Nedbank is looking for ways to increase profitability, market share, and customer acquisition among underbanked stokvel (informal savings clubs) accounts. The proposal involves launching a Fair Share Digital Marketplace that links existing stokvel club accounts together to provide enhanced purchasing power for items like solar panels. An Affinity Club Account program would also be launched to incentivize the opening of new individual transaction accounts linked to existing club accounts. Data analytics capturing customer information from the new accounts would help Nedbank better meet market needs. The proposal projects a net present value of R211 million for Nedbank over the period from 2014 to 2020 through new club and individual accounts as well as incremental cash flows and revenues.

1. Nedbank, Under-banked Stokvel Accounts
Kelley Connect Week, Summer 2015
Team 17
Evan Crouse ebcscr@gmail.com
Travis Kunnemann tkunnema@umail.iu.edu
Tom McGrew mcgrew.thomas@gmail.com
John Stillwagen john@stillwagen.com
Michael Yack michael_yack@praxair.com

2. The Situation
Since 2010, Nedbank’s retail market share has underperformed
compared to disruptive market entrant Capitec. Nedbank’s market
share has remained stagnant in segments which still have significant
opportunity for growth.
Under the current market conditions, how can Nedbank drive
profitability, new customer acquisition, and a higher market share
while aligning with their goal to be a leader in sustainability?
2

3. Fair Share Marketplace
Fair Share Digital Marketplace – Links Club Accounts together to
provide enhanced purchasing power.
New Affinity Club Account – Incentivize new individual transactional
accounts by linking new accounts to existing Club Accounts.
Data Analytics – Captures customer information to better meet the
market needs and enhance firm performance.
3
Net Present Value
R211 million

4. Existing South African Stokvel Markets
• Stokvels constitute a known market of over R44 billion per year
– Estimates up to R75 billion
– Experiencing a growth rate of R80-90 million per year
• Over 45% of households contribute to at least 1 Stokvel per month
• 400k+ Stokvels currently in South Africa consisting of 11.5M members
48%
52%
Stokvels tied to Formal
Institutions
Banked
Unbanked
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Savings Burials Groceries Birthdays Others Investments
Type of Stokvels Used
Source: Stokvels - A Hidden Economy Source: Stokvels - A Hidden Economy
4

5. Challenges for Nedbank in Stokvel Market
• Group savings accounts currently exist in marketplace
– Simple accounts for individual groups
– Nedbank “Club Account” is a highly competitive product
• Nedbank market share decline in the banked Stokvel segment
– 2010: R6.0B (22% market share)
– 2014: R1.5B (7% market share)
• Significant opportunity to better understand segment
– Industry wide lack of data collection
– Nedbank has very limited understanding
○ Only 3 signatures required to open account
○ Limited information required of signators
Source: Case Study
5

6. Fair Share Digital Marketplace
• Link Club Accounts to other similar goal Club Accounts
• Utilize a digital marketplace that brings economies of scale to
deliver low cost purchases supporting Fair Share 2030 goals
• Formally unable to pool enough resources to make significant large
scale purchases
• Marketplace provides venue for linking vendors with Club Accounts
• Value add to multiple market segments
6

7. Digital Marketplace: How Nedbank makes things happen!
7
Soweto Stokvel
Need: Solar Power
Segment: Transitioning ELB
Challenge: Unable to afford
community purchase!!!

8. Affinity Club Account
• Incentivize opening of a new individual Club Affinity Account, as well
as linkage to parent Club Accounts
• Drives incremental account generation and transactional revenue
• Drives incremental data collection
• Account rolls rewards into Club Accounts based on usage
• Utilizes existing fee structure and Affinity program
• Drives greater intimacy with customers
Club
Acct
Club
Affinity
Acct
Club
Affinity
Acct
Club
Affinity
Acct
8

9. Data Analytics
9
Customer behavior of the club account segment is an un-mined
market, and will provide a competitive edge to Nedbank
Multi-source Data Collection
• Club accounts
• Individual accounts
Benefits for Nedbank and Clients
Leverages existing platform to keep costs low
and reduce implementation time
Customer Centered
Innovation
Targeted
Marketing Increase Sales

10. Financial Summary
Net Present Value
84
127
115
145
137
0
20
40
60
80
100
120
140
160
2016 2017 2018 2019 2020
RandinMillion
43
66
59
76
71
0
10
20
30
40
50
60
70
80
2016 2017 2018 2019 2020
RandinMillion
R211 million
2014 2020
12.2% New Club Accounts
New Individual Accounts
9.2% 30k
850k
Entry Level Market Share Customer Acquisition
Incremental Cash FlowsIncremental Revenues
10

11. Path to Success
11
SHORT TERM INTERMEDIATE TERM LONG TERM
8 months 16 Months > 16 Months
Project Development and Analysis
Primary Survey of Current Accounts
Fair Share 2030 Digital Marketplace Development
Build Business Intelligence Capabilities for Stokvel Data
Build Analytic Tools for Making Data Based Decisions
Nedbank Brand Advertising Design and Creation
Build Vendor Relationships
Marketing and Outreach in Preparation Pending Launch
OOH Media Campaign (Wall Media, Taxis, Sign Posts)
Current Customer Outreach Marketing Campaign
--FAIR SHARE 2030 DIGITAL MARKETPLACE LAUNCH--
Outcome Analysis, Growth and Realignment
Validate Business Intelligence Algorithms and Incoming Data
First Targeted Product Communication w/ NCA Data
Re-Analyze Market Trends
CHRISTMAS LAUNCH
Stokvel Data Sales
Launch Nedbank Club Affinity Account

12. Risks & Mitigations
• Identify incentives to drive
legacy accounts to update
information
• Narrow product focus further to
ensure positive product buy-in
• Transition marketing program
to more direct focus, using
known information about
existing users
Risk Factors Mitigating Actions
• Unforeseen barriers to
collecting information on
existing Club Accounts
• Poor vendor partnership for
sustainable product offerings
• Lower than expected
acquisition of Club Affinity
accounts
X
X
X
RISK
SEVERITY
LIKELIHOODOFOCCURANCE
12

13. Make Things Happen
13
“There is no shortage of ideas about what needs to be done to
improve the economy of townships, the challenge is to incentivize
and mobilize local communities to urgently implement
appropriate solutions”
Asad Alam
World Bank Group Country Director for South Africa
To secure first mover advantage, the time to make things
happen is now!

14. 14
Appendices

15. Cash Flow Analysis
WACC = 13.5%
Marginal Tax Rate = 45%
Rand in Million 2015 2016 2017 2018 2019 2020
Incremental Revenues
Club Accounts 2.86 3.91 3.56 4.48 4.24
Individual Accounts 81.61 111.39 101.37 127.72 120.70
Data Analytics 0.00 11.53 10.49 13.22 12.49
Total Incremental Revenue 84.47 126.83 115.42 145.43 137.43
Incremetal Costs
- Electronic Marketplace (3.16) (6.25) (6.56) (6.89) (7.24) (7.60)
- Data Analytics (0.16) (0.03) (0.03) (0.03) (0.04) (0.04)
- Marketing & PR (0.50) (0.38) (0.39) (0.41) (0.43) (0.46)
Total Incremental Costs (3.81) (6.66) (6.99) (7.34) (7.71) (8.09)
EBIT (3.81) 77.81 119.84 108.08 137.72 129.33
Taxes 1.71 (35.02) (53.93) (48.63) (61.97) (58.20)
Net Cash Flow (2.10) 42.80 65.91 59.44 75.75 71.13
NPV @ WACC 210.84
CAGR 10.7%
15

16. Stokvel Demographics and Competitive Statistics
Stokvel Population vs. City Populations Stokvels and Banks
Stokvel by Category Stokvel Contributions
*http://www.africanresponse.co.za/PressReleases/Documents/2012StokvelHiddenEconomy.pdf
16

17. Club Affinity Account Linking
Nedbank
Club
Account
Club
Account
Club
Affinity
Acct
Club
Affinity
Acct
Club
Affinity
Acct
Club
Affinity
Acct
Club
Affinity
Acct
New Offering
17

18. Marketing Plan – Club Affinity Accounts
18
• One Week Television Blitz for product launch
• Nedbank Brochure and other physical advertising design and manufacture
• Nedbank Website Augmentation and SEO for new product
• Research and create list of viable vendors to build relationship with
• Negotiate market maker fees with vendors
• Taxis are estimated by the South African Advertising Research Foundation (SAARF) to be
the most viewed channel for OOH advertising, marginally ahead of street poles and
billboards. (South African entertainment and media outlook: 2013-2017)
• Average weekly reach, 2012 (% of population) Taxis 77%, Street poles 66%, Billboards
65%
• Website must be leader in class for digital marketplaces (e.g. Ebay, Amazon, Alibaba). As
such must be created with a strong focus on design, usability and market use testing.
• Christmas Season Target – Instead of buying gifts, buy solar for your group!
• Primary Marketing Survey – What is your group used for? What sorts of things are you
interested in purchasing for your Stokvel groups/Community?

19. SWOT
Opportunities Threats
• Large footprint in ZA
• Significant market penetration
within affluent and business
banking
• Losing stokvel market share
• Competitors have a stronger foothold
in entry-level banking sector
• Brand image associated with more
affluent banking sector
• Competitors imitate with a similar
product offering
• Nedbank has been disrupted before
• Percentage of unbanked stokvels
are high
• No digital group buying mechanism
exists today
Strengths Weaknesses
Source: Case Study
Source: Largest bank sites in ZA, Stokvels: A hidden economy Source: Case Study, Largest bank sites in ZA (i.e. Nedbank, FNB)
Source: Case Study, Stokvels: A hidden economy
19

20. Sources
20
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