There is a lot of media attention around the new Mna Nam saving fashion accessory; but what is the point of it really?!
To understand that; let’s have a look at the premise of why it exists. At its base level it is about changing the culture of South Africans to make them save. We are notoriously bad savers and use our credit cards as a draw down facility for day-to-day expenses as opposed to a facility that is there for an emergency.
To test if you are guilty of this, answer this question: Does your credit card have a negative or a positive balance? If it is negative; you are more than likely guilty! (of course I am generalizing)
Have a look at the story of how Sanlam birthed the Mna Nam.
So let me get this out of the way. As a concept; I think it is great! Its premise is intriguing and it does well to bring to light a plague that affects the entire continent – a lack of savings!
But that’s about where the nice things I have to say come to and end. So let’s break this down into bite size chunks,
WeChat is a Chinese offering. It is in fact the Chinese equivalent of WhatsApp. This kind of competition is great in an emerging technology economy; but a little over a year ago according to World Wide Worx; the WeChat user base in South Africa is a minuscule 5 000 000 (ish) compared to the more established WhatsApp who boast an active user base of twice that number and growing.
I get that there is no WhatsApp Wallet. Yet. But if you are looking at reaching a traditionally “technology shy” segment of the market and instilling a culture of saving in them; then surely you would look to a platform that has a greater share of the market?
Barriers to saving –
There are a lot of steps involved in saving some money in your online wallet. First, you need to download WeChat and set it up. Then you need to link it to your bank account (see the next point). Once you have done that you need to scan the QR code and choose how much you want to squirrel away. The WeChat app literally takes money from your existing bank account and drops it into your Standard Bank backed Wechat Wallet. Saving? More like a transfer.
This is a very difficult process for those who are not used to working with the technology. Not only are QR codes not widely used (more the pity in my opinion); but they are not widely known. When influencing a culture; you need to look at reinforcing positive behaviour (the behaviour or saving) and that behaviour needs to be built on something familiar. Arguably; QR codes are not familiar. Almost as unfamiliar as saving.
What is a very interesting proposition is the opposition application from Liberty; Stash. Their concept is rounding up your transactions to the closest R 100.00. This takes away the barrier to saving. It makes it automatic. As you are using your cards and transacting on a daily basis; you are saving. It is rounding up your transactions and automatically investing it on your behalf. This takes the barrier of culture away and makes it automatic.
Banking the unbanked –
This is quite possibly the biggest problem here. This does not address the largest problem in our emerging economy. Not only is saving not a norm; but bank accounts are not a norm and the app dictates that you need a bank account to transfer your savings from into your Wallet.
Accessibility and practicality –
While I understand that this is still in launch phase; there seems to be a limited supply of the bangle which will hamper its main stream adoption.
With this being said; the design of the bangle also has an air of sophistication to it. Which could explain some of the points I have raised higher up. But again this makes it a very niche saving mechanism. How many people will wear the bangle every day? How will the wearer make saving a habit?
Saving The Last Word
This is a great concept that I fear will not make saving a reality in most people’s lives. It is going to be a great marketing gimmick that raised a South African fashion designer for a short period and got Sanlam some notoriety as a technology driven innovative organisation.
There is promise for fashion and technology to come together to facilitate saving; but that solution needs to take the above shortcomings and turn them around.
To change people’s attitudes to saving; the product (in whatever guise) needs to be simple, easy to use and quickly repeatable. Whichever financial institution gets that right will be truly winning the race at banking the unbanked!