Banks and low income earners


The past few years have seen a surge in the number of financial institutions serving several segments

In recognition of the economic contribution of the low income segments of the society, most financial services providers (FSPs), especially commercial banks, introduced products and services that are tailored to the needs of low earners.

This is very positive and encouraging given the low level of financial inclusion in Malawi, which, based on the FinScope Consumer Survey of 2014 showed that only 34 percent of adults reported using formal financial services.


Such a low level of financial inclusion could be attributed to lack of trust and the perception of the significance of banks among low income earners.

Over the weekend my friend Maxwell and I went to Tsoka Market in Lilongwe to purchase soccer boots for our social football team. We met Robert, who was selling the boots but, we did not have enough cash at that time to pay for the shoes.

I asked Robert, if he had a bank account so that I could transfer the money from my account to his to complete the purchase.


He was honest enough to say that he did not have a bank account because he was frustrated with long queues that are usually the order of the day in banking halls.

He also narrated a situation, where a bank teller at one point returned the money he wanted to deposit saying it was short of the amount that he had written on the deposit slip, when he was sure he had given the teller the right amount. This prompted him to close the only bank account he had.

In the end he said, “Za ma bank izi, sizaifeyo (banks are not for people like me). From Maxwell’s experience, some of the factors that would make potential low income clients feel this way include the setup of bank branch counters, products or services orientation and value for money.

It is undisputable that banks have introduced and promoted products and services that focus on the low income segments to save and invest with banks but the question is whether all banks that have such products and services have a fully equipped platform for such clients.

Snap checks in some bank branches in the cities of Blantyre and Lilongwe in the past two months showed that while some banks have enquiries counters serving low income segments and deposits counters for “small deposits”, other banks do not segment their services in this way.

To some observers, this segmentation may appear to be redundant but, to others, it makes a big difference.

For example, if a low income individual wants to be saving, say K5,000 per day from their small business, it may find it to be costly to be standing on a queue in the banking hall every day, when being served from a counter that also serves people with “large deposits”.

Secondly, the lack of a designated enquires counter may make access to balances and mini statements cumbersome hence; the capability of low income clients to track their accounts is greatly impaired.

In as far as the service platform is concerned, the key question every bank needs to ask itself is, “Do our existing and potential low income clients feel that we provide a convenient and welcome service environment?”

Again from Maxwell’s experience, where he believes he was robbed off from the money he wanted to deposit, the client should be assured and be made to feel safe, when dealing with the bank.

All banks use note counting machines to verify the accuracy of the deposits brought by its customers. If, indeed the note counting machine is used as part of the deposits verification process, then the clients, who bring the cash are entitled to monitor the verification process.

In order to appreciate the approach used at most bank counters, we visited few bank branches in Blantyre and Lilongwe recently, where we observed that at some branches, the note counting machines were partly obscure to the extent that it would be difficult for a client to appreciate that they had a shortage on their deposit.

Usually, the middle and high income clients can either argue confidently or settle the difference without feeling the financial pinch however, for the low income clients, the shortages impact their incomes significantly yet they would not have the confidence to request for a verification process including viewing CCTV footage.

The second concern regarding processing of deposits is the periodic lack of printed deposits receipts. These receipts were introduced to among other things eradicate fake deposit slips that some people used to produce hence; in the current period they also serve to assure low income clients that their deposits have been processed by the bank.

Thus with regard to trust, the question financial services providers need to ask themselves is, “Does our way of processing cash deposits strengthen the trust of the low income clients in our services?”

If, indeed the low income clients are welcomed by the formal financial service providers then we need to constantly see actions that make such clients feel that the bank is for everyone and that all the services are rendered in a trustworthy manner.

Recent innovations to link bank accounts with mobile money accounts should be fast-tracked if efforts to get more people banked and financially included are to bear fruits.

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