Financial inclusion Levelling the playing field Deon Tromp Trustlink

1. Financial inclusion Levelling the playing field Deon Tromp Trustlink

2. We believe that in order to develop an inclusive and growing economy, a cheap, safe and fast payment method is required, accessible to all consumers, rich and poor, as well as all businesses (large, medium, small and micro) – at the same cost and level of convenience

3. What is financial inclusion? • Definition: • Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way. • Acid test: • Is what we are doing in South Africa in the name of financial inclusion, meeting the World Bank vision that it should be ‘a key enabler to reduce extreme poverty and boost shared prosperity’ • World Bank, Oct 02, 2018

4. South African financial system infrastructure South Africa has a modern, safe and sound financial system infrastructure on par with the best in the world but … Service offerings and pricing models favour big business, the more affluent sector of the community and those in cities and towns. In fact, it is biased against the small and the poor, i.e. small & micro businesses, the lower middle class and all those who struggle to make ends meet, as well as those living in townships and out of main centres and rural areas.

5. “Let them have bank accounts!” Banking sector aim Financial inclusion is a central aim of the banking sector, whereby the sector seeks to improve the range, quality and availability of financial services and products focusing on the unserved, under-served and financially excluded. Banking Association • Why is it important to have a bank account? • According to a Bank spokesperson, South Africans who don’t have bank accounts may face the following consequences: • Lack of protection: Banks are insured, and they guarantee the safety and accessibility of their customers’ money in the event something happens as long as the customer is not at fault. • Lender/creditor requirements: There are situations where you will need a bank account because the information will be necessary on an application for a loan or mortgage. • No record of spending:  If you only spend cash and there is no account of what you are spending or where, you will not have accurate financial records. • Card acceptance: There is a higher rate of card acceptance world-wide. Carrying a card is safer and more convenient than cash. • Bill payments:  Debit orders can be set up on an account. Monthly payments will then be processed if there are funds in the account and customers do not have to go to a store to pay a bill. • Just Money report Jun 2018 • Banks have been quite successful with this message

6. “…but, no such thing as a free lunch”

7. The disincentive to bank – Real life example Weekly wage earner Period: 13/3/2017 to 22/3/2017 Weekly wage earner - Period: 13/3/2017 to 22/3/2017

8. Somebody pays full price for goods and services

9. Interoperability between banked and non-banked Credit Card Cheque or debit card Merchants or service providers ATM Cash Economy ATM

10. Back to the future Coins Bartering Banknotes Cheques Physicalpeer-to-peer Pre-automation era In the beginning 1717 500 BC 1694 Credit cards Debit orders ATM cards Debit cards Internet banking Cheques Switching & clearing Automation era 1980 1960 1975 1983 1994 2000 Digital money Digital legal tender Digital currencies Digital peer-to-peer Stored-value era Dematerialised fiat money Immobilised fiat money 2013 2022 2009 2017

11. What will make financial inclusivity a reality? • A vehicle designed for the safe custody of funds • Free custodial service • Safe - Always your money • Not bank promise • Not crypto token or voucher • Real money owned by the depositor • Income generation for the benefit of the owner of the funds • Licensed and regulated to ensure independence and depositor protection • No conflict of interest between income generation and custodial service • The ability to transact with anyone, anywhere, anytime • Accessible – through mobile phones – quick and easy onboarding process • Real-time transactions • Cost effective, even for very small transactions • Interoperable - accept all forms of payment

12. Model for responsible and sustainable financial inclusivity

13. CHIPS™ value proposition CHIPS proposition to business enterprises • Instant liquidity • Lower transaction costs • Cashless operations • Multi payment option enabled – mobile, card, instant electronic funds transfer etc. • Reconciliation between all forms of payment • Payment fraud and payment risk reduction • Larger consumer population with access to electronic payment mechanisms • A low cost bulk payment system alternative for distribution and collection of funds CHIPS proposition to consumers • An interoperable payment mechanism available to all – receive or make CHIPS, other mobile, international or physical card payments • A licensed and regulated safe-keeping account with no fees & no unauthorised deductions • A safer money holding and transacting option • Bringing open banking services to wherever you are, with no bank account required • Revenue earning potential • Saving without costs Problems: Lack of awareness Once downloaded, to begin using the apps Engage major customer community ‘owning’ corporates (e.g. MNO’s, large account bases, loyalty programs, etc) Advertising Employers, trade unions, Solutions:

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