While a recent Finscope survey has found that financial inclusion in South Africa remains stable, with 87%, or 31.2-million people, served by domestic financial services, the report has suggested that the country must now move beyond the simple measurement and tracking of access to financial services and focus rather on the quality and benefits derived from financial services – particularly for the low-income segment.

Drawing on research by his firm TNS Research Surveys, CEO Rob Powell noted at the launch of the Finscope Consumer Survey South Africa 2015, on Tuesday, that determining the extent of the country’s economic evolution was no longer a matter of simply calculating the number of people that had access to banking facilities.

“Financial inclusion is no longer enough. We need to move the conversation on and look at how people engage with financial services.

“We’ve come to the end of the road when it comes to talking about inclusion as though it’s the only thing that matters, as real economic inclusion needs to make a change in people’s lives,” he remarked.

The yearly survey, which was based on a nationally representative sample of 5 000 adults who were 16 years or older, was considered a research tool to assess financial access and to identify the constraints that prevented financial service providers from reaching the financially underserved and unserved portion of the population.

Noting that the 2015 survey had been expanded to allow for greater interrogation, Powell reported that, while overall inclusion figures had not changed substantially, the composition of inclusion in terms of product use had changed, with the percentage of the banked population increasing from 75% in 2014 to 77% this year.

Meanwhile, the quality of inclusion measure indicator (Q-FIM), which addressed the ability of the respondent to use a transactional account, open a savings account, have access to credit and use insurance services, illustrated that high levels of inclusion did not necessarily translate into a real economic benefit.

“The high proportion of thinly served among the financially included population is driven by the low use of digital payments.

“For example, only 13.7-million adults, or 37% of the population, use digital payments on a monthly basis, of which 63% opt for the traditional brick-and-mortar branches to pay bills and send remittances and transfers.

“They do not make the best of transactional products they have access to to save on transactional cost, time, transport costs and queuing time – thereby not improving their quality of life,” said Powell.

He argued that the low optimisation of financial products was driven by a lack of product knowledge and the lack of innovative products to meet the consumer’s specific need.

By way of example, Powell held that, as 5.5-million South African adults had two or more funeral cover plans from different providers, the consolidation of funeral plans could greatly increase the benefits and possibly reduce the customer’s monthly premiums – thus streamlining their portfolio of products.

“Shockingly, 56% of salaried adults do not have retirement-related financial products, which places a burden on their families and the State to provide for them when they are past working age,” he remarked.

Elaborating on further findings of the survey, he noted that only 61% of the population were aware of which bank account was best suited their needs, while 59% felt that banking fees were too expensive.

Encouragingly, the Finscope report also pointed to an improvement in the level of savings, with 36% of adults indicating that they saved on a monthly basis, which appeared to be linked to a government push on tax-free savings.

Some 15% of people saved in banks, while 14% of adults had a formal savings product from a nonbank financial institution, such as a unit trust, and 13% used other informal savings mechanisms, such as stokvels. A further 11% claimed to save at home.

The degree to which people were accessing credit through formal channels had, meanwhile, increased, with 13% borrowing from banks, 46% having formal credit facilities from nonbank institutions, such as store cards, and 4% using informal credit. Some 5% said they borrowed from friends and family.

This increase had been largely driven by the unsecured loan environment, which saw people using credit for short-term needs, such as food (26%), emergencies (26%), transport fees (12%), bills (10%) and clothes (10%).

“This seems to be more prominent in the informal space rather than the formal space, with people accessing the most credit in KwaZulu-Natal, followed by the Free State and the Western Cape,” Powell held.

Moreover, while smartphone penetration in the adult population was narrowing the digital divide, with about 18.9-million adults owning smartphones, only 40% of the adult population used smartphone banking apps.

Some 31% used cellphones to manage their finances and buy airtime, while 37% of the population used digital payment mechanisms on a monthly basis.

Worryingly, however, Powell observed that people were finding it increasingly difficult to “stretch” their income to meet household expenditure.

Around 28% indicated that they struggled to balance income and expenses, with households under increasing financial pressure and many claiming to receive support from others.

“Overall, the study shows that, despite the challenging macroeconomic environment, there has not been a huge change in financial inclusion.

“However, there is a general concern around the level of financial inclusion owing to the low use of digital payments, multiple insurance cover, a lack of retirement products and a rise in unsecured lending,” he concluded.