Inside the bank where 9 in 10 clients rely on SASSA
· The South African
Fewer than 20% of clients at South African banks receive a grant from the South African Social Security Agency (SASSA).
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This mirrors the country’s population data. About 1 in 5 South Africans get a grant.
However, one bank has decided to build its business on grant beneficiaries.
At this bank, 9 in 10 clients receive a SASSA grant.
The Bank Relying on SASSA Beneficiaries
Lesaka has 2 million active clients.
According to SASSA’s half-year report, 1 798 419 grant beneficiaries have their grant deposited into a Lesaka account.
This means 89.9% of the bank’s clients get a grant from SASSA.
The bank ranks third for the number of beneficiaries on its books. Capitec is first, followed by African Bank.
Merger with Bank Zero
The SASSA report shows Lesaka relies on African Bank’s infrastructure to manage deposits.
That will end soon.
The bank recently announced a merger with Bank Zero.
The fintech company will acquire Bank Zero for R1.1 billion.
This allows Lesaka to rely on Bank Zero’s infrastructure rather than African Bank’s.
Currently, only 278 Bank Zero clients get a grant, so there’s very little overlap.
Building a Company on the Backs of SASSA Beneficiaries
Nine in ten of the bank’s clients are SASSA beneficiaries; this is intentional.
Lesaka specifically targets grant beneficiaries.
One of its products, a pensioner plan, deducts R10 a month for funeral cover directly from the Old Age Grant.
The company also offers a loan of up to R1 000, paid over 3 months, to SASSA beneficiaries willing to switch.
These efforts earn the company millions.
Lesaka charges an account fee of R7.50 a month.
With 2 million active clients, the bank gets R15 million a month in account fees, of which R13.4 million comes from SASSA beneficiaries.
Lesaka’s next goal is to get 3 million clients by 2029.
If grant recipients remain the bank’s main target group, the company will become the second-largest bank serving SASSA beneficiaries.