up
paying more.”
Despite his income uncertainty and wish to expand his business, Lucien has
never considered taking a bank loan. When it comes to his family however,
Lucien will always try to go the extra mile. Upon his kids’ request, Lucien
bought a home stereo system from OK House and Home last year. The stereo
was bought using hire purchase (installments) and Lucien is now paying
R852/month for 30 months (he’s not exactly sure about the interest rates).
The family is also planning to get a DSTV service which will cost R599 for the
dish and R265/month for subscription.
“The bank will lose the money of an individual, but not when we are in
a group.”
For savings, Lucien is relying on the burial society that he inherited from his
father. He currently contributes R70 each month to cover his entire family.
Being around for so long and recognized as the financially savvy one, Lucien
was chosen as one of the society’s 3 leaders a few years ago. The society
usually gathers during the first week of each month to discuss matters and
collect money. To make better use of the money, Lucien has been shopping
around for banks that give better interest rates. He was also the one who
proposed using part of the society’s money to stock up on funeral necessities
such as pots, plates and tents to cut down on the operating costs of funerals.

1500$ 1000$ 850$ 250$ 200$120$100$ 480$
Clothes Airtime
R4,500
self-made
Groceries Farm operations Installment Electricity Savings
MONTHLY EXPENSES
SPENDING PATTERNS
R4,020
KEY ASSETS
0 7 14 21 28
MONTHLY
SPEND
Societies
TelevisionNokia feature
phone
Flatscreen TV
(1 per bedroom)
Stereo Microwave Mini-fridge Washing machine
DAILY
SPEND
Grocery
bulk purchase

risk tolerance
Lucien is one of the 3 leaders of a burial
society he inherited from his father. He
strongly believes in the notion of
community as a means to influence
positive financial behaviors and has
been actively finding ways to improve
the operation of the society.
Despite his desire to save, he has an
unstable income, so he finds it hard to
plan financially beyond the next season
(2-3 months). The family relies mostly
on payouts from their saving societies
for any major unexpected expenditures,
e.g., funerals and weddings.
While trusting banks to be the safest
place to keep his money, Lucien has
always had doubts on whether banks do
act in customers’ best interests. He
strongly believes that communities
should manage their own finances.
When it comes to insurance however,
Lucien does see the value of having an
education policy. He wants to make sure
that none of his family members will
suffer even when he is not around.
Despite his wish to expand his
business, Lucien never considers
applying for a loan for fear that he will
not be able to pay it back. Instead he
prefers saving up. He is comfortable
with taking purchase installments due
to the smaller amounts involved.

Working hard and providing for his family for more than two
decades, Lucien has consistently made family the central
part of his life. By expanding his chicken farm, Lucien hopes
to increase his income so that he can send all the rest of his
three children to university. Cognizant of his present
challenges in operating a business, he does not expect any
of his children to take over the farm, but rather wants them
to get a good job in town and earn a stable income. He also
hopes to ﬁnd ways to manage the funding of the burial
society more effectively so that they can contribute more at
times of any member’s funeral.
“My biggest achievement
will be seeing all my children
go to university, getting a
good job and not having to
worry about money.”

KEY INSURANCE NEED
Clear value proposition on how
formal and informal solutions can
co-exist
Lucien is quite comfortable with his
portfolio of informal group savings and
insurance schemes. He has recently
been receiving calls from a few
insurance companies, but is not sure
which ones he can trust, nor does he
see a truly compelling reason for why
he should switch.
KEY PAYMENTS NEED
Easier and cheaper inter-bank
transfer mechanisms
As not all the hatcheries he deals with
use the same bank as he, Lucien often
has to pay additional fees for money
transfers. He tried opening multiple
accounts to reduce fees, but decided
the hassle of managing multiple
accounts was too inconvenient.
In addition to a burial
society, Lucien contributes
to an informal food stokvel
(R50/month). He is also
considering buying an
education policy for
his children.
Lucien receives money
(R3,000-7,000) from
various hatcheries in
Pretoria toward year-end
via bank transfers.
Despite wishing to expand
his business, Lucien has not
considered taking a loan for
fear of not being able to pay
back. He thinks hire
installments are best
because of the small
payments involved.
KEY CREDIT NEED
More flexible and more
approachable loan terms
Lucien could benefit from loans to
grow his business, but has a deep-
seated fear of credit. He believes all
bank loans are inflexible in their terms,
so he would rather borrow from family
or friends if needed. However, he feels
uncomfortable using personal
relationships for large loans, so
defaults to not borrowing at all.
KEY SAVINGS NEED
Better tracking and management of
family and community finances
Managing the finances of a family of 7
and a 26-member burial society is not
easy. Lucien tries to diligently log all
transactions, often referring back to
SMS notifications, and keeps all
receipts in a plastic bag. He finds this
process cumbersome and tedious, but
doesn’t feel he has any other options.
Lucien has 2 bank
accounts: one for the burial
society and one for
personal finance. He likes
one for its SMS
notifications, the other for
the simplicity of its flat
transaction fees.

PERSONAS | NATALIE, THE SURVIVOR
PERSONA 3:
Natalie,
the survivor
41 years old
Part-time cleaner
Ga-Mashashane, living with her family
Single mother/grandmother
Often living with small incomes and SASSA social
grants, survivors struggle with their ﬁnances on a
daily basis. A lack of transparency into ﬁnancial
products and the pressure to make ends meet
forces many of them into repeated cycles of debt.

“I have had 7 kids and 3 of them died so I’m left with 6 orphans. My
husband passed away 2 years ago.”
At age 41, Natalie is already the grandmother of 11. She has a part-time
cleaning job which pays her R1,500/month and is also entitled to foster care
grants of R1,500/month. Life has not been easy on Natalie – both her
husband and 3 kids passed away a few years ago and now she is left with 6
orphans, the youngest one aged 4.
“I have a R400 loan from a loan shark. The interest rate is 40% which I
think is high but I still agreed as it was convenient. I cannot let the kids
go hungry.”
With a monthly household expenditure of around R3,500, Natalie’s income
hardly covers living costs. She started borrowing from banks 2 years ago and
has since been borrowing from different institutions. One of the largest loans
(R14,000) was used to buy a water tank and to put electricity in the house.
Another recent loan was used for a burial. Recently, she is looking for smaller
banks as they are the ones least concerned about her credit history. Although
Natalie has been trying to pay off parts of her loans, she estimates that the
amount owed to banks still exceeds R27,000. Natalie is currently paying
R1,200/month to cover minimum payments and interest.
Lately, faced with the pressure to feed her family, Natalie has resorted to
borrowing R400 from a loan shark that lives in her village. Natalie is fully
aware of the outrageous interest rate (40%), but has little choice.
“I get my SASSA money on my card once a month but as soon as the
money is deposited, I take it all out at Shoprite.”
Though she has 3 bank accounts, Natalie hardly has money left in any of her
bank or SASSA accounts at one time. Like many other single mothers, she
withdraws all the money from a Shoprite near her home almost immediately
after money is deposited. She will normally spend the money right
afterwards on bulk food and groceries that she hopes will last the family the
entire month.

1200$ 1200$ 400$ 200$ 150$ 100$60$
Clothes Others
R3,000
self-made and grants
Loan repayment Groceries Transport Airtime
MONTHLY EXPENSES
SPENDING PATTERNS
R3,500
KEY ASSETS
0 7 14 21 28
MONTHLY
SPEND
TelevisionNokia feature
phone
Stereo Microwave
Refrigerator
DAILY
SPEND
Grocery
bulk purchase
Grocery
bulk purchase
and loan
repayment
ElectricityLoan shark repayment

risk tolerance
As much as she wants to be part of
savings communities, Natalie is not as
she cannot afford the monthly
payments. She often feels helpless in
the face of crushing debt and doesn’t
have the discipline to truly find viable
ways out.
With hardly any money left in her bank
account at any given time, Natalie’s
financial horizon does not stretch
beyond even the current month.
Natalie considers banks as the safest
place to borrow money and will only turn
to informal institutions such as loan
sharks as a last resort. However, in times
of desperation, the convenience factor
still precedes all – she will take out loans
from whichever institutions are willing to
lend to her.
The pressure to sustain herself and her
grandchildren means that Natalie is
willing to take as much financial risk as
she can to cover basic expenditures.
Trapped in a debt cycle, she regularly
takes out loans from both formal
institutions and loan sharks to cover
the minimum repayment and
interest expenses.

As simple as it might sound for people not living on a tight
budget like Natalie, making it through the day appears to be
the most sensible thing she can hope for in her life. Fully
understanding the risks and dangers involved, Natalie
wishes to get out of her increasingly vicious debt cycle.
Getting a full-time job with better pay is what she sees as
the best solution.
“I wish I can have a full-time
job that will earn me more
money. All I want is to feed
the children. I cannot let
them go hungry.”

KEY INSURANCE NEED
Lower costs of entry for funeral
coverage
All burial societies in her neighborhood
demand a minimum contribution of
R50/month which Natalie cannot
afford. She would not mind if fewer
items are covered for a lower
contribution. She feels even light,
partial coverage is better than nothing.
KEY PAYMENTS NEED
None
She wants to enroll in a
local burial society, but
can’t afford the monthly
payment. She contributes
R10 towards funerals
happening in her
community in the hope that
people will do the same
for her.
Natalie is not using any
payment or remittance
services.
She currently has 3 loans
from 3 institutions – for
R14,000, R7,000, and
R5,000. She is also
borrowing R400 from a
loan shark at 40% interest.
She will borrow R300 from
her friend too regularly, with
no interest.
KEY CREDIT NEED
Greater confidence and better
planning to assist in escaping from
the debt cycle
Poor financial planning and the daily
pressure to make ends meet has
forced Natalie into a painful repeated
debt cycle – using one loan to cover
others. She feels so trapped in this
cycle that she has no idea how to start
trying to escape.
KEY SAVINGS NEED
Better mechanisms to force short-
term savings through income
troughs
Despite having three accounts, Natalie
can barely maintain savings in any of
them. She will withdraw and spend it
all as long as there is money, even if
she knows that saving a little would be
more beneficial to bulk purchasing for
her family.
Natalie has 3 bank
accounts – one for her
payroll account and two for
loans. She also has a
SASSA card through which
she receives R1,500
monthly.

PERSONAS | MATOME, THE DRIVEN BUSINESSMAN
PERSONA 4:
Matome,
the driven
businessman
36 years old
Teacher
Mankweng, living with his family
Divorced with children
Educated and with high income, driven
businessmen are financially savvy and open to
new ways of managing their finances. They are
keen to find ways to increase income, but not at
the cost of security.

“I learned from my father that the most important thing in life is to
grow to be a responsible man.”
As the only kid out of 5 with a college degree and a teaching diploma,
Matome is the star of his family. Being a teacher at a rural high school gives
Matome a reasonably good, stable income (R9,000). Inspired by his father,
Matome sees responsibility – for his business, his family, and his health – as
the most important priority in life. He works hard to be able to support three
households – his mother, his current wife with a child, and his divorced wife
and child (R1,000/month support) who are living in Magoebaskloof.
“Money is easy to spend. I ﬁnd it more interesting to put it into the
house and in livestock.”
Despite the easy income of a teaching job, Matome is never tired of ﬁnding
ways to grow his income. Lately, he started to run a small farm in his
backyard where he grows chicken and fruits. Matome also started a project
to extend his family house three months ago. The extension is expected to
cost R40,000 in total, but Matome has never considered taking a loan. He
actually had R30,000 savings in his bank account prior to starting. To
Matome, taking out a loan is only necessary if you cannot meet your basic
living needs. Matome has nonetheless agreed to purchase a pickup truck,
even though he doesn’t need it all the time as he’s part of a lift club with 4 of
his colleagues. He has also bought car insurance (R900) based on
recommendations from his garage.
“I do not believe in a burial society. I only trust myself to be the best
person to save money.”
Matome does not believe in the informal way of savings. When his father
passed away, the burial society only managed to provide R3,000 for the
coffin. Matome ended up having to put in an extra R7,000 to get his father a
‘decent coffin’. Instead, Matome relies on placing a 32-day stop order every
month for R3,000. Despite trusting the bank as a safe place to keep his
money, Matome has become skeptical about other services offered by banks.
He recently suffered a direct debit fraud where R200 was taken away from
his account for 3 months.

3500$ 1000$ 800$ 250$ 3290$
R9,000
self-made
Vehicle installment Child support
Electricity
Savings
MONTHLY EXPENSES
SPENDING PATTERNS
R5,710
KEY ASSETS
0 7 14 21 28
MONTHLY
SPEND
Nokia feature
phone
Flatscreen TV
(1 per bedroom)
Microwave Washing machine
DAILY
SPEND
Grocery
bulk purchase
and vehicle
installment
Bakkie
(pickup truck)
Refrigerator PC
Groceries Petrol (100)
Airtime (60)

risk tolerance
Matome is confident about managing
his own finances and does not want the
inflexibility imposed by savings
societies. He believes that community-
oriented finances are not for successful
businessmen like him.
Matome has a financial roadmap of at
least 4-5 years. He is saving a large
portion of his salary to expand his
family house. He is also developing a
small farming business in his backyard
where he plans to create additional
income for himself and his family by
selling chickens and fruits.
Matome believes that banks are the only
safe place to keep his money, although
his confidence in formal institutions has
been taunted by his recent experience
with a fraudulent debit order.
Though willing to take cautious
investment risks to build and extend his
family house, Matome will only use his
savings to fund the extensions. He
would rather do it over 2-3 years
instead of completing it with a bank
loan in 6 months.

Inspired by his father to be responsible and provide,
Matome’s latest expenditure is on extending the family
house where his mother still lives. Matome believes the
house extension is a symbol of achievement as well as an
expression of gratitude. He takes great pride in using his
income to bring stability to others. For him, this is the
ultimate sign of responsibility. He intends to instill this belief
in his children as well, urging hard work to make the future
better for all.“My dad struggled a lot to
get me to where I’m today.
Back in those times, it was
not easy. Now I’m the
breadwinner, so I need to
handle my responsibilities
ﬁrst and foremost.”

KEY INSURANCE NEED
Greater tangibility around insurance
mechanics, contributions, and
payouts
Matome struggles with the
mechanisms of insurance payout. He
has had bad experiences with informal
solutions, and doesn’t trust formal
solutions either due to his prior fraud
experience. He defaults to cattle,
considering it great insurance as it’s a
liquid asset, readily convertible to cash
in case any of his family members
pass away.
KEY PAYMENTS NEED
Greater confidence and security in
inter-bank money transfers
Matome wishes there were an easier
and cheaper option for transferring
money to his ex-wife. He does not fully
trust inter-bank transfers, preferring
the tedious process of visiting another
retail branch as he knows the payment
will be confirmed.
Matome considers
investment in cattle as a
better and more direct
insurance option than
buying a life or funeral
insurance policy.
Matome transfers money to
his ex-wife by withdrawing
money from one of his bank
accounts and depositing it
into another bank account
every month. Only this
second bank is available
where his wife lives.
Matome bought a pickup
truck using a vehicle loan.
He also has a credit card for
emergencies.
KEY CREDIT NEED
Tailored loan products based on
individual risk profile
Matome does not like the idea of taking
a loan for his house extension because
of the large total amount due. He’s
happy with a vehicle loan, as the risk of
taking out such a loan is much lower
due to the smaller total amount due.
KEY SAVINGS NEED
Secure wealth management
mechanisms that inspire confidence
Rather than keep money in a bank
account, Matome is looking for better
ways to grow his income. Currently, he
is investing money in his house and
livestock because he feels these are
the safest approaches. He was once
burned by a fraudulent debit order, so
now approaches money-making
schemes very conservatively.
Matome has 3 bank
accounts – one for payroll,
one for his vehicle loan, and
one for remittances only.

PERSONAS | ROLPHY, THE STRUGGLING ENTREPRENEUR
PERSONA 5:
Rolphy,
the struggling
entrepreneur
31 years old
Entrepreneur
Blood River, living with his family
Single with 2 young kids
High unemployment and little education mean
that many are left with few choices but to start
their own business. Struggling entrepreneurs look
for ﬁnancial solutions that help them sustain their
often ailing business. They seek safe ways to
borrow money and better ways to manage their
unstable income.

“I started the tombstone business because there is no other better way
to make money. It’s very hard to find a job.”
Rolphy is in the fifth year of his tombstone business. Eyeing the large
potential revenues involved, he decided to start the business with a group of
friends. He sells tombstones mainly to customers living in his neighborhood.
Sustaining the business has not been easy – the funeral business has
become extremely competitive with many new players in recent years. Also,
his customer base is shrinking – most of his customers are older. The
younger ones are just not that interested anymore.
“Payments from my customers are unstable. I feel a lot of stress
running my business.”
Most of Rolphy’s income comes from a monthly contribution (R30-60) of 25
customers. However, income tends to be fairly unstable as many of his
customers are on social grants and there are times when his customers
cannot pay. Special arrangements will be made with these customers –they
are usually given up to three months to make the repayment.
Rolphy keeps a record of all the income and expenses in a notebook which he
hides at home. When income is received, he pays for all the expenses and
banks the remaining. He has one bank account in town. His largest spend,
apart from buying stones and paying for electricity, is on his 2 young kids
who are staying with his mother. Rolphy sends money to them via a payment
service called Money Market at Shoprite at the end of every month. He cuts
costs by sharing the R60/week electricity payment with 4 other friends.
“I want to borrow from banks but I don’t think they’ll lend to me.”
Faced with ailing financials, Rolphy is really worried that one day he will not
be able to continue his business. He believes the only way to get out of this
predicament is by expanding into other funeral parlor services and obtaining
new customers. He has considered borrowing from banks, but thinks banks
will not lend to him due to his current financial condition. He is also worried
that he will not be able to pay back. Currently he is relying on friends who are
lending him money, but is not sure how long this can last.

Television
R1,200
self-made
MONTHLY EXPENSES
SPENDING PATTERNS
R1,200
KEY ASSETS
DAILY
SPEND
MONTHLY
SPEND
Motorola
feature phone
Used PC
0 7 14 21 28
Tombstone
and money
remittance
600# 260# 200# 80# 60#
Landline &
airtimeTombstone Groceries Money to kids Electricity

risk tolerance
Trying hard not to get into a debt,
Rolphy is highly disciplined in terms of
his personal expenditures. However, he
still struggles to manage the realities of
unstable income and unexpected
business-related expenditures.
Despite having a strong ﬁnancial
horizon in mind – with plans to
expand into other funeral services,
Rolphy is faced with the day-to-day
challenges of sustaining his
business. He is constantly
exploring the possibilities of
expanding his business, but lacks
the capability to do so.
Rolphy places strong trust in banks as
the safest place to keep his money.
However, he does not see banks as truly
helpful to lower-income customers like
himself. He does not believe they can
help with loans of business advice.
While being open to taking up bank
loans to expand his business, Rolphy is
unsure banks would help him given the
inconsistency of his business. He is
currently relying on friends for
loans instead.

Struggling to generate a stable ﬂow of income and keep an
adequate number of customers, Rolphy’s current biggest
concern is to keep his business going. He believes the only
solution is to expand his business into other funeral parlor
services. His biggest hope is to see his business grow and
not having to worry about its ﬁnancials all the time.
“I want to expand into the
funeral parlor business and
get more customers.”

KEY INSURANCE NEED
Greater flexibility in payment terms
Running a funeral business himself,
Rolphy does see the value of having an
insurance policy, but doesn’t think that
the formal sector understands his
needs and the needs of those in similar
situations. Many like himself who live
on tight, irregular incomes find it
difficult to make the regular payments
required by the formal service
providers.
KEY PAYMENTS NEED
Accelerated and more efficient
money transfers
Rolphy transfers R200 regularly to his
mother and children but has to do it
manually at Shoprite, which can be a
tedious process at month-end. He is
looking for more hassle-free, secure
solutions to conduct this
regular transaction.
Rolphy is not contributing
to any formal or informal
insurance products.
Rolphy uses the Money
Market transfer service at
Shoprite every month to
transfer money to
his family.
Rolphy relies mostly on his
friends to fund his business
activities, but the amount of
money lent is generally
very small.
KEY CREDIT NEED
Access to small business loans and
advice for small business growth
Rolphy would like to obtain capital
from banks but does not believe banks
will lend to small, struggling
businesses like his. He is also worried
about not being to pay back. In
addition to desiring access to loans for
his business, Rolphy also thinks
financial advice to help him expand his
business could be very helpful.
KEY SAVINGS NEED
Better ways to stabilize
erratic income
Unstable payments by his customers
mean that Rolphy finds it hard to keep
track of his finances. There are also
moments when his business requires
sudden, large cash outflows (e.g., when
his customer requests a tombstone).
Rolphy struggles to find solutions that
help him stabilize income while
meeting all unexpected capital needs.
Rolphy has one bank
account for all personal and
business needs. He tries to
save the little that’s left
after paying off all his
expenses at month-end.

PERSONAS | PATRICK & MEIKI, COMFORTABLE ELDERS
PERSONA 6:
Patrick & Meiki,
comfortable
elders
62 (Patrick) and 60 (Meiki) years old
Welding store owner and teacher
Ga-Mothiba, living with their family
Married with children
With well-established business histories and
accumulated wealth over the years, comfortable
elders are looking for ﬁnancial solutions that will
help them manage their wealth and navigate
through retirement.

“I do not think of growing my business anymore due to my age.”
At age 62, Patrick is looking forward to his retirement. Being a father of five
and the owner of a welding workshop for more than four decades, Patrick has
had a very busy life. Still running his business today, Patrick has hired 3 men
to help him out. Competition has intensified lately but Patrick has no plans to
retire due to age. He is happy with the R2,000-3,000 monthly profit that his
business still makes for him. His wife Meiki is also making R3,000 from her
teaching job.
“I am most proud of the fact that my house and TV are fully paid. I am a
free man.”
All but one of Patrick’s children have graduated from school. Patrick is very
proud that all of his sons have managed to find a decent job and are all
contributing to the expenses of the family.
Patrick is also proud of the fact that he has never taken out a loan. He does
not like the idea of owing others. A great accomplishment of his has been
raising all of his kids on his own.
“My wife is the one who makes all the purchasing decisions. She knows
best what the family needs.”
With all his focus on the business, Meiki is the one who makes all the major
purchasing decisions. She will normally visit Shoprite once or twice a month
to stock up on groceries.
Patrick is currently part of 2 burial societies, to which he contributes R70
each month to cover his entire family. Meiki is part of 2 food stokvels.
Patrick is also the MD of the Stonebreakers football club. The society has
created a stokvel with 21 members who contribute R50 monthly. Their
original thought was to use the money toward rebuilding the football club, but
now the goal is more about savings. Club funds are stored at a bank – he’s
had to move the accounts around a few times due to changing requirements
around society constitutions.

1500$ 1000$ 300$ 250$ 50$
R6,000
self-made
Groceries
Airtime
Savings
MONTHLY EXPENSES
SPENDING PATTERNS
R3,430
KEY ASSETS
0 7 14 21 28
MONTHLY
SPEND
Nokia feature
phone
Microwave Washing machine
DAILY
SPEND
Grocery
bulk purchase
and farm
operations
Refrigerator
Petrol
Second-hand
car
Television Flatscreen TV
(1 per bedroom)
Plant operations Societies
Electricity
200#
Dogs
2570#

risk tolerance
Patrick and Meiki strongly believe in the
notion of community and the value
community brings to financial
discipline. Multiple burial societies and
stokvels have helped them save
for decades.
At age 62, Patrick is really looking
forward to his retirement. Even though
he understands that his business is at
risk from competition, he has no plans
to alter his business model in response.
While Patrick believes that banks are the
safest place to keep money, he does not
trust them to be acting in his best
interest all the time. He is especially
disappointed by some of the newer
technology developments (e.g., SMS
notifications instead of paper
statements), which he finds hard to
keep up with.
Patrick and Meiki have never and would
never consider taking a bank loan. They
do not like the idea of owing
others anything.

After working hard and growing a business for more than
four decades, Patrick and Meiki are at a life stage where
they seek comfort and stability. While family is still central
to their lives, they are relieved and proud of the fact that
their children are now independent. It is now their time to
gently and deliberately pursue what they want.
“My main goal in life now is
to see my last child ﬁnish
school. Then I am free!”

KEY INSURANCE NEED
Greater security and trust around
formal insurance schemes
Patrick has been getting calls from a
lot of insurance companies but does
not believe that any of these
companies are legit. He has been
hearing many stories of people getting
conned on insurance sales. Although
he would consider additional plans to
ensure maximum funeral coverage, he
does not see a clear reason to switch
to formal solutions, given the relative
safety of his current burial societies.
KEY PAYMENTS NEED
Better mechanisms to track and
manage payments for business
purposes
Although Patrick believes supporting
customers’ preferred payment
mechanisms is good customer service,
he struggles with payments that are
not regular. At times, it takes some
customers 2-3 months to pay up,
which makes it very hard for Patrick to
keep track of his finances.
Patrick and Meiki are part of
2 burial societies, where
they have been members
for over 20 years.
Patrick has 2 bank
accounts, to be able to
more cheaply transact with
more customers. For
customers far away, Patrick
usually receives payments
by bank transfer.
Patrick has never
considered taking out a
loan as he does not like the
idea of owing
others anything.
KEY CREDIT NEED
None
KEY SAVINGS NEED
Better ways to track finances and
plan for the longer-term
Even though Patrick and Meiki have
saved well over the years and are soon
reaching the point where they no
longer have to worry about
dependents, they recognize that
retirement presents its own financial
challenges. They find financial planning
challenging – they used to go to banks
to ask for print-outs of bank
statements but were told to use SMS
notifications instead. Patrick doesn’t
find this easier.
Patrick and Meiki save
judiciously in 2 bank
accounts, actively thinking
about their retirement
lifestyle.

PERSONAS | IN SUMMARY
Key needs in summary
Each of the 6 personas, with
their varying behaviors and
attitudes related to risk,
discipline, trust, and financial
horizon, have different needs
around payments, savings,
credit, and insurance.
Their key needs in each of
these areas represent areas of
opportunity that can be taken
advantage of through a variety
of mechanisms.
Patrick & Meiki,
comfortable elders
Angela,
the aspiring student
Lucien,
the family man
Natalie,
the survivor
Matome,
the driven businessman
Rolphy,
the struggling entrepreneur
Greater self-
discipline to
promote savings
and discourage
careless spending
Greater control
and ownership of
the money receipt
process
More
approachable loan
information and
education to
inform long-term
planning
Lower barriers to
entry for formal
funeral insurance
Better tracking
and management
of family and
community
finances
Easier and
cheaper inter-bank
transfer
mechanisms
More flexible and
more
approachable loan
terms
Clear value
proposition on how
formal and
informal solutions
can co-exist
Better
mechanisms to
force short-term
savings through
income troughs
None
Greater
confidence and
better planning to
assist in escaping
from the debt
cycle
Lower costs of
entry for funeral
coverage
Secure wealth
management
mechanisms that
inspire confidence
Greater
confidence and
security in inter-
bank money
transfers
Tailored loan
products based on
individual risk
profile
Greater tangibility
around insurance
mechanics,
contributions, and
payouts
Better ways to
stabilize erratic
income
Accelerated and
more efficient
money transfers
Access to small
business loans and
advice for small
business growth
Greater flexibility
in payment terms
Better ways to
track finances and
plan for the longer-
term
Better
mechanisms to
track and manage
payments for
business purposes
None
Greater security
and trust around
formal insurance
schemes

The fact that all 6 personas are banked should
not be viewed as a success story of financial
inclusion. The fact that they have significant
unmet needs across multiple financial domains
in fact says the opposite – that these personas
are fundamentally underbanked.
As these 6 personas are already participants in
the formal sector in limited capacities, financial
institutions are not starting from zero in their
attempts to serve them.
In this way, these 6 personas represent 6 ideal
potential customers – comfortable enough
with the formal sector to have a relationship to
build on, but not yet served perfectly by any
player, formal or informal, in the
financial ecosystem.
While it is beyond the scope of this study to
recommend specific product, service,
communication, distribution or strategy ideas
to address the key needs of these personas, a
number of themes – representing potential
market opportunities – emerge when we take a
consumer-centric perspective that looks
across these needs. These should serve as the
foundation for more focused
innovation initiatives.
74
RECOMMENDATIONS

RECOMMENDATIONS
A consistent theme that emerged across many consumer
conversations relates to the flexibility and control built into
financial solutions. This is particularly apparent in formal
solutions, which are broadly considered to be overly strict
and unforgiving in their mechanics and terms.
From a consumer perspective, finance is viewed as
among the most personal of subjects, and therefore is a
subject that should be addressed in personalized ways.
The market is full of unsalaried workers subject to the
severe fluctuations of seasonal income, unpredictable
part-time jobs or contacts that don’t pay on time. There
are consumers who do not have the right loan
documentation but who can pay back responsibly. There
are borrowers whose ability to front collateral changes
over time. There are savers who can save for the short-
term but not the long-term, and vice versa. Consumers
believe that formal institutions do not work well with
inconsistency, as they do not offer the right level of control
over the terms of the products they’re purchasing and
using or the right level of flexibility given their individual
circumstances and how their circumstances change over
time. Often, these consumers will turn away completely,
representing a missed opportunity.
Offer solutions for uncertainty, that position individual
flexibility and control as the core value and benefit– not
as a secondary, optional component – of the solution
experience puts the financial institution in a more intimate
relationship with the consumer.
MARKET OPPORTUNITY 2
PROMOTE FLEXIBILITY AND CONTROL
Outside of dense urban centers, the infrastructure of
formal providers changes dramatically, in many cases
disappearing altogether. Remote ATMs and retail
partnerships are the typical means used to extend reach,
but this greater reach comes at the expense of quality.
From a consumer perspective, there is great import
placed on personal retail interactions that are both live
and genuine.
Live interactions are obviously viewed as the most
personal form of interaction, but they are not always
considered the best. Retail bank branches are often
viewed as intimidating by non-urban-dwellers, effectively
creating an experience that does not genuinely support
the consumers it is trying to serve. Conversely, SMS
balance notifications, despite being impersonal and
crude, are appreciated as the most trusted
communication that banks make.
The opportunity for formal players is to consider ways to
broaden and deepen reach in lesser served areas by
building genuine relationships. A live presence through
more branches, retail partnerships or mobile branches is
not necessarily always the best approach (nor the most
cost-effective), unless a well designed experience strategy
is in place. Well designed technology solutions also help,
complementing the extended distribution network.
EXTEND DISTRIBUTION GENUINELY
The prevailing approach seen in the market is formal and
informal institutions competing either head-on or not at
all. Banks are the source of larger loans, while informal
lenders are the source for smaller ones. Stokvels and
savings accounts rarely cross paths. Burial societies and
funeral insurance compete directly for share of wallet.
From a consumer perspective, both formal and informal
solutions have their place, each with their own
advantages and disadvantages.
While there may be opportunities to displace informal
solutions in certain contexts, seeking ways to coexist with
the informal represents an untapped opportunity. Burial
societies and stokvels could benefit from the security and
reliability of formal institutions. Local relationships with
communities, industry, and entrepreneurs could be
leveraged to create a more authentic local presence for
formal institutions. Behaviors around informal solutions
could be used to better tailor formal solution mechanics
and terms.
A more complementary and cooperative model of
coexistence with the informal gives formal institutions
the opportunity to build deeper, more trusted and more
meaningful relationships with consumers.
COMPLEMENT THE INFORMAL

RECOMMENDATIONS
Financial services inherently involve some level of
complexity, and financial and textual literacy varies
significantly across the market. While many consumers
may implicitly understand notions of risk, time value of
money, and the flavors of financial instruments, the actual
mechanics and vocabularies of financial services are often
difficult to grasp.
From a consumer perspective, a deeper understanding of
financial solutions is universally desired, but the ideal
means by which such understanding is best conveyed
varies widely.
There is an unrealized opportunity to build education
more intuitively into the financial service experience.
Savings solutions need to teach discipline and financial
planning over the short- and long-terms. Loan products
need to promote understanding of scenarios and
alternatives. Payment solutions need to teach smarter
usage for personal and business contexts.
For each of these, institutions must carefully design the
moments at which education is delivered. Teaching at
the point of initial awareness and trial, continuously
throughout the usage experience, at points of failure or
challenge or outside of the experience through
educational marketing are all viable approaches, but some
of these will have deeper impact than others.
UNCOVER TEACHABLE MOMENTS
The landscape of financial services available in South
Africa is getting larger and larger, with numerous
institutions releasing new services, promoting new
technologies and developing new channels regularly.
Curiously, many consumers continue to be unaware of the
wealth of options available.
From a consumer perspective, the messaging around
new offerings is missing the mark. It is not for lack of
trying, as marketing and communication campaigns of all
sorts are prevalent, seemingly bombarding the market at
times. Yet awareness of new offerings remains low.
The impression created by many formal institutions is one
of persistently trying to close a deal. Consumers struggle
to make sense of the subtle differences in offerings being
conveyed over a barrage of sales calls. They do not easily
find answers to why they should switch, experiment, or
supplement. At times, offerings come off as being
intended for a different target consumer altogether.
These represent failures in a fundamental principle of
good marketing – to communicate authentically.
Institutions must engage in real conversations with the
right vocabulary and personality, not one-off packaged
pitches. New products, technologies and channels must
be presented in a way that appreciates consumers’
specific contexts and needs to ensure any chance for
triggering adoption.
COMMUNICATE AUTHENTICALLY
Many formal institutions enjoy a seemingly trusted
relationship with consumers, as evidenced by the
prevalence of bank accounts. However, this trust only
infrequently translates into deeper and broader use of
financial services.
From a consumer perspective, this baseline trust is
tentative at best, a result of a savings account being the
best alternative. Consumers build trust with institutions
that care about their financial well-being, but believe few
institutions truly do.
Some of the reasons for this are seemingly beyond an
institution’s direct control. Third-party fraud impacts a few
directly and many indirectly, through word of mouth that
perpetuates apprehension. But other reasons put the
blame on institutions. They do not instill the confidence –
and in many cases sap the confidence – of consumers
looking to improve the security of their financial lives.
Creating mechanisms that afford reliable transactional
security is a minimal baseline that is unfortunately not yet
met in the market today. The more compelling approach is
to extend the definition of security beyond the
transactional to one of financial lifestyle – one that
accounts for future planning, taking care of dependents,
and escaping cycles of debt. The opportunity is to create
security in this broader sense, thereby creating the
confidence to promote greater financial service usage.
GAIN TRUST THROUGH SECURITY

Recommendations in summary
From the diverse behaviors, attitudes
and needs of the 6 personas, we have
identified 6 potential market
opportunities for financial service
industry players to take advantage of.
We look forward to seeing a wealth of
innovative products, services, business
strategies and communication
approaches come to life to meaningfully
tackle the challenge of financial
inclusion in South Africa.
1. COMPLEMENT THE INFORMAL
Both formal and informal solutions have their
place. Create a more complementary and
cooperative model of coexistence with
the informal.
2. PROMOTE FLEXIBILITY AND CONTROL
Finance is viewed as among the most personal
of subjects. Offer solutions for uncertainty, that
position individual flexibility and control as the
core value and benefit.
3. EXTEND DISTRIBUTION GENUINELY
Great import is placed on personal retail
interactions that are both live and genuine.
Broaden and deepen reach in lesser served
areas by building genuine relationships.
4. GAIN TRUST THROUGH SECURITY
Trust builds with institutions that care about
financial well-being. Extend the definition of
security beyond the transactional to one of
financial lifestyle.
5. UNCOVER TEACHABLE MOMENTS
A deeper understanding of financial solutions
is universally desired. Carefully design the
moment at which education is delivered.
6. COMMUNICATE AUTHENTICALLY
Messaging around new offerings is missing the
mark. Engage in real conversations with the
right vocabulary and personality.

frog_finmarktrust_the_personalities_of_the_underbanked_final

frog_finmarktrust_the_personalities_of_the_underbanked_final

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